Dec 2, 2022 | Articles, Tax, Wealth Management

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2022 Arizona Individual Tax Credits

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The following guide is to help you navigate 2022 Arizona tax credits for charitable donations. Donations are no longer eligible for a federal charitable deduction if you receive a credit for Arizona purposes. The donations are eligible as a deduction on your Federal Schedule A as a state tax payment if you have not yet exceeded the $10,000 State and Local tax (SALT) limitation. You still receive a dollar-for-dollar tax credit for Arizona purposes.

 It’s a great way to dictate where your tax money goes even if you are not eligible for a federal benefit. For most credits, you can donate until April 18, 2023, and apply it to your 2022 tax return.

Qualifying Charitable Organizations (QCO) Credit

Credit for cash contributions made to certain charities

  • Maximum credit for the 2022 tax return:
    • $400 for single, heads of household, and married filing separate filers
    • $800 for married taxpayers filing a joint return
  • Credit can offset Arizona tax liability dollar for dollar but is not refundable
  • Unused credit can be carried forward five years
  • Qualifying charitable organizations for 2022:
    https://azdor.gov/sites/default/files/media/CREDITS_2022_qco.pdf
  • Contributions can be made from January 1 to April 15 of the following calendar year

Qualifying Foster Care Charitable Organizations (QFCO) Credit

Credit for cash contributions made to certain foster care charities 

  • Maximum credit for the 2022 tax return:
    • $500 for single, heads of household, and married filing separate filers
    • $1,000 for married taxpayers filing a joint return
  • Credit can offset Arizona tax liability dollar for dollar but is not refundable
  • Unused credit can be carried forward five years
  • Qualifying foster care charitable organizations for 2022: https://azdor.gov/sites/default/files/media/CREDITS_2022_qfco.pdf
  • Contributions can be made from January 1 to April 15 of the following calendar year

Public Schools Credit

Credit for cash donations made or fees contributed to public schools for extracurricular activities or character education programs

  • Maximum credit for the 2022 tax return:
    • $200 for single, heads of household, and married filing separate filers
    • $400 for married taxpayers filing a joint return
  • Credit can offset Arizona tax liability dollar for dollar but is not refundable
  • Unused credit can be carried forward five years
  • Qualifying public and charter schools for 2022: https://azdor.gov/sites/default/files/media/PUBLICATION_ADESchoolListing.pdf
  • Contributions can be made from January 1 to April 15 of the following calendar year

Certified (Private) School Tuition Organizations (STO) Credit

There are two credits available for contributions made to Certified School Tuition Organizations:

1) Original Individual Tax Credit
Credit for cash donations made to a Certified School Tuition program for scholarships to qualified private schools

  • Maximum credit for the 2022 tax return:
    • $632 for single, heads of household, and married filing separate filers
    • $1,245 for married taxpayers filing a joint return
  • Credit can offset Arizona tax liability dollar for dollar but is not refundable
  • Unused credit can be carried forward five years
  • School Tuition Organizations certified to receive donations
    https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf
  • Contributions can be made from January 1 to April 15 of the following calendar year

2) Switcher Individual Tax Credit
Credit for cash donations made to a Certified School Tuition Organization for scholarships to qualified private schools

  • Maximum credit for the 2022 tax return:
    • $620 for single, heads of household, and married filing separate filers
    • $1,238 for married taxpayers filing a joint return
  • Credit can offset Arizona tax liability dollar for dollar but is not refundable
  • Unused credit can be carried forward five years
  • Credit can only be taken if the individual taxpayers donate the maximum amount to the first credit
  • School Tuition Organizations certified to receive donations
    https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf
  • Contributions can be made from January 1 to April 15 of the following calendar year
  • Public Schools and the Certified School Tuition Organizations credits https://azdor.gov/sites/default/files/media/PUBLICATION_707.pdf

Military Family Relief Fund (Credit)

Credit for cash donations to provide financial assistance to the families of currently deployed Service Members and post-9/11 Military and Veteran families for hardships caused by the service member’s deployment to a combat zone. This fund tends to cap out quickly, so check before you contribute.

  • Maximum credit for the 2022 tax return:
    • $200 for single, heads of household, and married filing separate filers
    • $400 for married taxpayers filing a joint return
  • Credit can offset Arizona tax liability dollar for dollar but is not refundable
  • Unused credit cannot be carried forward
  • Contributions can be made from January 1 to December 31 of each calendar year, if the cap has not been met
  • Credit capped at $1,000,000 annually
  • Available on a first-come, first-serve basis per date of donation

If you contribute for a prior tax year, ensure you work off the current calendar year’s organization list. If you contribute in January of 2023 for your 2022 Arizona tax return, be sure the charitable organization you are donating to is on the 2023 eligible organization list.

The 2023 list of eligible organizations is available on the Arizona Department of Revenue website. The list of eligible organizations will be updated periodically throughout the year as eligible organizations receive their authorization to receive donations under the QCO and QFCO program. An organization can be certified one year and not the next, so verify that the organization is certified to receive tax credit donations when you donate.

DIsclosure:
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