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Arizona AZ Tax Credits 2013 can save you taxes and are a great investment for you and the community! Most Arizona taxpayers in the moderate to high tax brackets will come out ahead because besides getting a dollar for dollar reduction of Arizona income tax, the taxpayer gets an additional federal itemized deduction on Form 1040 Schedule A! You should discuss with your CPA and if there is a good tax savings for you, you should make your contributions by November 30th! Many Arizonans do not make a habit of taking advantage of the Arizona tax credits. Here are the benefits of contributing to Arizona private schools, public schools, working poor and AZ military families BEFORE 12-1-13. 1. IF $3,000 is contributed to eligible Arizona tax credits by a taxpayer in the 35% federal tax bracket and the taxpayer has over $3,000 in Arizona tax liability before state withholding and estimated tax payments, the taxpayer will be ahead by at least $1,050. 2. Taxpayers who have an Alternative Minimum Tax problem because of writing too many dollar amounts for state income tax and real estate taxes, can reduce the amount they have to pay for state income taxes and can reduce the Alternative Minimum Tax. 3. The total maximum Arizona tax credits for 2013 is $3,262 for married filing jointly and $1,631 for single filing taxpayers. For married filing jointly, the breakdown is $2,062 for AZ private schools, $400 for AZ working poor organizations, $400 for AZ public schools, and $400 for AZ Military families. For Single filers, the breakdown is 1,031 for AZ private schools, $200 for AZ working poor organizations, $200 for AZ public schools, and $200 for AZ Military families. 4. You can find out if the charity you want to give to is eligible for the credit. 5. When you fill out the charity form, make sure you specify that you expect to get the credit. 6. If you wait too late in December to write the checks or use credit card, the AZ Military families may no longer be eligible for the credit. 7. Although you have until April 15th to get an Arizona tax credit on your Arizona return for 2013. However, unless you contribute to the AZ tax credits by 12-31-13, Arizona taxpayers do NOT get a federal Itemized charitable deduction for 2013! Warnings: A. If you decide to contribute, make sure that you will benefit by taking the credit. For example, if you are married filing jointly and only have $1,000 Arizona tax Liability, you can only get a credit for $1,000! Remember, Arizona tax liability is what is owed to Arizona BEFORE any Arizona withholding and estimated taxes have been paid. B. Out of state taxpayers who file non-resident or part year resident Arizona returns are not eligible for the credits. C. If you wait too late to write the check or make a credit card payment, public schools and private schools who receive your check in January 2014, will not give you a credit form for 2013. D. Checks for regular school activities are not eligible for the credit. Many Arizona taxpayers do not know that the contributions to private schools and public schools cannot be used for school activities. The donations you make can only be used for extra curricular activities, like field trips, after school arts programs. or designated "character education programs." Of course check with the school to see if they will give you a credit for extra curricular activity that is not listed here. E. You cannot get a refund from Arizona if the credits are more than the tax liability. However, you can carry the credit forward. When you have to carry the credit forward, you want to avoid deducting the donation a second time on the federal tax return form 1040 Schedule A. F. For Arizona, you get a tax credit, not a tax credit and a charitable donation. G. When you contribute to Arizona tax credit after year end (i.e. 1-15-14), the credit is taken on the 2013 Arizona tax return but the donation is not deducted for Federal purposes until 2014. You will need to remember to not miss the deduction on the Federal 2014 return. You are allowed to specify which programs you'd like your donation to support. For example, you can specify that you want the contribution to be used for your grandchild’s teachers field trips. And remember you do not have to have a child in the school to get the credit. Also, you can donate to more than one charity for each credit. For example if you like two private schools for after school programs, you can donate to both of them. If you just want the Arizona tax credit and do not know what public school, private school or working poor organization to donate the funds, there are some good resources on the web. For the Working Poor, you can go to a search engine such as Google and type in “charity navigator Arizona” and a list of charities will show up for your review. Donating money to Arizona private schools, public schools, working poor and AZ Military Families not only can reduce your overall income taxes but can help the community including your own family. However, before just writing the checks or putting the donation on credit card, you need to be aware of the warnings above mentioned and check with your professional CPA in Arizona.
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