Apr 14, 2016
A Brief Walk-through
Over 64,000 Arizona taxpayers have trusted ACSTO with their tax credit donations over the past 17 years. Would you like to join their ranks and help Christian education to flourish in Arizona?
To get an overview, read the summary below. Otherwise, choose one of the four main categories here:
In A Nutshell
Some of you might be thinking, "What's all this talk about donors and donations? I thought this was about redirecting my taxes!"
The tax credit laws specifically describe the allowance of a tax credit for donations made to scholarship organizations like ACSTO. This is possible because the taxpayer is choosing where to make the donation, not the government, thus allowing private money, not public money, to be scholarshipped for any type of private school (secular or religious).
When you give, you are making a donation, and Arizona will grant a tax credit in return for that donation when you file your tax return. That is why we use 'donation' language and do not use 'redirecting' language.
Tax Credit #1: ORIGINAL
The Arizona Private School Tuition Tax Credit Law, A.R.S. Section 43-1089 (nicknamed the Original Tax Credit), allows a single taxpayer to make a donation to ACSTO for up to $545 and a married couple filing jointly to donate up to $1090 for 2016, and receive a dollar-for-dollar tax credit against the taxpayer’s Arizona state income tax.
Tax Credit #2: OVERFLOW
In addition, Arizona signed the new Overflow (aka: PLUS or Switcher) tax credit into law in 2012 as A.R.S. 43-1089.03, allowing donors to receive credit for a contribution over and above the Original tax credit law. The Arizona taxpayer must first be able to donate the $1090 (married) or $545 (single) maximum for the Original tax credit in order to donate an additional amount to the Overflow/PLUS tax credit up to another $542/$1083.
Maximums for 2016:**
|Filing Status||Original Tax Credit||Overflow/PLUS/Switcher
**Maximums increase a little each year according to the increase in the annual Phx CPI. For example, the 2017 maximums will increase, though not my much. The total for single taxpayers will be $1,089 and the total for married filing jointly will be $2,177.
If the taxpayer has actual Arizona state income tax less than the maximum allowable, the available credit in a given year is limited to the taxpayer's actual tax (otherwise known as your liability). The tax law allows a carry forward for up to five years if a donation is made in excess of the actual state income tax due. Use forms 323 (Original tax credit), 348 (Overflow tax credit), and 301 (summary) to claim the credit on your Arizona taxes.
Online donations receive an email confirmation immediately. For online donations made through ACSTO's Donor Portal, you can save & print out your own receipt for recent donations. For all other methods of donating, we mail out receipts every week (December receipts are mailed by January 31). A comprehensive statement is always available by January 31 of the following year.
The donation deadline for a given tax year is no longer December 31 for private school tax credit donations. Donations can be mailed or submitted online to ACSTO prior to filing taxes but no later than April 15 and still be eligible for the tax credit for the previous tax year. This means that for any donations made between January 1 and April 15 it is up to the donor to determine which tax year to claim the donation. It must be postmarked or submitted online by midnight of April 15 - there are no extensions! (The Federal deadline for charitable deductions is still December 31.)
The private school tuition tax credit laws allow recommendations, but they are not guaranteed. This is because a school tuition organization cannot award, restrict, or reserve scholarships solely on the basis of a donor's recommendation. A taxpayer may not claim a tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer's own dependent (a.k.a.: swapping recommendations with another parent for each other's children is prohibited). A taxpayer may also not recommend his/her own child or dependent.
Now that you have an overview, here are the four main categories concerning tax credit donations: