Good news! Literacy Volunteers of Coconino County / The Literacy Center is a Qualifying Charitable Organization to accept Arizona Tax Credit donations because we are a 501(c)(3) charity that spends at least 50% of its budget on low income residents whose household income is less than 150% of the federal poverty level. What was formerly known as the Working Poor Credit is now officially known as the Credit for Donations made to Qualifying Charitable Organizations. This change was made in 2013 to reflect the expansion of the credit to include Foster Care organizations.
Frequently Asked Questions (FAQs)
What’s the difference between a tax credit and a tax deduction?
A tax credit reduces your tax liability dollar-for-dollar. You can get back the FULL amount donated! Keep your Arizona state taxes local by directing your Arizona tax dollars to The Literacy Center! By making a donation to The Literacy Center as a Qualifying Charitable Organization, you may reduce the amount you owe to the state or you may increase your refund, dollar for dollar. This allows you to support The Literacy Center programs at no cost to you.
A tax deduction reduces your taxable income, but the actual amount saved depends on what tax bracket you are in. It is not dollar-for-dollar, but rather a percentage.
Will I be refunded if I donate more than I owe?
First, be careful NOT to confuse “what I owe” with “what is my tax liability.” You may be getting a refund because you had more taxes withheld (from your paycheck, pension, other sources, etc.) than what your liability was. In this case, if you qualify for the Credit for Donations made to Qualifying Charitable Organizations, you would get a larger refund. The direct answer to the above question is you cannot get a refund if you donate more than your income tax liability; however, any unused contribution may be carried forward and used up to 5 years after the donation.
How does this work?
Anyone who pays Arizona state income tax is eligible for the credit and you’re not required to itemize deductions to claim the credit. Your primary residence must be within the state of Arizona. This credit is in addition to the school tax credits. You can make a Charitable Contribution Tax Credit donation AND a School Tax Credit. If you are unsure if you qualify for the tax credit, contact your tax advisor.
The deadline to donate to a Qualifying Charitable Organization, and take advantage of the Arizona Charitable Tax Credit on your 2016 state taxes, is April 15th 2017 or whichever date you file your 2016 state taxes.
How much can a taxpayer donate?
Couples who file jointly can reduce their state taxes by up to $800; individuals or head of household filers can claim a tax credit of up to $400. Again, this is in addition to the School Tax Credit.
You may donate any amount up to your limit and receive the credit; up to $800 if you are married and filing jointly, or $400 if you are married and filing separately or a single taxpayer or head of household. For example, if you give $100, you will be eligible for a tax credit of $100. If you give $1000, you will be eligible for up to a $800 tax credit (married, filing jointly), as well as a state tax deduction for any amount you donate over the tax credit limit. Of course, your entire contribution can also be eligible as a tax deduction if you itemize your federal tax return.
Charitable Contribution Tax Credit Donation Documentation
The Literacy Center will send you a letter confirming the amount and date of your donation. This letter documents your contribution and is necessary to support your tax credit. Please make sure you include your name and home address on the donation page.
You can deduct the $400 or $800 tax credit donation to The Literacy Center on your federal taxes if you itemize which would actually “make you money” on the donation.
For example: Make a $400 tax credit donation to the Literacy Center. Get a $400 tax credit on your Arizona taxes. Itemize on your federal taxes and if you fall in the 25% tax bracket you would get a $100 tax reduction on your federal taxes for the $400 donation. So, a $400 donation could amount to a $500 benefit in your favor, putting you $100 ahead.
Make an Arizona Tax Credit Donation
Thank you for supporting literacy for all by directing your Arizona tax dollars to TLC!