If you make a cash contribution to a tuition organization that provides scholarships or grants to qualified schools before December 31, 2008 you would qualify for a dollar for dollar credit on your 2008 Arizona Income Tax Return. Thus if you donate $500.00 you will receive a reduction in your tax due of $500.00. This tax credit is limited to $500.00 for an individual and $1,000.00 for a married couple filing jointly. In Arizona a cash contribution includes cash, checks and credit card payments. This allows you to make a donation in December 2008, after your credit card billing cutoff, and not have the payment due until January 2009. You will receive a credit for the donation on your 2008 Arizona tax return and additionally can deduct the donation as a charitable gift on your Federal Tax Return (Subject to charitable donation limits of 50% of your adjusted gross income). For example, a married couple in the 25% federal tax bracket this would receive a $250.00 reduction in federal income taxes due in addition to receiving the $500.00 credit on their Arizona Income Taxes. The law does stipulate that a donor cannot designate a donation to the school tuition organization for the direct benefit of a dependent of the taxpayer. The Arizona Department of Revenue has a list of qualifying schools on its’ website. For additional information please view the Arizona Department of Revenue’s publication on School Tax Credits.
To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
Robert K Minniti, CPA, CFE, Cr.FA, CFF, MBA
www.minnitiaccounting.com
www.linkedin.com/in/robertminniti
Original source: http://ascpa.wordpress.com/2008/12/01/arizonas-private-school-tuition-tax-credit/
