Arizona Tax Credit

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It Won’t Cost You A Single Penny To Save/Change A Life

Everybody by law is required to pay Arizona state taxes. Would you rather pay money to the state OR help:

  • Individuals Suffering From A Chronic Illness (Ex: Cancer)
  • Women & Men That Are Victims Of Sexual Violence (Ex: Rape)
  • Indivuduals Who Can’t Afford Their Hospital Bill Or Medication (Ex: Insulin)
  • Individuals That Need Mental Health Treatment Who Can’t Afford It
  • Foster Children In Need
  • Homeless Indivuduals In Need

You do have a choice to redirect what you owe on your state taxes to help change a life. As a certified Qualified Charitable Organization with the Arizona Department Of Revenue, you will receive a tax credit: a dollar-for-dollar reduction of the state income tax you owe – up to $400 for individuals and $800 for those filing jointly. 

A tax credit reduces the amount you owe on your taxes. For example: If you owe $300 to the state and make a $100 donation to Urban AZ, you will now owe $200 on your state taxes, therefore redirecting $100 of your tax dollars to a more meaningful cause.

Learn More About Qualified Chariable Organizations HERE

Estimate What You Will Owe On Your State Taxes HERE

Tax Deduction Vs Tax Credit

A tax deduction reduces how much of your income is subject to taxes while a tax credit directly reduces the amount of taxes you owe, giving you a dollar-for-dollar reduction of your tax liability. Check out the chart below. Which would you rather have?

Scenarios: A: $10,000 Tax Deduction B: $10,000 Tax Credit
Income: $100,000 $100,000
Tax Deduction: ($10,000) n/a
Taxable Income: $90,000 $100,000
Tax Rate: 25% 25%
Taxed Owed: $22,500 $25,000
Tax Credit: n/a ($10,000)
Final Tax Bill: $22,500 $15,000

 

We’re assuming you would pick scenario B.

Estimate What You Will Owe On Your State Taxes HERE

Real Time Examples

For our examples, we will be using the lowest taxable income bracket rate which is 2.59%

Example 1 Example 2 Example 3
Adjusted Gross Income Claimed (Year): $17,184 $21,817 $26,540
State Tax Owed: $120 $240 $360
Donating $120 would reduce to your state tax liability to $0 Donating $240 would reduce to your state tax liability to $0 Donating $360 would reduce to your state tax liability to $0

 

How To Claim The Tax Credit

Step 1: Donate any amount (up to $400 if filing single or $800 filing jointly)

Step 2: You will recieve a donation reciept via email.

Step 3: When you are ready to file your taxes for the state of Arizona, use form 321 to claim the tax credit – You can download the form and instructions HERE

Step 4: On form 321, write down the amount you’ve donated and use our charity code 22476 (Part 1 Section B)

Please consult your tax advisor for specific questions related to your taxes.

FAQS

How does the tax credit work?

Here are some general guidelines for using the Arizona Charitable Tax Credit. Please consult your tax advisor for advice on your specific tax situation.

  • The gift must be made by an individual (corporations, foundations, partnerships, etc. do not qualify).
  • The gift must be made in cash (in-kind donations such as toys, books and services do not qualify).
  • The maximum credit allowed for single taxpayers or heads of households is $400,. For joint taxpayers, the maximum credit is $800.
Im a W-2 Employee, Have My Taxes Withheld and I Get A Refund. Can I Still Use The Tax Credit?

The purpose of withholding tax is to ensure that you comfortably pay whatever income tax you owe. If you receive a refund, that is because the amount you withheld was greater than the amount you owed. Donating for our tax credit will still decrease what you owe on your state taxes and increase your refund.

For example: If you owe $400 in state taxes,  make a $400 donation and withheld $800 for state taxes, you will recieve a $800 refund since your tax liability is now $0 with the $400 donation.

How do I verify Urban AZ qualifies for the tax credit?

Visit the Arizona Department of Revenue website to see if an organization qualifies as a charity.

Is there a minimum dollar donation requirement for the tax credit?

Short answer: No there is not a minimum. Therefore, if you donate $1, you will receive a $1 tax credit. The maximum is $400

Does the Charitable Tax Credit also apply to my federal income tax returns?

The Charitable Tax Credit only applies on your Arizona State income tax. However, you may be able to claim a federal tax deduction for the amount donated.

I currently use the Public Education Tax Credit. Can I use the Charitable Tax Credit as well?

Yes, these two tax credits are independent. You can therefore take advantage of both the Public Education Tax Credit and the Charitable Tax Credit on the same tax return. You 

I currently use the Foster Care Tax Credit. Can I use the Charitable Tax Credit as well?

Yes, these two tax credits are independent. You can therefore take advantage of both the Foster Care Tax Credit and the Charitable Tax Credit on the same tax return. You 

How does Urban AZ use Charitable Tax Credit dollars?

100% goes directly to supporting the cause of your choice when you make a donation!

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