Guide to the Arizona Charitable Tax Credit

A: Arizona gives tax breaks to residents who donate to approved charities (called Qualified Charitable Organizations, or QCOs). If you give money to a qualified charity in Arizona, you can use this tax credit to reduce the amount of state taxes you owe. This tax credit is dollar-for-dollar, meaning your taxes are reduced by the exact amount you donate.

The Arizona state tax credit for charitable donations exists to give taxpayers more choice in how their tax dollars are spent. Instead of your tax dollars going to general state allocations, with this tax credit, your tax dollars are going directly to causes you choose.

Teen Lifeline is a Qualifying Charitable Organization, so donations made to Teen Lifeline are eligible for this tax credit.

A: A tax credit directly reduces the amount of state income taxes you owe, while a tax deduction reduces your taxable income. Tax credits generally provide a greater benefit to taxpayers, as it subtracts from your final tax bill itself.

For example, let’s say you make $50,000 per year and owe $885 in state taxes (a 2.5% marginal tax rate).

Tax Credit Example:

• You donate $400 to Teen Lifeline, qualifying for the Arizona Charitable Tax Credit.
• Your Arizona state tax bill is reduced by $400, bringing your tax bill down from $885 to $485.
• In total, you save $400 on your taxes.

Tax Deduction Example:

• You have an tax deduction for expenses of $400.
• Your taxable income is reduced from $50,000 to $49,200. This reduced amount is used to calculate your new tax bill, which goes down from $885 to $865.
• In total, you save $20 on your taxes.

You can claim both tax credits and tax deductions at the same time on your taxes.

A: Any Arizona taxpayer who owes money on their state income taxes can claim the credit, as long as they file an Arizona state income tax return and make a donation to a certified QCO during the tax year.

To claim your tax credit, complete Arizona Form 321 (Credit for Contributions to QCOs) with the amount of your donation and use Teen Lifeline QCO Code 20695 when filing your state income tax.

A: When filling your 2024 Arizona income tax, complete Arizona Form 321 (Credit for Contributions to QCOs) with the amount of your donation and use Teen Lifeline QCO Code 20695 when filing.

A: For the 2024 tax year, married couples filing jointly can claim up to $938 and the maximum allowable credit for a single individual, married person filing separately, or a head of household is $470.

A: No, you do not need to itemize deductions to claim the QCO tax credit. You can claim the credit regardless of whether you take the standard deduction or itemize.

A: Yes, you can donate to multiple QCOs and claim credits up to the maximum limit for your filing status to each different QCO ($470 for individuals, married filing separately or head of household / $970 for couples).

For example, if you donate $100 to three different qualifying charities each, you can claim this tax credit for each donation for a total tax credit of $300.

A: If your donation exceeds the QCO limit for 2024, you can carry the excess forward to 2025. Be sure to consult with your tax advisor for advice about your specific circumstances.

A: To qualify for the tax credit for tax year 2024, you must make your donation before April 15 of 2025. To qualify for the tax credit for a given tax year, you must make your donation by April 15 of the following year.

A: Yes, Arizona offers tax credits for donations to other types of organizations, such as public schools, private school tuition organizations, and foster care organizations. Each type of credit has its own limits and requirements.

You can claim multiple credits for the same tax return.

A: Retain the receipt or acknowledgment letter you receive from Teen Lifeline that verifies the amount of your gift and the date that you made your contribution.

A: No, there are no income restrictions for claiming the QCO tax credit. However, the credit can only reduce your Arizona state tax liability to zero.

A: Not at all! Claiming the QCO tax credit for your gift to Teen Lifeline is straightforward. Simply make your donation, keep your receipt and complete Form 321 when filing your Arizona state tax return. If you’re unsure about what to do or have any additional questions, a tax professional can assist you.