Arizona offers a unique opportunity for Arizona taxpayers to make contributions to students at a private school and receive a dollar-for-dollar tax credit against their state tax liability each year.
That means that for 2018-2019, a married Arizona taxpayer can give $2,213 to a student at Valley Christian Schools, and if their state tax liability is $2,213 or more, they will receive the entire amount back on their tax return.
It really is that easy. Read on for additional information, but please consider it helpful and don’t let it scare you. This is an incredible program that is a “no-brainer” for friends of Valley Christian who are also Arizona taxpayers, and we invite you to contribute to a Valley student right away.
(To answer your immediate questions… a single taxpayer can give up to $1,107 as outlined above, and if you give more than your tax liability, you receive a credit that can be carried forward up to five years.)
While there are many STOs in the Valley, our preferred partner is ACSTO (Arizona Christian School Tuition Organization).
Arizona tax laws specifically describe the allowance of a tax credit for donations made to STOs, since the taxpayer is choosing where to make the donation (not the government), allowing private funds to be given as a scholarship for any type of private school (secular or religious).
When you give, you are making a donation, and Arizona will grant a dollar-for-dollar tax credit in return for that donation when you file your tax return. Since ACSTO began in 1998, they have awarded more than $200 million in scholarships to more than 34,000 students attending more than 150 Arizona Christian schools. As a school, we have now received more than $18 million in awarded scholarships from ACSTO, including more than $1.3 million in 18-19 alone.
ACSTO has an incredibly helpful program for parents on their website called ACSTO 101: A Guide To Raising Tax Credit Donations. This is a great resource for parents who want to understand the program and the best way to communicate this with potential donors.
TAX CREDIT AMOUNTS
Arizona taxpayers must first donate the $1110 (married) or $555 (single) maximum for the Original tax credit in order to donate an additional amount to the Overflow/PLUS tax credit up to another $1103/$552. You can donate up to your actual Arizona income tax. Any donation in excess of this can be carried forward up to five years.
HOW TO DONATE
You can donate online at ACSTO’s Website, or by mail, using the donation forms in the front office. You can also download the brochure here. Receipts are mailed from ACSTO to the donor in a timely fashion.
WAYS TO DONATE
To donate by check, fill out a donor card, and mail it with your check to ACSTO.
By Credit Card:
You can donate online via ACSTO’s secure website, by phone at 480.820.0403, or by filling out a donor card with your credit card information and mailing or faxing it to ACSTO.
If you’d like to spread out your giving, you can schedule monthly transactions through your credit card. You can set this up by calling ACSTO at 480.820.0403.
You can donate through the Arizona state tax withholdings that is already being taken out of your paycheck. Instead of sending it to the state, your employer can send it to ACSTO as installments of your donation.
ACSTO works with donors to take advantage of their company’s matching gift programs.
Each year, Landings Credit Union provides interest-free loans between November 1st and December 31st for those wanting assistance in making a tax credit donation. You can visit their website for locations and more information.
Claiming Your Credit
Once you’ve donated you will still need to claim the credit on your Arizona income tax forms. ACSTO sends receipts weekly throughout the year except in December and January, and sends comprehensive annual statements by January 31.
The Forms you will need to include with your Arizona Form 140 can be found here.
You cannot use the EZ form if you are claiming a tax credit. ACSTO updates the tax forms as they become available by the Arizona Department of Revenue. You can visit the AZDOR Tax Credits & Exemptions website or the AZDOR Individual Forms website for more information about the forms you use to file your taxes.
NOTE: 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.