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Taxpayers can pick which schools, charities get their tax dollars under state credit program

Arizona tax lawyer

The April 15 tax filing deadline looms. For Arizona taxpayers, that means having the power to control how their tax dollars are used. Arizona taxpayers can now direct their tax dollars to schools and charities they support and believe in. That is due to the state’s tax credit program.

The program lets taxpayers make contributions to schools, foster care groups and non-profits, like the Arizona Military Relief Fund. The amount of taxes that taxpayers owe to the state is thus reduced by the amount of money they donated in these contributions, according to The Arizona Tax Credit Site.

The IRS has eliminated the deduction for these contributions on the 2019 federal income tax returns that taxpayers will be filing, according to

Eligibility for tax credit

Taxpayers who use the tax credit program have to make a contribution upfront. These include donations to schools and qualified charities. Taxpayers get every dollar of those contributions back in the form of a tax credit. That is, provided the contributions stay within prescribed limits.

A taxpayer must have a tax liability for at least the amount of what is contributed to the schools or charities in order to take a tax credit. In other words, if a taxpayer owes only $500 to the state of Arizona, the taxpayer cannot receive $1,000 in tax credits, according to The Arizona Tax Credit Site.

That means that taxpayers can’t claim more than they owe in state taxes. With the exception of the Military Family Relief Fund Credit, however, unused credits can be carried forward for five years until used.

If an Arizona taxpayer claims a tax credit by making a contribution to a qualified school or charitable organization, can the taxpayer also write off the contribution on their tax filings? Generally, donations claimed as a tax credit cannot also be used as an itemized deduction on Arizona income tax returns or for federal income taxes.

How to get credit

Arizona has assigned a five-digit code number to each qualifying school and charitable and foster care organization.

Taxpayers must enter this code on income tax returns to get the credit. Code numbers can be obtained for charitable organizations at and for foster care organizations at

The Arizona Legislature established the Military Relief Fund in 2007. The fund helps the families of currently deployed military service members. They also help post-9/11 military and veteran families with hardships caused by the service member’s deployment to a combat zone.

Not everyone is a fan of the Arizona tax credit program insofar as it directs money to certain schools. Some see these contributions as a sneaky way to provide school vouchers. A voucher is a document or bond that entitles the holder to a discount or to goods and services.

In terms of schools, vouchers are like tuition stipends to help students attend certain schools. Opponents say school vouchers drain money from public schools, leaving fewer resources for the students who stay.

Supporters say vouchers for schools give parents more of a say in their children’s education. They say they are a way to help students from poor families attend a private school. They say they offer these students a better education.

Contact The Law Firm Of Brown & Jensen in Arizona today for help with the state’s tax credit program and other tax law, estate and probate issues.

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