The Arizona Private School Tuition Tax Credit allows Arizona taxpayers to give to AZTO and receive a dollar-for-dollar tax credit against your Arizona Income Taxes. AZTO then issues tuition awards to eligible students attending one of AZTO’s participating schools. For a 90 second overview on Arizona’s Tuition Tax Credit Program, please see AZTO’s Whiteboard Animation Video.
How it Works
- You may contribute to AZTO online or by mail with a current year Donation Form to participate in the tax credit program.
- Contributions can be accepted through Arizona’s tax day for a credit in the previous calendar year. A contribution must either be postmarked by Arizona’s tax day or received online by midnight on Arizona’s tax day to be eligible for a credit in the previous calendar year.
- If contributing online, you will receive an email receipt within moments of making the online donation. AZTO annually receipts all contributions by mail in January for all prior year contributions. During the first quarter of the year, AZTO issues receipts monthly by mail for those donations designated for credit in the prior tax year.
- When completing your taxes, use your AZTO receipt to claim the credit. Arizona Forms 301, 323, and 348 are used when claiming the Private School Tuition Tax Credits. These forms become available by the Arizona Department of Revenue each December.
Examples
Below are two examples of fictional donors and how the tax credit might work in their situations.
Example 1 – Matt and Jody (AGI ~ $150,000)
Matt and Jody are married and file their taxes jointly. They have withheld $1,200 from their paychecks to pay for their Arizona Income Taxes. They correctly estimate that they have a tax liability of $3,000. The following donations to AZTO will have the following results:
| AZTO Tax Credit Donation | Tax Calculation (tax liability – withheld – donation = ) |
Taxes Owed or Refunded After AZTO Donation |
| $0 | $3,000 – $1,200 – $0 = | $1,800 Owed |
| $1,000 | $3,000 – $1,200 – $1,000 = | $800 Owed |
| $1,800 | $3,000 – $1,200 – $1,800 = | $0 |
| $2,910 Maximum | $3,000 – $1,200 – $2,910 = | $1,110 Refund |
Example 2 – Jason (AGI ~ $55,000)
Jason is single and files his taxes as an individual. He has withheld $1,200 from his paycheck to pay for his Arizona Income Taxes. He correctly estimates that he has a tax liability of $1,000. The following donations to AZTO will have the following results:
| AZTO Tax Credit Donation | Tax Calculation (tax liability – withheld – donation = ) |
Taxes Owed or Refunded After AZTO Donation |
| $0 | $1,000 – $1,200 – $0 = | $200 Refund |
| $200 | $1,000 – $1,200 – $200 = | $400 Refund |
| $500 | $1,000 – $1,200 – $500 = | $700 Refund |
| $1,459 Maximum | $1,000 – $1,200 – $1,459 = | $1,000 Refund + $659 Carry Forward |
Tips
Examining Line 48 on the full Arizona Form 140 (2023) is your tax liability and will give you a feel for how much you can donate, as long as it is less than the tax credit’s maximum amount for your filing status. If the donation amount exceeds the tax liability, the difference must be carried over to the following tax year, for up to five tax years. Also, if you donate to multiple types of tax credits, you need to add together all of the tax credits to determine the maximum allowed for that tax year. As always, we recommend you consult with your tax adviser regarding your specific situation. Other credits, deductions, and various factors may apply that would affect your personal result.
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