Consider tax credits before the year’s end - The Explorer: Columns

Consider tax credits before the year’s end

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Dave Safier

Posted: Thursday, December 20, 2012 1:28 pm

I’m ending the year with a nonpartisan column about holiday giving the easy way. I recommend you take advantage of Arizona tax credits that let you give money to public schools and worthy charities and get all of it back at tax time. Doing good for others without making a dent in your wallet: that’s a deal no one should refuse.

Arizona has set up a number of tax credits where you can give away a set amount of money and get 100 percent of it back when you pay your state income tax. It’s better than a standard charitable deduction that lowers your taxable income. These tax credit donations are subtracted directly from the amount of money you owe in state taxes.

My favorite is the public school tax credit. Here’s how it works. You give $200 for an individual, or $400 for a couple filing jointly, to the publicly funded school of your choice. That includes both district schools and charter schools. Just go to the website of a school district or charter school to learn how you do it. Usually you can pay online by credit card or send a check in the mail, and the school will send you a receipt. Then when tax time rolls around, you fill out a short, simple form as part of your return, and the amount you gave will be subtracted from what you owe. Give $200 -- $400 for a couple -- and you’ll pay $200 or $400 less in state taxes. It’s that simple.

Here are two details you should keep in mind. The first is, obviously, you have to owe state taxes to get the tax credit. The second is, the school can only use the money for extracurricular activities; it can’t go directly into the classroom. I think that’s a foolish restriction, but that’s how the law was written. Still, extra curriculars -- art, music and drama as well as sports -- are an important part of what schools offer. Your donations allow schools to provide these valuable experiences for students, even those who can’t afford to pay for them.

Let me make one suggestion for where to give the money if you don’t already have a school picked out. Consider choosing a school with students from low income families. The students in those schools are in the greatest need of enrichment since their parents don’t have much money left over after expenses, but those are the schools that generally receive the fewest tax credit dollars.

My other favorite tax credit program is for contributions to organizations that provide assistance to the working poor. Hundreds of charitable organizations qualify for the credit, all listed by the Arizona Department of Revenue (Google “Arizona Working Poor Tax Credit”). You can give the same amount as the public school tax credit: $200 for an individual or $400 for a couple filing jointly.

There are lots of worthy organizations, but my top choice is the Community Food Bank of Southern Arizona (communityfoodbank.com). Few things break my heart more than the thought of a hungry child, and I feel better knowing my contribution puts food on families’ tables. Even better, every dollar you give translates into almost $9 worth of food. It’s like donating a can of food and having 8 more cans magically appear. The Food Bank's work is even more important with the economic downturn. So many people are in need, it can't keep up with the demand.

Maybe you already give to qualifying charities year round. If so, think about giving a little more before December 31, courtesy of the Arizona Tax Credit.

The holiday season is a time to think of others as well as ourselves and our families, and the need always seems to be greatest this time of year. Arizona makes it easy for us to give money where we think it will help the most. I urge you to take advantage of the opportunity.

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