Any business with an Arizona tax liability can assist children in obtaining a quality education by making a tax credit donation. This credit is used to provide low-income and disabled displaced scholarships. The Arizona Corporation School Tuition Tax Credit Law, A.R.S. Section 43-1183, followed in 2015 by HB2153, allows corporations to receive a dollar-for-dollar credit against their AZ state income tax liability for these donations.
Arizona Tax Credit Program Facts
- C-Corps that pay Arizona corporate income taxes are eligible to participate in this program. The corporation does not have to be based in Arizona. The only requirement is that they have an Arizona state tax liability.
- Donations are a dollar-for-dollar tax credit against the corporation’s Arizona state taxes.
- There is no maximum amount a corporation may contribute, but the state does assign an overall donation cap every year. Corporate Tax Credits are allowed on a first come, first serve basis until the cap is reached. The cap for the 20/21 tax year is $123 million.
- Unused credits from contributions can be carried forward for up to 5 years.
- A corporation cannot designate a specific student, but it can recommend a school.
Steps to making your Tax Credit Donation
- Identify your company’s corporate income tax liability and determine how much you would like to donate versus pay to the state this fiscal year. (Your company can donate the ENTIRE corporate tax liability amount.)
- Contact Tim Kuhn at tim@arizonatuitionconnection.com or call him at 480-409-4106.
- On July 1st, Arizona Tuition Connection will file a one-page form with the Department of Revenue (ADOR), asking for approval for the donation/credit.
- Once approval has been received from the ADOR, the donation amount must be provided to Arizona Tuition Connection from the corporation within 20 days.
- When you file your company’s taxes, you will take the corporate income tax credit on the Standard 120 Form and file a 335 Form as well, listing the credit amount.