Other common tax credit topics taxpayers have questions on have to do with school tax credits and the increased excise tax credit.
In the first case, taxpayers can claim both the public school tax credit and the school tuition tax credit. For more information, see Arizona Department of Revenue Pub 707, School Tax Credits. Please note: a single individual who contributed to a school tuition organization cannot carry over any amount to the next tax year because of limitations.
Additionally, individuals may take the public school tax credit for contributions made or fees paid to a public school in support of extracurricular activities or charter education. This includes amounts paid to a charter school.
With that being said, Arizona does not allow taxpayers to claim both a credit and a deduction for the same charitable contribution. Taxpayers should enter an amount on Form 140 Schedule A if they are taking an Arizona tax credit for an amount included on their federal charitable deductions. This will reduce the federal charitable deduction allowed on an Arizona return by the amount of credit claimed. To file an Arizona Schedule A, taxpayers must first fill out a federal Schedule A form.
As for the increased excise tax, Arizona law provides qualified taxpayers a state income tax credit to be applied against increased excise taxes imposed by county governments. The credit is available each year and depends on the taxpayer’s income. The goal of the credit is to provide disabled and low-income individuals with financial assistance in the form of tax relief.
Please note: Arizona excise taxes are imposed by all counties except Pima County. It provides revenue to pay for county services, including public transportation and county facilities.
The amount of the credit is $25 for each resident of Arizona and for whom a personal or dependent exemption is allowed on the Arizona return. For example, if taxpayers are married filing jointly, they may claim a credit of $25 for themselves, their spouse, and $25 each for up to two dependents. Single taxpayers may claim a credit of $25 for themselves and $25 each for up to three dependents. This credit cannot exceed $100 per household.
To determine if an individual or dependent qualifies for the increased excise tax credit, please review the instructions for the Arizona Form 140 series and complete the worksheet. Individuals can claim the credit even if they do not have to file an Arizona return. Individuals filing an income tax return using Form 140, Form 140A, Form 140EZ or Form 140PY can claim this credit by completing the worksheet on the instructions of these forms.
Taxpayers can also use Form 140PTC to claim the credit for increase excise tax and the property tax credit. Individuals not required to file an Arizona income tax return, and whom do not qualify for the property tax credit, can claim the increased excise tax credit by filing Arizona Form 140ET.
Many individuals who take the federal standard deduction can itemize Arizona deductions when filing an individual tax return if appropriate. To do so, they must fill out a federal Schedule A, and, if applicable, an Arizona Schedule A. These forms must be attached to their returns.