Credits for Contributions to Certified School Tuition Organizations

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Arizona provides tax credits for contributions made to Certified School Tuition Organizations which provide scholarships to students enrolled in Arizona private schools.  Credits are available for donations made by individual taxpayers and for donations made by corporate taxpayers. 

 

The Arizona Department of Revenue advises taxpayers they now have until May 17 to contribute to certified qualifying charitable organizations, qualifying foster care charitable organizations, school tuition organizations, and public schools and claim the tax credits on their 2020 individual income tax return.

 

Information for Individual Taxpayers

Two separate nonrefundable tax credits are available to individuals for contributions made to a Certified School Tuition Organization which provides scholarships for students enrolled in Arizona private schools.  An individual who is a shareholder of an S corporation may also claim two separate nonrefundable credits for contributions made by the S corporation when the S corporation qualifies for a corporate credit and elects to pass the credit through to its individual shareholders.

 

Credit for Contributions to Private School Tuition Organizations (Original Individual Income Tax Credit)

This tax credit is claimed on Form 323. For tax year 2021, the maximum credit allowed is $611 for single, heads of household and married filing separate filers and $1,221 for married filing joint filers.  

 

Credit for Contributions to Certified School Tuition Organizations (Switcher Individual Income Tax Credit)

This tax credit is claimed on Form 348 and is available to individual taxpayers who donate the maximum amount allowed under the Credit for Contributions to Private School Tuition Organizations (Form 323) and make an additional donation to a Certified School Tuition Organization. For tax year 2021, the maximum credit allowed is $608 for single, heads of household and married filing separate filers and $1,214 for married filing joint filers.

 

Credit for Business Contributions by an S Corporation to School Tuition Organizations

This tax credit is claimed on Form 335-I is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization.

 

Credit for Business Contributions by an S Corporation to School Tuition Organizations for Displaced Student or Students with Disabilities

This tax credit is claimed on Form 341-I is available for individual shareholders to claim their pro rata amount of contributions made by an S corporation to a Certified School Tuition Organization. 

 

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Information for Corporate Taxpayers

There are two separate nonrefundable corporate tuition tax credits for donations made to Certified School Tuition Organizations which provides scholarships for students to attend Arizona private schools.  Due to the statutory caps on the aggregate amount of credits allowed in a fiscal year, both the low-income corporate tax credits and the disabled/displaced corporate tax credits must be pre-approved by the Arizona Department of Revenue.

 

Credit for Corporate Contributions to School Tuition Organizations (Low-Income)

This tax credit is claimed on Form 335. Corporations interested in making a donation to a Certified School Tuition Organization for the low-income tax credit must contact a School Tuition Organization directly to discuss applying for a corporate credit donation pre-approval. Corporate partners, S corporation individual shareholders and exempt organizations subject to unrelated business taxable income may also be eligible to claim the low-income corporate credit.

The Low-Income Corporate Tax Credit Cap for FY2019/20 is $106,993,207. 

 

Credit for Corporate Contributions to School Tuition Organizations for Displaced Students or Students with Disabilities

This tax credit is claimed on Form 341. Corporations interested in making a donation to a School Tuition Organization for the disabled/displaced tax credit must contact a School Tuition Organization directly to discuss applying for a corporate credit donation pre-approval. Corporate partners, S corporation individual shareholders and exempt organizations subject to unrelated business taxable income may also be eligible to claim the disabled/displaced corporate credit.

The Disabled/Displaced Corporate Tax Credit Cap each fiscal year is $5,000,000.

 

Pre-Approval of Corporate Donations to School Tuition Organizations

Corporations interested in making a donation for either corporate credit must contact a School Tuition Organization directly to discuss applying for a corporate credit donation pre-approval. School Tuition Organizations submit the corporate donation application for credit pre-approval to the Arizona Department of Revenue.  Pre-approval applications submitted by a corporation to the Arizona Department of Revenue will not be accepted.

 

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