Purpose of Charitable Tax Credit is to help people who need a hand up

The Arizona Charitable Tax Credit was established by the Arizona State Legislature to provide services such as medical care, child care, food, clothing, shelter and basic needs for employed families struggling to make ends meet. To encourage charitable contributions specifically for this fund, the Arizona State Legislature allows most individual donors to take up to $200 off their taxes, based on the amount of the gift, in the form of a tax credit.

Frequently Asked Questions about the Arizona Charitable Tax Credit

Note: Mesa United Way is not a tax advisor. As with any financial recommendations, contact a qualified tax advisor for expert advice on your specific tax situation. The Arizona Department of Revenue also has a FAQ page on the Charitable Tax Credit here.

What's the difference between a tax credit and a tax deduction?

A tax credit is applied as a reduction to your final tax bill. In this case, the tax credit comes right off the top of your state tax bill, lowering the amount of money that you must pay. For example, if you qualify and give $200 to the Arizona Charitable Tax Credit, you will pay $200 less in state taxes. A tax deduction, on the other hand, is an item that helps calculate what your final tax bill will be. In addition to the state tax credit, your gift to the Arizona Charitable Tax Credit can be taken as a deduction on your federal taxes.

Do I qualify for the credit if I do not owe any taxes at year end?

Assuming you have a state tax liability, the credit reduces it independently from any tax that you may have withheld during the course of the year. If you withheld an amount equal to or greater than your tax liability, the credit will increase your state tax refund accordingly.

How do I file for the credit?

You or your accountant complete a simple form, which is included with materials provided by the State of Arizona to all state tax filers, and send it along with your state tax return.

Where do these funds go?

Contributions to the Arizona Charitable Tax Credit Fund go to non-profit 501(c)3 organizations that provide services for working needy families such as medical care, child care, food, clothing, shelter and basic needs. Legislation specifies that eligible organizations spend at least 50% of their budget on basic needs to residents of Arizona. Agencies must be certified by the State of Arizona.

Is Mesa United Way a certified organization to distribute money to needy families?

Mesa United Way is certified with the State of Arizona as a qualifying charitable organization. Along with other organizations that provide assistance to the working poor, Mesa United Way can receive charitable contributions which qualify for the tax credit.

To learn more about the Arizona Charitable Tax Credit, contact your tax advisor or the Arizona Department of Revenue at 602-255-3381 or toll free 1-800-352-4090.