Question 1

What are Tax Credit Contributions to Qualifying Charitable Organizations?

Accepted Answer

Qualifying Charitable Organizations (QCOs) and Qualifying Foster Care Charitable Organizations (QFCOs) are certified by the Arizona Department of Revenue to receive contributions eligible for the tax credit.

Arizona provides two separate tax credits for individuals who make contributions to charitable organizations: one for donations to Qualifying Charitable Organizations (QCO) and the second for donations to Qualifying Foster Care Charitable Organizations (QFCO). Individuals making cash donations made to these charities may claim these tax credits on their Arizona Personal Income Tax returns.

Question 2

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

Accepted Answer

A tax deduction is an expense that reduces taxable income and saves a certain percentage of tax. A tax deduction helps determine how much taxes you owe to the state.

A tax credit, on the other hand, reduces your tax liability dollar-for-dollar. A tax credit reduces the amount you owe to the state. In other words, if you are married and filing jointly and owe $987 in state taxes, you can take the credit and owe nothing. By making a donation to a Qualifying Charitable Organization, or Qualifying Foster Care Organization, you may reduce the amount you owe to the state or you may increase your refund, dollar for dollar. This can allow you to donate to programs helping the working poor at no cost to you!

Question 3

How does it work?

Accepted Answer

Arizona provides two separate tax credits for individuals who make contributions to charitable organizations: one for donations to Qualifying Charitable Organizations (QCO) and the second for donations to Qualifying Foster Care Charitable Organizations (QFCO). Individuals making cash donations made to these charities may claim these tax credits on their Arizona Personal Income Tax returns.

You can claim an Arizona Tax Credit by making a donation to a Qualifying Charitable Organization to reduce dollar-for-dollar what you owe in state income tax. The total AZ Tax Credit you can claim is limited by your tax liability. Couples who file jointly can reduce their state taxes by up to $987; individuals or head of household filers can claim a maximum tax credit of up to $495.

Here’s how:

1. Make a donate to any qualifying Arizona organization (please note: you may divide your donation between multiple organizations).
2. When you file your state taxes, claim credit(s) on Form 321 (Qualified Charitable Organization) or Form 352 (Qualified Foster Care Organization) when you file your return - it's that easy!
(Forms are available in January of each year at www.azdor.gov,(https://azdor.gov/tax-credits/contributions-qcos-and-qfcos) or here (javascript:void(0))in the "Forms" section of this website.)
3. List the Qualified Charitable Organization(s) (on Form 321 and/or 352) along with their QCO Code and your donation amount(s). 
4. If you contribute more than your total state tax amount, the credits may be carried forward five years, so not to worry if you end up with more credits than taxes.

Remember to contact a qualified tax professional for expert advice on your specific tax situation.

Question 4

What happened to the federal deduction for tax credits?

Accepted Answer

On August 23, 2018 the IRS released new rules limiting charitable donations and state tax credits.  Previously, when you made a donation that qualified for an Arizona dollar for dollar tax credit you received a state tax credit and a Federal charitable deduction. Taxpayer’s who make a donation after August 27, 2018 and claim an Arizona credit on their tax return will no longer be able to also claim the Federal charitable contribution for the associated donation.

Any donations made before Tuesday, August 28 get BOTH the federal charitable deduction and the Arizona $1 for $1 tax credit. Donations made after Monday August 27th still qualify for the Arizona tax credit but will receive NO Federal charitable deduction.

If you do not expect to itemize deductions under the new tax law, this will not have any tax effect on the contributions you would make. Thresholds for itemized deductions for 2020 are $24,000 for married couples filing jointly, $18,000 for head of house hold filers and $12,000 for single filers. In light of this new regulation, tax credits are still a great opportunity to direct your tax dollars locally and receive a dollar for dollar offset for your contributions. See your tax preparer for details on how this change affects you.

More information on charitable contributions and state or local tax credits can be found HERE.(https://www.irs.gov/forms-pubs/charitable-contributions-and-state-or-local-tax-credits-or-deductions)

Question 5

Explain what a QCO (Qualified Charitable Organization) code is and how do I use it on my tax forms?

Accepted Answer

Effective in 2018, the Arizona Department of Revenue has assigned a five (5) digit code number to identify each Qualifying Charitable Organization and Qualifying Foster Care Charitable Organization for Arizona tax credit purposes on Form 321 and Form 352, which is included with the Arizona income tax return. (These forms are available on the Arizona Department of Revenue website in November of each year.) Taxpayers must use the “QCO Code” or “QFCO Code” of certified organizations to claim the tax credits for contributions QCOs or QFCOs. The Arizona Department of Revenue lists of qualifying charities include the code assigned to each organization and are available at azdor.gov.(https://azdor.gov/tax-credits/contributions-qcos-and-qfcos)

Click here (javascript:void(0))for a listing of ALL state Qualifying Charitable Organizations and their QCO Codes.

Click here (javascript:void(0))for a listing of ALL state Qualifying Foster Care Organizations and their QCO Codes.

Question 6

Can I still take the school credit along with the charitable tax credits?

Accepted Answer

Yes!  Tax Credits for contributions to Qualifying Charitable Organizations and Qualifying Foster Care Organizations are in addition to and completely separate from the Public School Activity Tax Credit and Private School Tuition Tax Credit – you may participate in all of them in the same tax season. For example, you can donate up to $987 (filing jointly) to a Qualifying Charitable Organization, donate up to $1,234 (filing jointly) to a Qualifying Foster Care Charitable Organization, AND donate to your local public and/or private school. Combine all for significant savings!

Question 7

Who can take advantage of the Arizona Charitable Tax Credit?

Accepted Answer

We can accept contributions only from individuals. We cannot accept contributions from corporations or LLCs.

Question 8

Can I take multiple tax credits?

Accepted Answer

Yes! You can receive dollar-for-dollar tax credits in the same tax season for Qualifying Charitable Organizations, Qualifying Foster Care Organizations, and the Arizona Public and Private School Tax Credits. You can donate up to $987 to Qualifying Charitable Organizations, up to $1,234 to Qualifying Foster Care Organizations, in addition to local schools. Combine all three for significant savings!

Click here (https://www.sensiblemoney.com/learn/arizona-tax-credits-2016/)to view additional detail on available State Tax Credits.

Question 9

Do I have to give the full $987 or $495 to get the tax credit?

Accepted Answer

You are not required to give the full maximum tax credit of $987 or $495. You may donate any amount up to your limit and receive the credit; up to $987 if you are married and filing jointly, or $495 if you are married and filing separately or a single taxpayer or head of household. For example, if you give $200, you will be eligible for a tax credit of $200. If you give $1,000, you will be eligible for up to a $987 tax credit (married, filing jointly). You may also make convenient monthly donations so that when April 15th arrives, you won’t have to write a big donation check

Question 10

What is the Foster Care Tax Credit?

Accepted Answer

This individual income tax credit is available for contributions to Qualifying Foster Care Charitable Organizations that provide immediate basic needs to residents of Arizona who receive temporary assistance for needy families (TANF) benefits, are low income residents of Arizona, or are children who have a chronic illness or physical disability, and provide immediate basic needs to at least 200 qualifying individuals in the foster care system. The tax credit is claimed on Form 352. The maximum credit allowed is $1,234 for married filing joint filers and $618 for single, heads of household, and married filing separate filers.

You can claim this tax credit in addition to the Arizona Charitable Tax Credit and school tax credits.

Question 11

How do I document my contribution?

Accepted Answer

Each agency is responsible for sending a letter confirming your contribution to them. This letter documents your contribution and is necessary to support your tax credit. Please make sure you include the QCO Code on your Tax Forms. Click here (javascript:void(0))for QCO Codes.

Question 12

How do I know if I am eligible to take a tax credit?

Accepted Answer

Anyone who pays Arizona state income tax is eligible for the credit. This credit is in addition to the school tax credits. The total AZ Tax Credit you can claim is limited by your tax liability. If you are unsure if you qualify for the tax credit, contact your tax advisor.

Question 13

Is every Arizonian eligible to claim the tax credit?

Accepted Answer

Only Arizonians who have an Arizona state tax liability are eligible to claim the tax credit. This is not a refundable credit. If the maximum allowable credit is more than you pay in state taxes annually, you can only receive back in a tax credit up to what your liability is.

You can contribute up to the amount of your expected Arizona tax liability. If you contribute more than your total state tax amount, the credits can be carried forward five years.

In general, you must make your tax credit donations by April 15, 2025 in order for them to apply to the 2024 year.

Question 14

How do I qualify for and make a Charitable Tax Contribution?

Accepted Answer

As long as you have a tax liability to the State of Arizona, you qualify for tax credits. Just report the amount you donated and the Qualified Charitable Organization’s QCO Code on Tax Form 321. The maximum credit allowed is $987 for married filing joint filers and $495 for single, heads of household, and married filing separate filers. Use Tax Form 352 for donations to Qualified Foster Care Organization. The maximum credit allowed is $1,234 for married filing joint filers and $618 for single, heads of household, and married filing separate filers.

To download these tax forms, please click here.(javascript:void(0))

Question 15

How do I file for the credit?

Accepted Answer

Simply fill out Arizona Form 321 noting the Qualified Charitable Organization’s name and QCO Code and include them with your tax return. These forms are made available in November of each year and are included with tax materials provided by the State of Arizona. They are also available here (javascript:void(0))in the "Forms" section of this website. If you are unsure if you qualify for the tax credit, contact a qualified tax professional for advice on your specific tax situation.

Question 16

What qualified organizations can I donate to?

Accepted Answer

To view a current list of Qualified Charitable Organizations with the Arizona Department of Revenue, click here (javascript:void(0))or visit the "Forms" section of this website, or click here (https://azdor.gov/tax-credits/contributions-qcos-and-qfcos)to visit the Arizona Department of Revenue site.

Question 17

Are the agencies listed on this website qualified charitable organizations under Arizona law?

Accepted Answer

Yes! Qualifying Charitable Organizations (QCOs) and Qualifying Foster Care Charitable Organizations (QFCOs) are certified by the Arizona Department of Revenue to receive contributions eligible for the tax credit. Flagstaff Tax Credit Coalition agencies are Qualifying Charitable Organizations as defined by the Arizona Department of Revenue spending at least 50% of their budget on basic needs to residents of Arizona.

Question 18

Where can I get more information about the tax credit?

Accepted Answer

Visit the Arizona Department of Revenue website at azdor.gov,(https://azdor.gov/tax-credits/contributions-qcos-and-qfcos) or call Taxpayer Assistance 1-800-352-4090. Contact your tax preparer for details about your personal taxes.

Question 19

Where can I get the forms needed for my tax return?

Accepted Answer

If you make a donation to a Qualified Charitable Organization, you’d need to complete Arizona tax forms 321 and 301. If you make a donation to a Qualified Foster Care Charitable Organization, you’d need to complete Arizona tax corms 352 and 301. Arizona tax form 301 is where you’d like ALL the credits you are claiming.

To find these forms, you can visit the Forms section of our website by clicking here.(javascript:void(0)) Or you can download the forms from the Arizona Department of Revenue website by clicking here.(https://azdor.gov/forms/individual)

Question 20

Where can I get more information about the school tax credit?

Accepted Answer

Arizona taxpayers may claim a credit of up to $655 per single taxpayer or $1,308 per household if you contribute to extracurricular activities or character education programs in the Arizona public or charter school of your choice. This tax law provides you the opportunity to support your favorite student’s school.

For the public schools credit, you choose to pay some of the state income tax you owe directly to a school.

Visit the FUSD website here (https://www.fusd1.org/Page/124)or call 928-527-6041 to learn more.

Question 21

Do I have to live within the Flagstaff Unified School District?

Accepted Answer

No - Any individual who pays Arizona State income tax can contribute.

Question 22

When is the deadline to make a tax credit donation?

Accepted Answer

In general, you must make your tax credit donations no later than tax-day each year, in order for them to apply to the previous year.

The deadline for making a donation and claiming a tax credit under the AZ Charitable Tax Credit for 2025 is April 15, 2026 or whichever date you file your 2025 state taxes. Your tax professional can answer additional questions about tax credits and the forms you need to file your State returns to get the credit.

Question 23

What happened to the Working Poor Tax Credit?

Accepted Answer

What was formerly known as the Working Poor Credit is now officially known as the donations to Qualifying Charitable Organizations. This change was made in 2013 to reflect the expansion of the credit to include Foster Care organizations.

Click here (javascript:void(0))for a listing of ALL state Qualifying Charitable Organizations and their QCO Codes

Click here (javascript:void(0))for a listing of ALL state Qualifying Foster Care Organizations and their QCO Codes

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