CREDIT FOR CONTRIBUTIONS TO
a list of Self Certifiable Charitable Organizations
How can a
taxpayer know that a charity meets the criteria to be
considered a qualifying charity?
The taxpayer should
ask to see a copy of the certification letter that the
charity is required to send the Department of Revenue.
Also, the taxpayer may contact the department to see if
an organization has filed a certification letter. See
the section on Qualifying Charitable Organizations below
for further information.
should also ask the following questions of the
1. Is the charity
exempt from federal income taxation under Section
501(c)(3) of the Internal Revenue Code? Or is the
organization a designated community action agency that
receives community services block grant program monies
pursuant to 42 United States Code Section 9901? Please
note that community action agencies qualify only AFTER
May 29, 1998.
2. Does the charity
spend at least fifty percent of its budget on services
to Arizona residents who receive Temporary Assistance
for Needy Families benefits or are considered low income
Can a taxpayer
give to a qualifying charitable organization through an
umbrella-type charitable organization?
Yes. A taxpayer
must designate that the donation be directed to a member
charitable organization or member group fund that would
qualify on a stand-alone basis.
Must a taxpayer
itemize deductions in order to qualify for the
Yes. A taxpayer
must itemize deductions and deduct charitable
contributions on the Arizona state income tax return at
least once in order to establish a baseline year and
amount. The credit is then figured on the amounts over
and above the baseline amount.
How does a
taxpayer determine the baseline year and
If a taxpayer
itemized deductions and deducted charitable
contributions in 1996, that is by law the baseline year.
The baseline amount is the total dollar amount of
charitable contributions deducted on Schedule A. This
amount includes the total contributions deducted
pursuant to Section 170 of the Internal Revenue Code
including cash amounts, property, or mileage amounts.
Therefore, if a taxpayer deducted a total of $500 in
charitable contributions in 1996, that is the baseline
If a taxpayer did
not itemize deductions and deduct charitable
contributions in 1996, then the baseline year is by law
the first taxable year after 1996 that the taxpayer
itemizes deductions and deducts charitable
How is the
credit amount figured once a taxpayer has established a
Credit dollars are
allowed on the amounts above the baseline dollar amount.
For instance, if a taxpayer has a baseline amount of
$500, the taxpayer must give $700 in total contributions
that includes $200 to a qualifying charitable
organization to receive a $200 tax credit. Likewise, a
taxpayer could give $600 in total contributions,
including $200 to a qualifying charitable organization,
and receive a $100 tax credit.
What is the maximum amount of the credit?
For tax year 2005, taxpayers filing as
single and unmarried head of household have a maximum
credit amount of $200. Taxpayers that are filing
as married filing joint have a maximum credit of
$300. Taxpayers filing married filing separate
have a maximum credit of
For tax year 2006 , taxtaxpayers filing
as single and unmarried head of household have a
maximum credit amount of $200. Taxpayers that
are filing as married filing joint have a maximum
credit of $400. Taxpayers filing married filing
separate have a maximum credit of
Can a federal or
state audit affect a taxpayer's baseline year and/or
Yes. The baseline
year could be changed or established if a taxpayer's
deductions are changed to or from itemized or to or from
standard, for instance. The dollar amount could change
depending on allowed or disallowed contributions.
Remember that a taxpayer is required to notify the state
of any federal audit changes within 90 days of the audit
How does a
taxpayer figure the baseline year and amount if filing
status changes due to divorce, marriage, remarriage,
death of a spouse, or change of
establish a new baseline year and amount following a
filing status change listed above. This includes a
married/joint filing where the spouses are
What is a
qualifying charitable organization?
charitable organization is a charitable organization
that is exempt from federal income taxes under Section
501(c)(3) or is a designated community action agency
that receives community services block grant program
monies pursuant to 42 United Stated Code Section 9901.
Please note that community action agencies qualify only
AFTER May 29, 1998. Further the organization must spend
at least 50 percent of its budget on services to Arizona
residents who are TANF recipients or who are low income
residents. Low income residents are persons whose
household income is less than 150 percent of the federal
What kind of
services must the qualifying charitable organization
Services means cash
assistance, medical care, child care, food, clothing,
shelter, or any other assistance that is reasonably
necessary to meet immediate basic needs and that is
provided and used in Arizona. AFTER May 29,
1998, job placement services, job training, and tuition
reimbursement for job training qualify.
Who are low
income residents of this state?
individuals are persons whose household income is less
than 150 percent of the federal poverty
qualifying charitable organization be
Yes. A qualifying
charitable organization must send a self-certification
letter to the Department of Revenue. The letter must
state that the charitable organization meets all
criteria to be considered a qualifying charitable
organization. The organization also must notify the
Department of any changes that may affect its
qualifications. The certification or change letters
should be mailed to:
Arizona Department of Revenue
Economic Research & Analysis
1600 W. Monroe
Phoenix, AZ 85007
department send a certification back to the qualifying
No. This is a
department publish or make available a list of
qualifying charitable organizations?
for a list of Self Certifiable Charitable Organizations