How to Donate

What exactly is a tuition tax credit? The Arizona tuition tax credit law (Arizona Revised Statutes section 43-1089) allows you to contribute $500 each year to a School Tuition Organization, and receive a dollar-for-dollar reduction in your state income tax. That means if you currently pay $700 in state income tax, when you contribute $500 to A SCHOOL TUITION ORGANIZATION, you will owe only $200 in state taxes. If you are a couple and file joint tax returns, you may contribute $1,000.

Can my spouse and I make separate contributions?
If you are married but file separate returns, you may each claim one-half of the amount of the contribution. . If you are married filing jointly, you may claim only one $1,000 credit.

May I claim both a federal tax deductionand an Arizona tax credit for the same contribution?
A SCHOOL TUITION ORGANIZATION is a 501(c)(3) charitable organization and therefore, qualifies for tax deductible contributions. Please consult your tax advisor concerning your specific circumstances.

How much of my contribution will be used for scholarships?
A SCHOOL TUITION ORGANIZATION, as defined in Arizona Revised Statutes section 43-1089, must allocate at least ninety percent of its annual revenue for educational scholarships or tuition grants to children to allow them to attend any qualified school of their parents’ choice. A SCHOOL TUITION ORGANIZATION allocates 90%of all tax credit donations received towards tuition scholarships.

I already contribute $200 to a public school.If I also contribute to A SCHOOL TUITION ORGANIZATION, may I claim both credits? Yes! The law allows you to contribute to both a public school and to A SCHOOL TUITION ORGANIZATION, and to claim both tax credits.

How do I claim my tax credit?
A SCHOOL TUITION ORGANIZATION will send each contributor an official receipt at the end of the year. Claiming the tax credit is easy-just fill out the simply, one page AZ 323 form and file it with your Arizona tax return. You may obtain Form 323 from the Arizona Department of Revenue.

Corporate Tax Credit

REVISED IMPLEMENTATION OF THE
CORPORATE INCOME TAX TUITION CREDIT

1. Corporations contact the School Tuition Organization (STO) to which they wish to donate. The corporation tells the STO the amount of the donation they will make. The STO must then fill out a Pre-Approval form, created by the Arizona Department of Revenue (ADOR).
2. ADOR will accept letters from STOs requesting pre-approval for a corporate donation beginningSEPTEMBER 21, 2006. The legislation became law without an effective date, making 90 days after session’s end the effective date. No letters from an STO for pre-approval for a corporation donation will be accepted by ADOR afterJune 30, 2011.
3. All requests from an STO for pre-approval shall be for one corporation per request.
4. All requests from an STO for pre-approval shall be by EXPRESS mail that is date and time stamped as to the time of mailing. The date and time on the letter shall dictate the order in which the requests are considered. No other form of request for pre-approval, such as e-mail, hand delivery or regular delivery mail, will be accepted by ADOR.
5. All requests shall be logged in by the date and time noted by the United States Post Office on the request at the time of mailing and shall be applied against the $10 million cap in this order.
6. All requests for pre-approval shall be sent to:

Georganna Meyer
Chief Economist
Arizona Department of Revenue
P.O. Box25248
Phoenix, Arizona 85002

7. ADOR shall respond to the request for pre-approval within twenty days of receiving the request. The request shall be approved if there is credit available under the$10 millioncap. ADOR pre-approval of an STO request does not constitute ADOR verification that the contribution meets all of the statutory requirements for a credit under A.R.S. § 43-1183.
8. ADOR will respond to the STO, either approving or denying the application, by fax. Approval or denial will be noted on the pre-approval application, along with an indication as to when the 10-day period ends that is allowed for receipt of a check from the corporation. The STO should notify the donor corporation on the same day ADOR notifies the STO.
9. In the event a request is received for an amount that is greater than the remaining amount under the cap, ADOR shall approve only that amount that is remaining. For example, if $500,000 is left under the $10 million cap and a request is received for $750,000, ADOR shall approve only $500,000. Any requests received after this point shall be denied.
10. A.R.S. § 43-1183 D. states that if a taxpayer fails to make the donation to the STO within ten days after being notified by the STO, the STO must immediately notify ADOR. If the donation is not made within the ten day period, the taxpayer is no longer pre-approved for the donation. Please notify ADOR by telephone upon receipt of the donation or upon expiration of the 10-day period with no donation made. Notification to ADOR of failure to make a donation must occur no later than the eleventh day after the STO notifies the taxpayer of pre-approval. (If the eleventh day falls on a weekend or holiday, the STO should call on the next business day.) Notification should occur by telephone. The STO must call Georganna Meyer at 602-716-6927.
11. Although requests after the cap has been reached will be denied by ADOR, ADOR will continue to log in requests in the order received. In the event ADOR is notified by an STO that a corporation did not make an approved donation, ADOR shall pre-approve those requests that were previously denied, in the order received, until the cap is again reached. The cap will revert to theNEW level ($12 million for FY08, $14.4 million for FY09, $17.28 million for FY10 and $20.736 million for FY11)each year on July 1 until the credit expires.

EXPRESS mail costs $14.40 per letter. I apologize for the expense, but it’s the only way I can think of to administer the “first-come, first-served” cap fairly.