Credit for Contributions to School Tuition Organizations
Arizona law provides a credit for contributions made to a school tuition organization that provides scholarships or grants to qualified schools.
This credit is available only to individuals. Corporations may not claim this credit. A partnership may not pass the credit through to its partners. An S corporation may not pass the credit through to its shareholders.
The credit is equal to the amount contributed. For 2018, the maximum amount of credit that a taxpayer can establish for the current taxable year is $546 for single taxpayers or heads of household. For married taxpayers that file a joint return, the maximum credit that can be established for the current taxable year is $1,092. In most cases, for married taxpayers who file separate returns, each spouse may claim only onehalf (1/2) of the credit that would have been allowed on a joint return.
NOTE: The maximum amount of credit established for the current taxable year does not include any unused valid carryover amount(s) from prior taxable years. Because this is a nonrefundable credit, the total amount of available credit [current year plus any valid carryover amount(s)] that a taxpayer may use for the taxable year cannot be greater than the tax liability shown.
If the allowable tax credit is more than your tax or if you have no tax, you may carry the unused credit forward for up to the next 5 consecutive taxable years’ income tax liability.
A school tuition organization is an organization that meets all of the following.
- The organization is tax exempt under Section 501(c)(3) of the Internal Revenue Code.
- The organization allocates at least 90 percent of its annual revenue to scholarships or grants.
- The organization makes its scholarships or grants available to students of more than one qualified school.
A qualified school is a nongovernmental primary or a secondary school located in Arizona, or a preschool for handicapped students located in Arizona. The school cannot discriminate on the basis of race, color, handicap, familial status, or national origin. The primary school must begin with kindergarten and the secondary school must end with grade 12.
In the case of a preschool for handicapped students, a handicapped student is a student who has any of the following conditions:
- Hearing impairment.
- Visual impairment
- Preschool moderate delay.
- Preschool severe delay.
- Preschool speech or language delay.
To determine if your contributions qualify for this credit, you should ask the organization if it meets all of the requirements.
Your donation to the school tuition organization will not qualify for the credit if you designate the donation for the direct benefit of your dependent.
You cannot claim both a tax credit and an itemized deduction for the amount of contributions made to a school tuition organization for which you are claiming a credit.
Before you claim this credit, make sure that the school tuition organization gave you a receipt for the contributions that you made. The receipt should show all of the following:
- The name and address of the school tuition organization
- The name of the taxpayer
- The taxpayer's social security number
- The amount paid
- The date paid
You may want to attach a copy of your receipt(s) to your return. Keep for your records. You will be contacted if further information is needed.
For more information on school tax credits, see the Arizona Department of Revenue brochure, Pub 707, School Tax Credits.