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Osborn
School District
Arizona Tuition
TAX
CREDIT Donation to an Osborn School
Osborn Educational Foundation
Arizona
Working Poor
TAX CREDIT
Donation
Osborn
Educational Foundation
TAX DEDUCTIBLE
Donation
Osborn
Educational Foundation
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Many
Arizona taxpayers are confused about the difference between a AZ State Tax
Credit and a Tax Deductible Donation. The following information is not meant to
be used for income tax advice, only to distinguish the difference between two
different types of donations. Please contact your income tax advisor for tax
advice. Please remember that you can make a donation to both types of tax
credits and receive the tax incentives of both.
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An Arizona
Tuition Tax Credit Donation is a donation that constitutes a credit against the
AZ state taxes owed during the taxable
year. For example if a single tax payer owed $500 in taxes for a given tax
year and gave a $200 AZ Tuition Tax Credit Donation to a public school, he
or she would only owe the difference, or $300 when his or her taxes
for that year were filed.
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An Arizona
Working Poor Tax Credit Donation is a donation that constitutes a credit against the
AZ state taxes owed during the taxable
year. The Working Poor Tax Credit is different from the Tuition Tax Credit
in that a baseline for charitable giving must be established. The amount of
the credit is the amount of qualifying contributions that exceed the
baseline amount. For example, if a taxpayer has a baseline amount of $300,
the taxpayer must give $500 in total contributions that includes $200 to a
qualifying charitable organization to receive a $200 tax credit. Please see
your accountant if you have any questions.
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A Tax
Deductible Donation is a voluntary donation made to a charity or
foundation with an IRS designated tax deductible status without getting
anything of equal value. Generally, you can deduct your contributions of
money or property that you make to a qualified organization from your
adjusted gross income. To deduct a charitable contribution, you must file
Form 1040 and itemized deductions Schedule A.
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AZ
Tuition Tax Credit Donation Information
43-1089.01.
Tax credit; public school fees and contributions; definitions
A. A credit
is allowed against the taxes imposed by this title for the amount of any fees or
cash contributions made by a taxpayer during the taxable year to a public
school located in this state for the support of extracurricular activities or
character education programs of the public school, but not exceeding:
1. Two
hundred dollars for a single individual or a head of household.
2.
Three hundred dollars in taxable year 2005 for a married couple filing a joint
return.
3. Four
hundred dollars in taxable year 2006 and any subsequent year for a married
couple filing a joint return.
B. A
husband and wife who file separate returns for a taxable year in which they
could have filed a joint return may each claim only one-half of the tax credit
that would have been allowed for a joint return.
C. The
credit allowed by this section is in lieu of any deduction pursuant to section
170 of the internal revenue code and taken for state tax purposes.
D. If
the allowable tax credit exceeds the taxes otherwise due under this title on the
claimant's income, or if there are no taxes due under this title, the
taxpayer may carry the amount of the claim not used to offset the taxes under
this title forward for not more than five consecutive taxable years' income tax
liability.
E. The
site council of the public school that receives contributions that are not
designated for a specific purpose shall determine how the contributions are used
at the school site. If a charter school does not have a site council, the
principal, director or chief administrator of the charter school shall determine
how the contributions that are not designated for a specific purpose are used at
the school site.
http://www.azleg.gov/FormatDocument.asp?inDoc=/ars/43/01089-01.htm&Title=43&DocType=ARS
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AZ
Working Poor Tax Credit Donation Information
43-1088
Tax credit; credit for contributions to a qualifying charity that provides
assistance to the working poor; definitions
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A. For taxable years beginning from
and after December 31, 1997, a credit is allowed against the
taxes imposed by this title for voluntary cash contributions made by
the taxpayer during the taxable year to a qualifying charitable
organization as determined pursuant to subsection F of this section,
but not exceeding:
1. Two hundred dollars in any
taxable year for a single individual or a head of household.
2. Three hundred dollars in taxable
year 2005 for a married couple filing a joint return.
3. Four hundred dollars in taxable
year 2006 and any subsequent year for a married couple filing a
joint return.
B. A husband and wife who file
separate returns for a taxable year in which they could have filed a
joint return may each claim only one-half of the tax credit that
would have been allowed for a joint return.
C. If the allowable tax credit exceeds
the taxes otherwise due under this title on the claimant's income,
or if there are no taxes due under this title, the taxpayer may
carry forward the amount of the claim not used to offset the taxes
under this title for not more than five consecutive taxable years'
income tax liability.
D. The credit allowed by this
section is in lieu of a deduction pursuant to section 170 of the
internal revenue code and taken for state tax purposes.
E. Taxpayers taking a credit
authorized by this section shall provide the name of the qualifying
charitable organization and the amount of the contribution to the
department of revenue on forms provided by the department.
F. The credit under this section
applies only to contributions to qualifying charitable organizations
that exceed the total amount deducted pursuant to section 170 of the
internal revenue code in the taxpayer's baseline year. The
taxpayer's baseline year is:
1. The 1996 taxable year if the
taxpayer deducted charitable contributions pursuant to section 170
of the internal revenue code in the 1996 taxable year.
2. If the taxpayer did not deduct
charitable contributions pursuant to section 170 of the internal
revenue code in the 1996 taxable year, the taxpayer's baseline year
is the first taxable year after 1996 that the taxpayer deducted
charitable contributions pursuant to section 170 of the internal
revenue code.
G. A qualifying charitable
organization shall provide the department of revenue with a written
certification that it meets all criteria to be considered a
qualifying charitable organization. The organization shall also
notify the department of any changes that may affect the
qualifications under this section. The department shall compile and
make available to the public a list of the qualifying organizations.
H. For the purposes of this section:
1. "Low income residents" means
persons whose household income is less than one hundred fifty per
cent of the federal poverty level.
2. "Qualifying charitable
organization" means a charitable organization that is exempt from
federal income taxation under section 501(c)(3) of the internal
revenue code or is a designated community action agency that
receives community services block grant program monies pursuant to
42 United States Code section 9901. The organization must spend at
least fifty per cent of its budget on services to residents of this
state who receive temporary assistance for needy families benefits
or low income residents of this state and their households.
Taxpayers choosing to make donations through an umbrella charitable
organization that collects donations on behalf of member charities
shall designate that the donation be directed to a member charitable
organization that would qualify under this section on a stand-alone
basis.
3. "Services" means cash assistance,
medical care, child care, food, clothing, shelter, job placement and
job training services or any other assistance that is reasonably
necessary to meet immediate basic needs and that is provided and
used in this state. |
http://www.azdor.gov/brochure/710.pdf |
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Income
Tax Deductible Donation
Information
Please
see the following site for information on claiming income tax deductions:
http://www.irs.gov/pub/irs-pdf/p526.pdf
Foundation
Status
While
its 501(c)(3) status determines that an organization is eligible to receive tax
deductible donations, its foundation status determines the limits of an
individual donor's deduction.
The
three principal classifications of 501(c)(3) organizations are as follows:
A public
charity (identified in IRS terms as "not a private
foundation") normally receives a substantial part of its income, directly
or indirectly, from the general public or from the government. The public
support must be fairly broad, not limited to a few individuals or families.
Public charities are defined in the Internal Revenue Code under sections
509(a)(1) through 509(a)(4).
A private
foundation, sometimes called a non-operating foundation, receives most
of its income from investments and endowments. This income is used to make
grants to other organizations, rather than being disbursed directly for
charitable activities. Private foundations are defined in the Internal Revenue
Code under section 509(a) as 501(c)(3) organizations which do not qualify as
public charities.
A private
operating foundation is a private foundation that devotes most of its
earnings and assets directly to the conduct of its tax exempt purposes, rather
than to making grants to other organizations for these purposes. Private
operating foundations are defined in the Internal Revenue Code under section
4942(j)(3).
Deductibility
Limitations to 501(c)(3) Groups
Individuals
giving to 501(c)(3) organizations that are either public charities,
private operating foundations, and certain private foundations
may deduct contributions representing up to 50% of the donor's adjusted gross
income if the individual itemizes on his tax returns. The 1986 Tax Reform Act,
which become effective January 1, 1987, does not allow non-itemizers to deduct
charitable donations on their federal income tax returns.
Individuals
giving to 501(c)(3) organizations that are private foundations
may generally deduct contributions representing up to 30% of their adjusted
gross income.
Corporations
may deduct all contributions to 501(c)(3) organizations (regardless of
foundation status) up to an amount normally equal to 10% of their taxable
income.
http://www.give.org/tips/tax.asp
Recent
Tax Law Changes May Affect People Giving to Charity: IRS Offers Tips for
Year-End Donations
IR-2006-192,
Dec. 14, 2006
WASHINGTON
— Individuals and businesses making contributions to charity should keep in
mind several important tax law changes made last summer by the Pension
Protection Act.
The new
law offers older owners of individual retirement accounts a new way to give to
charity. It also includes rules designed to provide both taxpayers and the
government greater certainty in determining what may be deducted as a charitable
contribution. Some of these changes include the following.
Guidelines
for Monetary Donations
To
deduct any charitable donation of money, a taxpayer must have a bank record or a
written communication from the charity showing the name of the charity and the
date and amount of the contribution. A bank record includes canceled checks,
bank or credit union statements and credit card statements. Bank or credit union
statements should show the name of the charity and the date and amount paid.
Credit card statements should show the name of the charity and the transaction
posting date.
Donations
of money include those made in cash or by check, electronic funds transfer,
credit card, and payroll deduction. For payroll deductions, the taxpayer should
retain a pay stub, Form W-2 wage statement or other document furnished by the
employer showing the total amount withheld for charity, along with the pledge
card showing the name of the charity.
Prior
law allowed taxpayers to back up their donations of money with personal bank
registers, diaries or notes made around the time of the donation. Those types of
records are no longer sufficient.
This
provision applies to contributions made in taxable years beginning after Aug.
17, 2006. For taxpayers that file returns on a calendar-year basis, including
most individuals, the new provision applies to contributions made beginning in
2007.
The new
law does not change the prior-law requirement that a taxpayer get an
acknowledgement from a charity for each deductible donation (either money or
property) of $250 or more. However, one statement containing all of the required
information may meet the requirements of both provisions.
To help
taxpayers plan their holiday-season and year-end donations, the IRS offers the
following additional reminders:
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Contributions
are deductible in the year made. Thus, donations charged to a credit card
before the end of the year count for 2006. This is true even if the
credit-card bill isn’t paid until next year. Also, checks count for 2006
as long as they are mailed this year.
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Check
that the organization is qualified. Only donations to qualified
organizations are tax-deductible. IRS Publication 78, available online and
at many public libraries, lists most organizations that are qualified to
receive deductible contributions. The searchable online version can be
found on IRS.gov under, “Search for Charities.” In addition, churches,
synagogues, temples, mosques and government agencies are eligible to
receive deductible donations, even though they often are not listed in
Publication 78.
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For
individuals, only taxpayers who itemize their deductions on Schedule A can
claim a deduction for charitable contributions. This deduction is not
available to people who choose the standard deduction, including anyone
who files a short form (1040A or 1040EZ). A taxpayer will have a tax
savings only if the total itemized deductions (mortgage interest,
charitable contributions, state and local taxes, etc.) exceeds the
standard deduction. Use the 2006 Schedule A, available now on IRS.gov, to
determine whether itemizing is better than claiming the standard
deduction.
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For
all donations of property, including clothing and household items, get
from the charity, if possible, a receipt that includes a description of
the donated property. If a donation is left at a charity’s unattended
drop site, keep a written record of the donation that includes a
description of the property and its condition.
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The
deduction for a motor vehicle, boat or airplane donated to charity is
usually limited to the gross proceeds from its sale. This rule applies if
the claimed value of the vehicle is more than $500. Form 1098-C, or a
similar statement, must be provided to the donor by the organization and
attached to the donor’s tax return. See IRS Publication 526, Charitable
Contributions, for more information.
http://www.irs.gov/newsroom/article/0,,id=164997,00.html
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