5 Easy Steps to Claim the Arizona Charitable Tax Credit

  • Matt Jensen

Have you ever donated to an Arizona charity and wondered if it's worth your time to claim the tax credit? The good new for tax year 2023, you can reduce your Arizona income tax up to $841 for married and $421 for single filers!

Key Takeaways

  • For tax year 2023, you can claim up to $841 if married and $421 if you’re single as a credit against your state tax liability.
  • A donation in cash to a Qualified Charitable Organization is a requirement. Other types of donations cannot be included.
  • Enclose donation details with your Arizona tax return on required forms Arizona Form 321 and Form 301.

Next is a detailed step-by-step guide to help you understand if you qualify for the Arizona Charitable Tax Credit and how to claim it.

Checklist of 7 items: 1. Made a cash donation, 2. qualified charity, 3. calculate amount, 4. proper records, 5. AZ Form 321, 6. AZ form 301, 7. Submit with AZ tax return

5 Steps to Claim the Arizona Tax Credit

These thorough, step-by-step instructions will help you determine eligibility for the Arizona Charitable Tax Credit and how to submit your claim.

Step 1: Check if You Donated to a Qualified Charitable Organization.

To be eligible for the tax credit, cash donations must have been made to a Qualified Charitable Organization (QCO). The Arizona Department of Revenue maintains each year's official list of QCOs.

It's important to note that tax credits are only available for cash donations, not for donations made in property, toys, books, or services.

List of Qualifying Charitable Organizations for 2023 provides information about every QCO, including the unique 5-digit number you’ll need to complete Arizona Form 321 later on.

You cannot claim a tax credit if you donated to a charitable organization that is not on the official list for your tax year.

Step 2: Know the Amount of Your Donation

To claim your donation, you must be certain of its exact amount. Even a $1 donation can be claimed because the Arizona Department of Revenue has only set a maximum. The maximum claims, however, are $421 for single filers and $841 for married/joint filers.

Arizona DOR allows to claim tax credit for donations made between January 1, 2023, and December 31, 2023, and from January 1, 2024, through April 15, 2024 on their 2023 Arizona tax return.

Step 3: Preparing Your Documentation

Tax-payers must obtain a receipt or written acknowledgment from the charitable organization for any donations claimed for the tax credit. This documentation should include the organization's name, the date of the donation, and the amount contributed.

You will also need QCO's unique 5-digit number, which can be found on the donation record or here List of QCOs.

Choose State or Federal

If you claim a tax credit for donations made on your Arizona state tax return, you cannot simultaneously claim a federal itemized deduction for those same contributions on your federal tax return.

Step 4: Claim the Credit on Your Taxes

You can claim tax credits by completing Form 321 and Form 301 and attaching them to your Arizona tax return. Here’s how you do it:

Completing Form 321

This form requires two essential elements: a five-digit code number that identifies the qualifying charity and the donation amount. It is crucial to ensure the accuracy of these two elements to claim the tax credit.

  1. Identify donations made in 2023 (Complete Lines 1, 2, and 3).
  2. Identify donations made between January 1 and April 15, 2024 (Complete Lines 6, 7, and 8).
  3. Include the following information for both years:
    • Date of contribution (MM/DD/2023) or (MM/DD/2024).
    • The five-digit code number of the qualifying charity (for example: 5 5 5 5 5)
    • Name of the Qualified Charitable Organization (QCO)
    • Amount of cash contributions made during the allowed period (January 1st, 2023 through December 31st, 2023, or from January 1st, 2024 through April 15th.)

You can combine all your donations to QCO between 2023 and April 15, 2024, to determine the total donation amount.

If you've claimed tax credits for your donations to a QCO using Form 321 every tax year between 2018 and 2022, and the credit was higher than your tax, then you must claim that carryover in 2023 this way:

  • Complete lines 14 through 19 to calculate the total leftover credit from the prior years.
  • Report the original credit amount in column B and the amount already used in column C.
  • Subtract the original credit from the amount previously used to determine the available carry-over.
Here is a Quick Example

You are a single taxpayer who made a $421 donation to a Qualified Charitable Organization (QCO), and your tax liability is $221. You can use $221 of the credit to reduce your 2023 tax liability.

The remaining $200 of the tax credit can be carried over to the following year and reported on Form 321.

Complete Form 301

You need to enter the total amounts on line 6 with the following information:

  • Currents year credit in column A
  • The available carryover in column B
  • Total available credit in column C

Step 5: File Your Taxes

To claim your tax credit, you must submit Form 321 and Form 301 with your Arizona tax return by April 15th, 2024. Ensure that all information provided is accurate and supported by the necessary documentation.

Getting a Little Lost?

If you’re unsure how to claim this credit, we suggest you seek help from a tax professional. This ensures you claim this credit correctly and receive personalized assistance based on your unique circumstances.

Arizona Charitable Tax Credit Changes for 2024

For the 2024 tax year, the maximum donations will be increased to $470 for single, separated, or head of household and $938 for married filers. That’s an increase of $49 for single and $97 for married couples.

In addition, the updated list of QCOs for the 2024 tax year can be found here.

Ready to Claim Your Charitable Tax Credit?

Now you know how to reduce your state income tax using this credit by claiming up to $421 as a single or $841 as a married filer. To claim it, make a cash donation to a QCO and fill out Form 321 and Form 301 along with your Arizona income tax return. Additionally, be sure to have all documentation for your donation.

Most taxpayers prefer working with a CPA to claim this tax credit properly. Be sure to send them your donation records and start claiming your tax savings!