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Remembering Year End Arizona Tax Credits

Arizona has a few non-refundable credits if you choose to make a contribution to qualifying organizations; there are even a few in the Flagstaff area. Around the holidays, we tend to think of organizations that provide meals to the needy, like Flagstaff Family Food Center. Cash (or check or credit card) contributions to organizations like the Food Center qualify for a $400 tax credit for Arizona taxpayers filing as single and $800 for taxpayers filing jointly. In addition to hot meals, those in need can grab a sack lunch from the kitchen door and hot meals are provided in the dining room and delivered to Flagstaff Shelter Services. You can find more information on this qualifying organization by visiting their website at hotfood.org.

If you still have a tax liability after donating your $400 or $800 to a qualifying organization, you might want to consider the credit for Contributions to Qualifying Foster Care Charitable Organizations. This credit is $500 for individual filers and $1,000 for married couples. You can possibly finish wiping out your tax liability by contributing to a group like Arizona Friends of Foster Children Foundation. AFFCF helps out foster children by making contributions to the families that foster them by helping with expenses like the cost of extracurricular activities and fees that many children in foster care might not have the chance to participate in. For more information about the Foundation, visit its website: affcf.org.

Making direct donations helps these groups and potentially qualifies you for a charitable contribution on your federal tax return (at least for now) as well as the credit. In order to claim one of these credits, you will need to make the contribution by the due date of your 2017 income tax return and if you do itemize, an adjustment will need to be made to your Arizona Itemized Deductions. Arizona Department of Revenue keeps an updated list of organizations qualifying for either of these credits on its website.

Employers have a few different credits available to them, for instance, the Credit for Employing National Guard Members and the Credit for Employment of TANF Recipients. Instructions for the National Guard Credit state “Arizona law provides a credit for employers who have an employee that is a member of the Arizona National Guard if the employee is placed on active duty. The credit is $1,000 for each employee who is placed on active duty by the Arizona National Guard. To qualify for the credit, all of the following must apply:

  • The employee must be a member of the Arizona National Guard.
  • The employee must be in a full-time equivalent position when the employee is placed on active duty.
  • Each member of the Arizona National Guard who is employed must have served during the taxable year on active duty for training that exceeds the required annual training period, including any activation for federal or state contingencies or emergencies.”

Sole proprietors, corporations and partnerships all qualify for this credit. This credit is actually pretty nice in that you don’t have to do anything (other than file the form) to qualify. If you have a National Guard employee who is activated, contact your tax preparer.

The Employment of TANF Recipients will require more work for an employer. Essentially, you have to hire a new employee for a new or additional position. Arizona wants to see a net increase in full-time positions to give you this credit. If you are a new or expanding business it might make sense to have your HR department – which very well might be you – ask new employees if they are receiving TANF. It’s worth $500, $1,000 and $1,500 in tax credits over three years. Don’t worry if you don’t know what these benefits are, someone receiving them will usually know if they or their family qualify.

If you think you might owe personal taxes and want to give that money to a deserving organization instead of the state general fund, talk to your preparer for an estimate of how much to donate for the full tax benefit. Or, if you know your taxes are really close to last year, check line 46 (tax before credits) of your 2016 AZ 140 to see how much to offset. A little money to a qualifying organization can help to make the holiday season just a little better, and your taxes a little lower. FBN

By Patrick Fleming, EA

Patrick Fleming, EA, is a partner with Northern AZ Financial Services Co. For more information, visit northernazfinancial.com or call 928-526-3999.

 

 

 

 

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