FALL 2017 4 | FRONTDOORSMEDIA .COM 2017-18 Tax Credit Directory 2017-18 Tax Credit Directory TAX CREDIT CONTRIBUTIONS FUEL COMMUNITY PROGRAMS, SAVE TAXPAYERS MONEY They’re increasingly becoming the fuel behind nonprofit and educational organizations — and one of the best ways to save money on your personal income taxes. Arizona’s charity and education tax credits have become one of the most important fundraising tools available for non-profits and schools statewide. They also provide taxpayers with an opportunity for a dollar-for-dollar credit on state income taxes — as well as, in many cases, a deduction on federal taxes as well. “It makes financial sense to learn about these credits,” said Cindie Hubiak, president & CEO of the Arizona Society of CPAs. “These tax credits are more valuable than a regular tax deduction because they are a dollar-for-dollar offset, rather than just reducing your net income.” And while they may seem too good to be true, they’re becoming an increasingly important resource for groups across the state. “The Tax Credit program has had a very positive impact on local nonprofits,” said Larry Lytle, first vice president-financial advisor for RBC Wealth Management locally, who sits on a number of nonprofit boards. “We are seeing increases in both the number new donors, the average donation amounts and donor retention. These dollars are turning out to be some of the most cost-efficient money they are raising. The end impact is stronger balance sheets amongst those nonprofits who have active campaigns.”

FALL 2017 FRONTDOORSMEDIA .COM | 5 Here’s How Tax Credit Contributions Work Arizona law allows you to receive a dollar-for-dollar credit on the amount of state income tax you pay if you donate to a qualified charity or educational institution in one of four categories: • Arizona Qualified Charities, which is a general category most nonprofits fit in. Contributions are limited to $400 per person or $800 per couple. • Arizona Qualifying Foster Care Charitable Organizations, which as the title implies encompasses non-profits who provide foster care services. Contributions have a $500 limit for individuals and a $1,000 limit per couple. • Public Schools, including charter schools, with a $200 per person and $400 per couple limit. • Private School Tuition Organizations, which fund contributions to private schools, which have a $1,089 total limit per person and $2,177 limit per couple. For example, if you give $800 to an Arizona Qualified Charity, your state income tax owed is reduced by $800. And, you can claim that same $800 charitable contribution on your federal taxes, lowering your federal tax bill as well. It’s a net win compared to paying tax dollars to the state, and you directly contribute to these beneficial organizations instead. “Arizona residents have several Arizona charitable tax credits available to them,” said Brenda Blunt, tax partner with Eide Bailly LLP. “Ideally, taxpayers will take advantage of all of them. With the exception of the public school tax credit, the tax savings generally equal the cash outlay to the charity or school. Whether you itemize your charitable contributions or not, these credits generally allow taxpayers to use money that would otherwise go to paying taxes and give it to qualifying schools and charities of their choice.” Arizona law allows for these contributions to be made all the way up to the April 15 tax deadline and still count for the 2017 tax year (contributions made in 2018 would count for your 2018 federal taxes, however). Hubiak said there’s still a learning curve for many people when it comes to tax credit contributions, but more and more people are taking advantage of the credits over time. “There’s still a fair amount of misunderstanding, and some of it is a sense of ‘too good to be true,’” she said. “To some people it doesn’t make sense that an individual can contribute to a nonprofit and get more back than they give.” The State of Arizona requires each organization to meet certain criteria in order to be eligible for the tax credit program. You can learn more about the tax credit program and eligible charities at azdor.gov/TaxCredits.aspx . (NOTE: Financial advisors quotes in this article are not providing tax or legal advice.) 2017-18 Tax Credit Directory