Image Caption Here Tax Credit Giving Guide credit amount prior to making their contribution. The first is the Low-Income Corporate Tax Credit (statewide cap is $106,993,207), and the second is the Disabled/Displaced Corporate Tax Credit (statewide cap is $5 million). Many people think it sounds too good to be true, but it’s not. You can give to a qualified charity or tuition organization instead of giving to the state government for taxes. Over time, these contributions have become increasingly popular for Arizona residents. According to the Arizona Department of Revenue, tax credit contributions in the categories above exceeded $180 million for tax year 2016, with more than 320,000 contributions made in total. That’s a big impact for Arizona nonprofits. “Tax credit donations are one of the critical streams of revenue for nonprofit organizations like Rosie’s House: A Music Academy for Children,” said Becky Bell Ballard, CEO of Rosie’s House. “With these contributions, we are able to address vital needs for economically disadvantaged youth in metro Phoenix and provide a 100-percent free after-school creative youth-development program. It’s a win-win for the donor and for our community.” A change in state law this year also adds benefits to non-tax credit contributions. The Alliance of Arizona Nonprofits helped efforts to pass a bill this past spring which allows every Arizonan the opportunity to itemize their qualifying charitable donations on their state taxes, regardless of whether they take the standard deduction on federal taxes. “If a donor chooses to itemize their charitable donations on their state taxes, they can now receive a 25 percent deduction from the total of what they donated,” said Jennifer Purcell, director of community engagement for the Alliance of Arizona Nonprofits. “For example, if you donate $1,000 to a charitable organization, you can receive a 25 percent deduction (or $250 deduction) on your state taxes.” Two other changes were made this year, according to Brenda Blunt, partner with Eide Bailly LLP. • In June 2019, the IRS issued a regulation that disallows a federal charitable contribution deduction for any contribution made after August 27, 2018 that qualified for these credits. • The IRS also posted a notice that allows an individual who itemizes deductions to treat, in certain circumstances, contributions not allowed as a charitable contribution as a state tax deduction instead. The state tax deduction would be limited to the new $10,000 limitation on the state and local tax deduction. According to Blunt, this notice is effective for 2018 returns as well, so some individuals may want to amend their 2018 returns to claim the additional benefit. With all that said, these contributions are still an inviting way for tens of thousands of Arizonans to support their favorite charitable causes. “Tax credit donations make a huge difference for us,” said Patti Hibbeler, CEO of Phoenix Indian Center. “It’s the opportunity to create stabilization for someone who’s near eviction and landing that permanent job or to support a handful of youth in their first summer internships to build good work habits.” So while tax season isn’t always a win-win, for the nonprofit community, tax credit contributions are critical for funding and sustainability. UMBRELLA ORGANIZATIONS Some charities under the Arizona Qualified Charity Tax Credit have a slightly different designation as “umbrella organizations.” They are eligible for contributions of $400 per person and $800 per couple as well, but are listed differently on the State of Arizona’s website. For example, Executive Council Charities, Valley of the Sun United Way and other United Way organizations across the state are considered “umbrella organizations” because they may receive tax credit contributions and distribute them to other nonprofit partners in the community. 8 FRONTDOORS MEDIA | TAX CREDIT GIVING GUIDE

DIRECT YOUR TAXDOLLAR S TOCHILDREN IN N E E D For more info or to donate online please visit SupportArizonaYouth.org Take advantage of a dollar-for-dollar tax credit opportunity to help youth in our community overcome adversity and reach their full potential. Support Arizona Youth is a tax credit program which funds nearly 100 youth programs and generates almost $2 million annually in tax credit donations. OF FUNDS DIRECTED TO QUALIFIED CHARITIES & FOSTER CARE CHARITIES 100% ‘HIGHEST NEED’ OR INDICATE YOUR PREFERENCE FOR A SPECIFIC QUALIFIED CHARITY SELECT