South Tempe Civics blog

Support school choice at no cost to you. Use the Arizona Tax Credit.

The Arizona Tax Credit gives all Arizona taxpayers a way of supporting school choice at no cost to you. School choice is intended to ensure that no families are trapped in the district school monopoly.

My friend Lou Bates, who is a tax professional, thinks what I wrote below is perhaps too much information for those who do not do their own taxes. Her one paragraph explanation follows. What follows that is aimed at those who do their own taxes, or at least wish to understand what their tax preparer is doing.

Evading taxes is illegal but avoiding taxes is legal and, in Arizona, encouraged by law. Single people can avoid paying the state up to $1,655 per year in income taxes, twice that amount if married filing a joint return. There are four Arizona charity categories to which you can contribute specific amounts every year and not pay the State of Arizona that amount – legally. The contributions can be made by the filing due date of your return – usually April 15 – and deducted on the previous year’s return. The charities are mostly child related such as Public Schools, Private Schools and Foster Care. The other recipients are general charity organizations. The list of acceptable organizations is available on the Arizona Department of Revenue (AZ DOR) and includes codes that are required on the tax return. Additionally, most tax preparers can assist you with the necessary info. — Lou Bates

If you pay Arizona income tax, you can simply direct that money to certain charities, including schools. You make a donation to a school that you wish to support and you get a credit for the amount of your donation against your Arizona tax liability. There are rules and limits, and, like any charitable donation, it is up to you to make sure the school receiving your donation is worthy of it.

You may support both public and private schools. Public (including charter) schools must use your donation on certain activities, such as extracurricular, or on instruction designed to build character. Private school tuition organizations (STOs) give scholarships to students attending private schools, including Catholic and Montessori schools. You can recommend both the school and the student to receive the scholarship, but your recommendations are not binding on the STO.

Each donation requires its own form in your tax return. Your donations are summarized on form 301, whose last line gets carried to line 51 of form 140 (“Nonrefundable Credits from Arizona Form 301, Part 2, line 69”) which is a full credit to your tax liability. “Nonrefundable” means that the credit is limited to your tax liability. You will need forms 322, 323, and perhaps 348. (See Appendix 2 below for examples.)

There are two other tax credit programs available, for Qualifying Charitable Organizations and Qualifying Foster Care Organizations. Please use them. I do not discuss them here because they are outside my topic of school choice.

In 2018, the limits on this gift were:

filer:	individual	joint
public school	200	400
STO	1,110	2,213
total available credit	1,310	2,613

You may make your gifts as late as April 15 for the prior calendar year, so you will be out the cash only in the case where you are owed a refund, and then for only as long as it takes Arizona to process your return. You can give to a district public school in Kyrene School District. Most schools will let you specify a use, so you can support the ROTC program at Corona. (See Appendix 1 below for instructions.) You can give to a school that is in another part of Arizona. Any taxpayer can give. You are not required to have children.

Here is a link to eligible public (including charter) schools: https://azdor.gov/sites/default/files/media/PUBLICATION_ADESchoolListing.pdf.

Here is a link to eligible STOs: https://azdor.gov/sites/default/files/REPORTS_CREDITS_2018_fy2017-private-school-tuition-org-credit-report.pdf

In 2017, there were about 2 million income-tax-paying households in Arizona. Only 15% used the Tax Credit for public schools (average gift $169). Link. Only 4% used the Credit for STOs (average gift $1,200).

As of this writing, I have not been able to find good numbers that might help further describe the need to support school choice. Statewide, American Community Survey data show that, in 2018, only 12% of primary and secondary school students attended a private school. Of those students in public schools, only 17% attended a charter school. In Tempe, which is served by Tempe Preparatory Academy, the Great Heart schools, and the BASIS schools, and others, –not all of which are physically in Tempe–there is competition for students. Not all parents would consider a charter school. (There is no bus.) It may take some years for more parents to become disillusioned by the district schools.

Appendix 1: instructions for giving to the ROTC program in Tempe Union High School District

• browse to: https://az-tempeunion.intouchreceipting.com/
• create an account
• select “Items at all schools” then select “high school” then last “Marcos de Niza High School”, select “Tax Credit Donations”
• Scroll down to “ROTC” and enter donation amount and click “buy,” then check out. You will get a receipt immediately.

Appendix 2: filled examples of Arizona Tax Credit forms

AZ301:

AZ322:

AZ323:

AZ348: