What are Charitable Tax Credits?

Arizona’s Charity Tax Credit program is a wonderful way to support local nonprofits and reduce your state tax bill at the same time. Unlike itemized deductions, tax credits directly reduce the amount of tax you owe. A tax credit is deducted directly from your Arizona tax liability!

Do all charitable organizations qualify for this tax credit?

Arizona state legislation authorized two categories of charities that are eligible for the charitable tax credit. To qualify, a "financial" donation must be made to one of these approved organizations. There is a maximum limit on the amount of charitable tax credit you can receive each year. Any donations up to these limits qualify for tax credit.

For contributions that exceed the Arizona tax liability, any unused portion of the charitable tax credit may be carried forward and claimed during future filing periods for up to five years. You can donate to multiple organizations and split the credit across them.

How can I find out if my favorite nonprofit qualifies?

AZTaxCreditList.com provides a search feature where you can enter the name of your charity. If the organization appears in the list with a five-digit code, it is eligible for these tax credits.

Where do I find a list of all charities that qualify?

For an online searchable list with charity code, description, website links, and 990s (click either): View QCOs List View QFCOs List

The official list QCOs and QFCOs is maintained by the Arizona Department of Revenue. The lists are available as downloadable PDF files that contain:

• Organization name and address
• Assigned five-digit QCO or QFCO code (required for claiming the tax credit)
• Certification status for tax credit eligibility

How do you claim the tax credit when filing?

Use Form 321 (QCO) or Form 352 (QFCO) with your Arizona income tax return. Keep the receipt and note the five-digit charity code when donating.

Why should you use these tax credits?

Many charitable organizations hope for and rely on charitable tax credit giving as a significant part of their funding, especially organizations like these:

• Homeless ID Project – Helps individuals and families acquire ID's and birth certificates as required for employment, housing, medical care and education.
• The Worker – Connects the Valley's disadvantaged, homeless, and transitioning individuals to quality jobs.
• New Pathways for Youth – Provides at-risk youth support, stability, and skills to flourish through matched mentors.

If you are likely to owe Arizona individual income tax, contributing to a qualified organization offers full credit against taxes owed, so it does not increase your costs. This really is the best feeling "wonderful" deal around!