Individual Private School Tuition Tax Credits
Arizona Tuition Connection is a 501(C)3 charitable organization, located at 11445 E Via Linda #2-145, Scottsdale, AZ 85259, approved by the state of Arizona to take tax credit donations. (https://azdor.gov/sites/default/files/2023-06/REPORTS_sto-i-list.pdf)
The Dept. of Revenue issues a publication outlining the details of the school tax credit program. Specific details on the private school tax credit start on page 3.
To qualify under the private school tax credit program, the donation must be made to a qualified School Tuition Organization or through a payroll deduction. Donations through 3rd party organizations such as Benevity and the United Way do not qualify for this tax credit.
Your client should provide you a receipt that includes the information required on the tax forms. You can request a copy of your client’s receipt by emailing us at firstname.lastname@example.org
The maximum for the 2023 tax year is $1,307 filing single, and $2,609 filing married jointly.
The maximum for the 2024 tax year is $1,459 filing single, and $2,910 filing married jointly.
If married taxpayers file separate returns, each spouse may claim only 1/2 of the credit that would have been allowed on the joint return.
This credit is taken on Arizona Form 323 and Arizona Form 348. Details on claiming the credit on these forms will be on your client’s receipt.
Donations made through April 15th may be used as a tax credit on the prior year’s tax return.
These are not refundable tax credits. The credits may only be used to the extent they reduce the annual tax liability to zero. Any unused amounts may be carried forward up to five consecutive taxable years.
Corporate Tax Credit Donations
There are two different tax credit programs available to Corporations.
- Credit for Corporate Contributions to School Tuition Organizations (Low-Income). The Low-Income Corporate Tax Credit Cap for FY2023/24 is $158,476,605.
- Credit for Corporate Contributions to School Tuition Organizations for Displaced Students or Students with Disabilities. The Disabled/Displaced Corporate Tax Credit Cap each fiscal year is $6,000,000.
S-Corporations and LLC’s that file as S-Corps
Private School Tax Credit – Passed Through to its Individual Share Holders.
Arizona Tuition Connection is a 501(C)3 charitable organization, located at 11445 E Via Linda #2-145, Scottsdale, AZ 85259, approved by the state of Arizona to take tax credit donations. (https://azdor.gov/sites/default/files/2023-06/REPORTS_sto-c-list.pdf)
An S-Corporation, or LLC that files as an S-Corp, may donate and elect to pass through the credit to its individual shareholders.
Once the donation process is complete, your client should provide you with a receipt with a confirmation number. You will need that confirmation number for the tax forms. To obtain a copy of your clients receipt you can email us at info@Arizonatuitionconnection.com
An S-Corporation that qualifies to claim the corporate private school tuition tax credits would claim these credits on Arizona Form 335 and/or 341. The S corporation will provide the shareholder with Arizona Form 335-S and/or 341-S.
The shareholder then uses Form 335-I and 341-I to claim that credit on their personal taxes.
The shareholder can take this credit even if they have already claimed the maximum amount allowed under the individual private school tuition credits (Arizona Forms 323 and 348)? The corporate private school tuition credits passed through from an S corporation are different credits that are not subject to the limitations under the individual private school tuition credit.
There are seasons of the year when a S-Corp can donate. To find out more about S-Corp donations please contact Tim Kuhn at 480-409-4106.
S-Corp Reporting Requirements
- The S-Corp can pass the credit onto their shareholders based on the ownership interest in the corporation.
- The S-Corp does not need to have tax liability in order to pass the credit onto shareholders.
- The S-Corp will pass the credit onto the shareholder at the end of their fiscal year/tax year. The individual shareholder would claim the credit on their tax return for the year in which the S-Corps fiscal year ends. The individual taxpayer would claim their share of the credit in the year the taxes are passed through.
- For low-income corporate donations – Form 335 and Form 335-S will be completed by the S-Corp and submitted with their 120S. A copy of Form 335-S is also to be forwarded to the shareholders.
- For disabled/displaced corporate donations – Form 341 and Form 341-S will be completed by the S-Corp and submitted with their 120S. A copy of Form 341-S is also to be forwarded to the shareholders.
C-Corporation Private School Tax Credit
Arizona Tuition Connection is a 501(C)3 charitable organization, located at 11445 E Via Linda #2-145, Scottsdale, AZ 85259, approved by the state of Arizona to take tax credit donations. (https://azdor.gov/sites/default/files/REPORTS_sto-i-list.pdf)
The corporation does not have to be based in Arizona. Any C-Corp with an Arizona tax liability can redirect that liability to this program.
Corporations interested in making a donation for either corporate credit must contact Arizona Tuition Connection directly to discuss applying for a corporate credit donation pre-approval. Arizona Tuition Connection will submit the corporate donation application for credit pre-approval to the Arizona Department of Revenue. Pre-approval applications submitted by a corporation directly to the Arizona Department of Revenue will not be accepted.
Credit for Corporate Contributions to School Tuition Organizations (Low-Income) is claimed on Form 335.
Credit for Corporate Contributions to School Tuition Organizations for Displaced Students or Students with Disabilities is claimed on Form 341.
There is no maximum amount a corporation may contribute.
Unused credits from contributions can be carried forward for up to 5 years.
A corporation cannot designate a specific student, but it can recommend a school.
Once the donation process is complete, you will be provided with a receipt with a confirmation number. You will need that confirmation number for the tax forms. To obtain a copy of your receipt email us at info@Arizonatuitionconnection.com