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Arizona State Tax Credit
Frequently Asked Questions
What is it?
The State of Arizona offers taxpayers an opportunity to direct a portion of their state taxes to the extra-curricular programs of the school of their choice. A taxpayer may donate money to any public school and then deduct that money from the amount of tax owed at the end of the year. Basically, the taxpayer has given the public school a donation that doesn’t cost that taxpayer anything.
How does it work?
1. Send a check or donate online through PayPal. (Up to $400 for a family, up to $200 for a single person) to James Madison Preparatory School.
2. Madison Prep sends you a receipt for your donation. Make sure to keep for your records.
3. When paying taxes in 2009, you compute your state tax liability; deduct the amount of your donation in step 1 for that figure.
4. The resulting figure is what you actually owe Arizona for 2008.
For example, let’s say you and your spouse have an adjusted gross income (AGI) of $60,000 in 2008. In February, 2009, you sit down to do your taxes. Let’s pretend for the sake of simplicity that the state tax rate is a flat 3%. Your state tax would be $1,800. However, since you donated a $400 tax credit, you immediately reduce that figure to $1,400. That’s the final amount of state tax you owe.
To complete the scenario, let’s pretend that your W-2 form shows that you’ve paid all of the $1800 you owe the state of Arizona from your wages during the course of 2008. When you file your taxes, the state of Arizona will issue you a refund of $400!
Can I take advantage of both the public and a private school tax credit in the same year?
Yes. If you have a state tax liability that meets the combined amount of both the public tax credit (up to $400) and the private tuition tax credit (up to $1000), you may take full advantage of both.
Click here to download the AZ Tax Credit Form.
Click here to pay AZ Tax Credit online.