Examples

TAX CREDIT MATH

To help illustrate how the Arizona tax credit can benefit you, we created a few scenarios to help understand the benefits for donators. However, be sure you contact a tax expert/adviser to get more information for your individual situation.

Mr. Bell*1 Ms. Goodman*2 Mr. & Ms. Sanders*3 Mr. & Ms. Trego*4
Tax Filing Status Single Single Married Married
State Income Tax Withheld **
$600 $300 $1,600 $800
State Tax Liability
($705) ($250) ($1,350) ($800)
Tax Refund
($105) $50 $250 $0
TAX CREDIT Donation to AZ4Education $500 $400 $1,000 $900
Tax Refund with Tax Credit $395 $300 $1,250 $800
Carry Over to Next Year $0 $150 $0 $100
 

*Note: these examples are using tax credit amounts  as of 2011  **Note: Shown on your W2

1) Mr. Bell

Mr. Bell is a single Arizona taxpayer, who owes $705 but the amount his employer held was only $600.  Mr. Bell will need to pay another $105 to the State to make up the difference when he files his taxes.  However, since he donated $500 to AZ4Education to help students in his community, he will actually get a $395 refund from the State, and he can use that money for something else.

2) Ms. Goodman

Ms. Goodman is a single Arizona taxpayer, who owes $250 to the State of Arizona. Since her employer withheld $300, she will receive a $50 refund (if she didn’t have a tax credit).  Ms. Goodman knows the future is dependent on our children and their education, so she gave $400 to AZ4Education. In this case, the Arizona law stipulates that she can not receive a tax credit more than her tax liability (ie. not to exceed $250), so she will actually get a refund from the State of $300 (=250+50) with a carry over credit to next year of $150 (=400-250). Money well spent for our future.

3) Mr. and Mrs. Sanders

The Sanders are a married couple filing jointly and have a tax liability of $1350. They have withheld $1600, so they are expecting a refund of $250 from the State. Considering they have children who are enrolled in a private school, they know the benefit of the STO program, so they have donated the maximum of $1000 to AZ4Education. This means they will be helping another student with a scholarship and they will also be receiving a refund total of $1250.  Income tax dollars supporting the local community through education.

4) Mr. and Mrs. Trego

The Trego’s are married and filing jointly this year. They have a combined tax liability of $800 and their employers have withheld the same amount. However, they were interested in helping a family, whom they have known for many years.   The were able to donate to Az4Education and make a recommendation for their friends child in private school. Their $900 contribution is more then the combined $800 tax liability, so they will get back $800 from the State, and have a carry over credit to next year of $100.

BE SURE TO CHECK WITH YOUR TAX ADVISER FOR CONFIRMATION OF HOW YOUR CONTRIBUTION AFFECT YOUR TAX PLANNING.