Who may claim these tax credits? These credits are available only to individuals. Partnerships and S corporations cannot pass the credits through to their partners or shareholders. The credits are also not available to trusts, estates, regular corporations, or S corporations.
Can a taxpayer receive a refund of these credits? No. The credits may only be used to the extent they reduce a tax liability to zero. Any unused amounts may be carried forward for not more than five consecutive taxable years.
Can a taxpayer claim both credits in the same taxable year (Private School & Public School)? Yes, this credit and the Public School ($400 married, $200 single) can both be claimed in the same year.
On the Arizona state income tax return, can a taxpayer claim both an itemized deduction and a tax credit for a contribution made to either a public school or a school tuition organization? No. Any amount claimed as a tax credit cannot be taken as an itemized deduction. However, you may still claim any excess over the amount claimed as a credit as an itemized deduction.
Yes - On the Federal Return.
Must a taxpayer have a child in school in order to claim one or both of these credits? No.
Private School Tuition CreditWhat do I have to do to qualify for this credit? To qualify for this credit, you must make cash contributions to a tuition organization that provides scholarships or grants to qualified schools.
What is the maximum dollar amount of the credit? The credit is equal to the amount contributed. However, for single taxpayers or heads of household, the credit cannot exceed $1,067. For married taxpayers that file a joint return, the credit cannot exceed $2,134. 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.
(The amounts above are the total amounts for Tax Year 2015 and include the Switcher Credit Law which allows you to donate an additional $532 if filing single and additional $1,064 if filing jointly; totalling $1,067 and $2,134 respectively.)
What is a school tuition organization? A school tuition organization is one that is tax exempt under Section 501(c)(3) of the Internal Revenue Code, which allocates at least 90 percent of its annual revenue to scholarships or grants, and makes its scholarships/ grants available to students of more than one qualified school.
Are there situations where a contribution to a school tuition organization, as defined in statute, would not qualify for the tax credit? The law lists only one situation that does not qualify for the tax credit. The credit will not be allowed if the taxpayer designates a donation to the school tuition organization for the direct benefit of a dependent of the taxpayer.
A school tuition organization must allocate at least 90 percent of its annual revenues to scholarships or grants. Does that mean that the organization must actually pay out 90 percent of its annual revenues in any given year? No. The organization may, for instance, grant a four year scholarship to a student and pay the money out in four installments at the beginning of each school year. The total amount of the four-year grant, however, must be included in the allocation percentage of the year in which the scholarship was granted and not split over the life of the scholarship, if the monies were received and became part of the annual revenues of the year the scholarship was granted.
A school tuition organization cannot limit availability to only students of one school. Does that mean that the organization must actually make grants to more than one school? No. A school tuition organization should have a list of qualifying schools for which they would grant scholarships. They do not have to actually allocate funds to more than one school in any given year, but they must be willing to make grants to more than one school.