Make an Arizona Dollar-for-Dollar Credit Donation from Your S-Corp to Reduce Your State Tax Liability Below the New Federal $10,000 State Tax Deduction

In light of the new Federal tax reform, Arizona’s Private School Tax credit program has become even more advantageous for corporate business owners. Not only will the donation reduce your individual Arizona state tax liability dollar-for-dollar, it will also potentially shift the Federal itemized deduction from a disallowed deduction to an allowed deduction.

  • This credit is available to S-Corps and LLC’s taxed as S-Corps
  • The donation must be made through a qualified School Tuition Organization (STO)
  • We highly recommend contacting your selected STO before July 2, 2018 which is when the Arizona Department of Revenue will begin accepting credit applications. The state requires that the STO file the corporation’s credit application and historically the state’s cap has been met in a matter of days
  • The S-Corp passes a pro-rated share of the credit based on the individual’s ownership interest through to its individual shareholders to claim as a credit on their Arizona individual tax income return. Unused tax credits can be carried forward for 5 years
  • Donated funds are used to provide tuition scholarships for low income and disabled/displaced families attending private K-12 schools in Arizona.
  • The minimum donation for a S-Corp is $5,000
  • It is possible for corporations to recommend a school to receive their donations

If you have any questions regarding the tax benefit of this credit for your corporation, your individual benefit, how to apply for the donation credit, or any other questions, please feel free to contact us. We will gladly help you through the process.

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