Law

Arizona Tax Code as Amended:

43-1089. Credit for voluntary contributions to school tuition organizations:

A. "For taxable years beginning from and after December 31, 1997, a credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization, but not to exceed $1,000.00* in any taxable year."

*NOTE: The limit for married filing joint return was increased to $1,000 for the tax year 2006. Single filers remain at $500.

ARIZONA REVISED STATUTES 43-1089
PRIVATE SCHOLARSHIPS TAX CREDIT
CURRENT VERSION – MAY 2004

SENATE ENGROSSED HOUSE BILL
House Bill 2074

State of Arizona
House of Representatives
Forty-sixth Legislature
Second Regular Session
2004

AN ACT AMENDING SECTIONS 43-1089…, ARIZONA REVISED STATUTES; RELATING TO INCOME TAX CREDITS.

43-1089. Credit for contributions to school tuition organization; definitions

1. A credit is allowed against the taxes imposed by this title for the amount of voluntary cash contributions made by the taxpayer during the taxable year to a school tuition organization, but not exceeding:
   1. Five hundred dollars in any taxable year for a single individual or a head of household.
   2. Six hundred twenty-five dollars in any taxable year for a married couple filing a joint return. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the tax credit that would have been allowed for a joint return.
2. If the allowable tax credit exceeds the taxes otherwise due under this title on the claimant’s income, or if there are no taxes due under this title, the taxpayer may carry the amount of the claim not used to offset the taxes under this title forward for not more than five consecutive taxable years’ income tax liability.
3. The credit allowed by this section is in lieu of any deduction pursuant to section 170 of the Internal Revenue Code and taken for state tax purposes.
4. The tax credit is not allowed if the taxpayer designates the taxpayer’s donation to the school tuition organization for the direct benefit of any dependent of the taxpayer.
5. A school tuition organization that receives a voluntary cash contribution pursuant to subsection A shall report to the Department, in a form prescribed by the department, by February 28th of each year the following information:
   1. The name, address and contact name of the school tuition organization
   2. The total number of contributions received during the previous calendar year.
   3. The total dollar amount of contributions received during the previous calendar year.
   4. The total number of children awarded educational scholarships or tuition grants during the previous calendar year.
   5. The total dollar amount of educational scholarships and tuition grants awarded during the previous calendar year.
   6. For each school to which educational scholarships or tuition grants were awarded:
      1. The name and address of the school
      2. The number of educational scholarships and tuition grants awarded during the previous calendar year.
      3. The total dollar amount of educational scholarships and tuition grants awarded during the previous calendar year.
6. For the purposes of this section:
   1. “Handicapped student” means a student who has any of the following conditions:
      1. Hearing Impairment
      2. Visual Impairment
      3. Preschool moderate delay
      4. Preschool severe delay
      5. Preschool speech or language delay
   2. “Qualified School” means a nongovernmental primary school or secondary school or a preschool for handicapped students, that is located in this state that does not discriminate on the basis of race, color, handicap, familial status or national origin and that satisfies the requirements prescribed by law for private schools in this state on January 1, 1997.
   3. “School Tuition Organization” means a charitable organization in this state that is exempt from federal taxation under section 501(c)(3) of the Internal Revenue Code and that allocates at least ninety percent of its annual revenues for educational scholarships or tuition grants to children to allow them to attend any qualified school of the parents’ choice. In addition, to qualify as a school tuition organization the charitable organization shall provide educational scholarships or tuition grants to students without limiting availability to only students of one school.

For a brochure on questions and answers from the Arizona Department of Revenue, please visit http://www.revenue.state.az.us/brochure/707.pdf