Arizona Waldorf Scholarship Foundation
Frequently Asked Questions

Q:  What school tax credits are available to individuals?
A:  An individual may claim a credit for making contributions or paying fees to a public school for support of extra curricular activities or character education programs. An individual may also claim a credit for making a donation to a qualified school tuition organization for scholarships to private schools. A family may do BOTH if they desire (see #5 below).

Q:  Who may claim the individual school tax credits?
A:  The individual school tax credits are available only to individuals. Partnerships and S corporations cannot pass these credits through to their partners or shareholders. These credits are also not available to trusts, estates, regular corporations, or S corporations.

Q:  What form does an individual use to claim these credits?
A:  An individual that makes contributions or pays fees to a public school for support of extra curricular activities or character education programs would use Arizona Form 322 to claim this credit. An individual that makes a contribution to a qualifying private school tuition organization would use Arizona Form 323 to claim this credit.

Q:  Can a taxpayer receive a refund of these credits?
A:  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.

Q:  Can a taxpayer claim both credits in the same taxable year?
A:  Yes.

Q:  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?
A:  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 as long as the contribution did not benefit your dependent. However, if the taxpayer itemizes a Federal return, this donation may be included.

Q:  Must a taxpayer have a child in school in order to claim one or both of these credits?
A:  No.

Q:  What do I have to do to qualify for this credit?
A:  To qualify for this credit, you must make cash contributions to a tuition organization that provides scholarships or grants to qualified schools.

Q:  What is the maximum dollar amount of the credit?
A:  The credit is equal to the amount contributed. However, for single taxpayers or heads of household, the credit cannot exceed $500. For married taxpayers that file a joint return, the credit cannot exceed $1,000. 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.

Q:  What is a school tuition organization?
A:  A school tuition organization is one that is tax exempt under Section 501(c)(3) of the Internal Revenue Code, 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.

Q:  Will the Department of Revenue certify school tuition organizations?
A:  No. There is no requirement that the department certify a school tuition organization. However, the taxpayer should ask questions of the organization to determine if the organization (1) is tax exempt under Section 501(c)(3) of the Internal Revenue Code; (2) allocates 90 percent of its annual revenues to scholarships; and (3) makes scholarships available to students of more than one school.

Q:  What is a qualified school?
A:  A qualified private school is a non-governmental preschool for handicapped students, or a non-governmental primary or secondary school located in Arizona. The school cannot discriminate on the basis of race, color, handicap, familial status, or national origin. The primary school begins with kindergarten, and the secondary school ends with grade 12.

Q:  Are there situations where a contribution to a school tuition organization, as defined in statute, would not qualify for the tax credit?
A:  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.

For Additional Information:
Arizona Department of Revenue
Office of Economic Research and Analysis
1600 West Monroe, Phoenix, Arizona 85007

Toll free from area codes 520 & 928 :: (800) 352-4090

For Hearing Impaired - TDD only:
Toll free from area codes 520 & 928 :: (800) 397-0256

For Related Tax Information:
Recorded Tax Information (602) 542-1991
Toll free from area codes 520 & 928 :: (800) 845-8192
Forms by Mail (602) 542-4260
http://www.azdor.gov