A Win-Win OpportunityDid you know that Arizona is leading the nation in tuition tax credit opportunities for both individuals and corporations? In 2006, the Arizona Corporation School Tuition Tax Credit Law, A.R.S. Section 43-1183 was passed to allow corporations to receive a dollar-for-dollar tax credit against the state income tax they owe to help children in low income families receive a quality private education! Eligible corporations must pay corporate state income tax and the credit must be less than or equal to the actual amount they will pay to the state of Arizona. There is an annual state-wide cap of $29.859 million for the 2012-2013 school year that is allocated on a first-come-first-serve basis. The annual state-wide cap will increase to $35.831 million for the 2013-2014 school year. There is no set maximum contribution for the corporation.
How to Take the Credit
- Corporations interested in making a tax credit contribution should contact APESF directly at 480-699-8911 or email@example.com and complete the Corporate Tax Credit Contribution Form.
- APESF will submit an approval request for the contribution to the AZ Department of Revenue.
- If the state-wide cap has not been met, ADOR will respond within 20 days approving the contribution. Once APESF receives approval notification, the corporation will have 20 calendar days to make payment to APESF. (If payment is not made within 20 days, the contribution will be taken out of the cap and the process must start all over again.)
- The corporation will take the credit on its next tax return, but may carry any unused credit forward for up to five years.
Who BenefitsThe Corporate Tax Credit benefits low-income families (income cannot exceed 185% of the federal reduced-priced lunch index). Scholarships are awarded to students switching from public to private school, starting Kindergarten or students who have received a corporate, individual or the new Overflow/PLUS "switcher" tax credit scholarship in ANY year during their private school attendance. The corporation may recommend a specific school but cannot recommend a specific student(s). If no eligible students make application to APESF from the recommended school or if the recommended school is not considered a qualified school under tax credit law, the funds will be awarded to eligible students in other qualified schools. The state-wide corporate Tax Credit Donation cap will increase by 20% per year. 2012/2013 cap is $29.859 Million. 2013/2014 cap is $35.831 Million
This is truly the easiest donation you can make…no net cost to your company and Arizona’s students, through educational choice, reap the benefits for a lifetime!
Frequently Asked Questions
Any “C” corporation that pays Arizona corporate state income tax is eligible to take the credit. LLC’s and most subchapter S corporations do not qualify. Please consult your tax advisor for more information.
A corporation can claim the full amount of the donation for their state taxes owed, up to the maximum amounts allowed by law or the actual tax owed, whichever is less. All corporate donations must first be pre-approved by the Department of Revenue, in writing, and the approved corporate tax credit donation must be made within 20 days of the written approval by the ADOR. This process is to insure that the corporation is qualified to make the donation and that the donation will not cause the state-wide cap to be exceeded.
Under the corporate tuition tax credit law there is an annually adjusted state-wide cap on the aggregate total that all corporations can contribute. The current 2012/2013 cap is $29.859 Million. The law also requires recipient students to meet certain income guidelines in order to receive a scholarship and the scholarship cannot exceed certain amounts prescribed by law.
The corporation can recommend that their contribution be allocated to students attending a particular school(s). Corporations cannot recommend a specific student(s). Scholarships from corporate donations are awarded to eligible students in qualified private schools that meet the student qualification criteria under the law.