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, allowing most "C" corporations and insurance companies to claim a dollar-for-dollar tax credit against the state income tax or premium tax they owe to help children in low-income families receive a quality private education! Eligible corporations and insurance companies must pay corporate state income tax or premium 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 $35.831 million for the 2013-2014 school year that is allocated on a first-come-first-serve basis. The annual state-wide cap will increase by 20% each year and resets every July. There is no set maximum contribution for an individual corporation or insurance company.
How to Take the Credit
- Corporations and insurance companies interested in making a tax credit contribution should contact APESF directly at (480) 699-8911 or firstname.lastname@example.org 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 or insurance company 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 or insurance company 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 Overflow/PLUS tax credit scholarship in ANY year during their private school attendance. The corporation may recommend a specific school but cannot recommend a specific student. 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.
This is truly the easiest "donation" you can make. There is no net cost to the company, and Arizona’s children get a benefit that lasts a lifetime!
Frequently Asked Questions
Any corporation that pays AZ corporate state income tax is eligible. (“C” corporations typically are eligible. LLCs and “S” corporations are not.*) All local and national insurance companies that pay AZ premium tax are also eligible to redirect 100% of their state premium tax obligation to this program!
*If the “S” corporation files on form 120, it may qualify to receive a credit. Please advise your tax preparer if this is the case.
A corporation or insurance company can take the full amount of the credit for as much as they will be paying in actual tax to the state of AZ. The donation can also be claimed for a federal deduction, but consult an accountant before doing so.
The corporate program has an annual state- wide cap that increases by 20% each year and resets every July, making a pre-approval process necessary. There are also limitations as to which students are eligible to receive corporate funding and how much.
Yes, a recommendation can be made to allocate donated funds for scholarships to students at a particular private school or schools, but a specific student recommendation is not allowed.
90% or more of every dollar is directly allocated to provide scholarships for students from low-income families in AZ!