Credits, Refunds & Deductions
Calculating Your Credit
To maximize your donation, donate as close to your expected liability for the year as possible. You can determine an approximate liability by looking at last year’s taxes, or you can calculate your exact liability between January and April and still make a donation for the previous tax year because the deadline to give is April 15th. On Arizona Form 140, the subtotal of your tax (your liability) is on line 48, and you fill in your tax credits on line 50. (Line 50 cannot be more than line 48.)
Reviewing Your Refund
Your refund is determined by how much you overpay to the state throughout the year. If you are trying to determine whether you will receive a refund in a given year, first you must determine how much you will pre-pay (or have pre-paid) in taxes for that year. A refund is only possible if the sum of your pre-paid taxes and your donation is more than your liability.
Most people who donate end up with some form of refund because they pre-pay in taxes out of their paycheck throughout the year and then also make a tax credit donation, meaning they double-pay on their taxes (in a sense). Making a tax credit donation does not necessarily guarantee a refund, but it may cause you to end up with one.
Determining Your Deduction
Your donation may count as a charitable donation for Federal deduction purposes as well. Consult your tax advisor for eligibility requirements. The tax year deadline for those wanting to claim their donation as a Federal deduction is December 31st. (The April 15th relate-back does not apply for deduction purposes, only for the state tax credit.)