Frequently Asked Questions
What is a school tuition organization?
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 contributions to scholarships or grants, and makes its scholarships/grants available to students of more than one qualified school.
Is the Arizona Private Education Scholarship Fund, Inc. a legitimate school tuition organization?
Yes! APESF was established in 1998 and is certified by the Arizona Department of Revenue as a School Tuition Organization. It is also recognized by the IRS as a 501(c)(3) tax-exempt organization, Federal I.D. number 86-0958161. APESF allocates at least 90 percent of its annual revenue to educational scholarships and makes its scholarships available to students of more than one qualified school. It is governed by a highly qualified Board of Directors whose members have been significant supporters of private education in Arizona for many years.
How is APESF different from other school tuition organizations?
In many ways, all of the Arizona STOs should be very similar, because the statute that governs this program is clear as to how every STO should operate. The primary differences are evidenced in how each STO serves its participating donors, schools and families. APESF has been consistent in providing its donors, partner schools and scholarship recipient families with all of the benefits that the tax credit allows, with a strong commitment to personal service and the development of unique communication strategies. We are not the largest STO but one of the most personal and most emulated.
On average, how many private schools does APESF award scholarships to in a given year?
We have over 120 qualified school partners who can receive scholarships from us, and we are among the top school tuition organizations in the state that award scholarships to more than 25 schools.
What is a qualified school?
Qualified school means a preschool located in Arizona that offers services to students with disabilities OR a nongovernmental primary or secondary school located in Arizona. A qualified school does not discriminate based on race, color, disability, familial status or national origin. All teaching staff and personnel that have unsupervised contact with students are required to be fingerprinted. Qualified school does not include a charter school or any program operated by a charter or public school.
What is the process to apply for a tuition scholarship for my child?
Apply via the application page of our website. You must complete an application one time per school year to be considered for scholarships. After submitting your application, you will receive an email that confirms successful submission of your family’s application. The application is reviewed and weighted to determine the potential amount of assistance your family is eligible to receive. Scholarships are subject to available funding from tax credit revenues, enrollment status, scholarship committee approval and the outstanding tuition balance. If an award is made, you will receive a notice by email when the funds are sent to the school.
What’s the deal with Empowerment Scholarship Accounts (ESA)?
Now that I have applied, what should I do?
APESF relies solely on the financial support of individuals to award scholarships, so it's very important that we work together to raise funding to help you meet your goal…
- > Spread the word about the advantages of the tax credit program to your friends, family and surrounding community (i.e., grandparents, aunts and uncles, neighbors, co-workers, friends, church members or service providers).
- > Talk to individuals that support your family and your choice of private education, and let them know they may recommend your child to receive a scholarship when making their contribution.
- > Check out our free toolkit for families! This resource provides sample templates that you customize and save to your computer to send to your contacts by email or mail.
When are scholarships distributed to schools?
APESF distributes scholarships on a monthly basis, with the exception of January and May. Once our Scholarship Committee approves a distribution, the schools must verify enrollment & tuition due. Once funding is sent to the schools, you will receive an email notification detailing the award type and amount. Parent email notifications are always sent on the last day of the month in months when a distribution takes place.
If my child has been recommended for a scholarship, do I still need to complete an application?
Yes. A recommendation by a donor does not guarantee that a child will be awarded a scholarship. You must fill out an application each year to be considered for tuition scholarships.
If I applied last year, do I need to apply again this year?
Yes. You need to complete an application for each school year to be considered for tuition scholarships. Applications for the coming school year are released in April and remain valid through the entire school year.
If my child is young and doesn’t participate in many extracurricular activities, will this be counted against him/her on his/her application?
No. The age of the applicant is appropriately considered during the review process.
Do you require that we submit our tax return information when applying for scholarships?
It is currently NOT required; however, applications are randomly audited, and you may be asked to provide additional documentation to support your application.
May I recommend someone else’s child in exchange for him/her recommending my child?
No. Reciprocity, or “swapping,” of any type is strictly prohibited (A.R.S. 43-1089 Notice). When two or more individuals exchange recommendations when making their tax credit contributions, it violates both federal and state tax laws. If reciprocity/”swapping” is suspected, the donor’s recommendation will not be considered.
May I recommend my grandchild for a scholarship?
Yes, you may recommend anyone who is not your legal dependent. Please note that a recommendation is not a designation; therefore, all scholarship decisions are subject to the absolute discretion of APESF.
What tax forms do I use when filing for the tax credit?
In order to claim the tax credit for your donation, you must file Arizona tax forms 301 and 323 along with your Arizona income tax forms. If you make an Overflow/PLUS/Switcher donation, you must also file Arizona tax form 348. These forms (and instructions) can be downloaded here (http://www.azdor.gov/Forms/Credits.aspx
). Please consult your tax preparer with further questions.
Is my donation also eligible for a federal income tax deduction?
We are a tax-exempt 501(c)(3) charitable organization, so your tax credit donation may be eligible for a federal deduction as well. You should consult your tax advisor for specific tax advice concerning deductibility for you. More information can be found at www.irs.gov.
May I also make the public school tax credit donation and receive both tax credits?
Yes, the public school tax credit donation is made directly to the public school of your choice and is strongly encouraged if your total tax liability equals or exceeds the total credit of both donations. The maximum tax credits available by law for both programs may adjust annually. This should be considered BEFORE you make your donation each year so you can take full advantage of the allowable credits for both the private and public school programs.
What percentage of my donation will actually be allocated for scholarships?
90% or more of every dollar is directly allocated to provide scholarships for students attending qualified private schools in Arizona.
Do I get the entire contribution as a tax credit?
Yes, you may receive a credit for the full amount of the contribution, up to the amount allowed by law or the actual tax you owe, whichever is less. If you cannot use the entire credit amount available for a particular year, the excess can be carried forward and used to offset state income taxes for up to five years. A taxpayer who donates between January 1st and April 15th may elect to claim the credit in either the previous tax year or the current year in which the donation was made. Always consult a tax advisor with questions regarding your personal taxes.
What do you mean by re-directing state taxes owed?
Making a donation to APESF is an alternative to writing a check to the state. For example, if you owe $3,000 to the state, you could say, “I want $1,000 of that to go to students in Arizona private schools,” and you would then only owe $2,000 to the state. In other words, a tax credit contribution to APESF directly reduces the amount of taxes you owe to the state of Arizona that you would have to pay anyway. By taking the credit you are, in effect, re-directing your tax dollars to benefit worthy students in Arizona private schools.
Tax Credit vs. Deduction–what’s the difference?
A tax credit lowers your tax bill dollar-for-dollar. A deduction decreases your taxable income, so the value deducted depends on your tax bracket. If you are in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers your bill by the full $1,000, no matter the tax bracket.
Will I receive a receipt for my donation?
Donors who contribute online will automatically receive an email receipt and may also request a receipt be mailed to them. Donors who contribute by mail with a check will have the option on the donor form to receive it by mail, email or both.
Are there situations where a contribution to a school tuition organization (STO), as defined in statute, would not qualify for the tax credits?
Yes. Your donation to the school tuition organization will not qualify for the credits if you designate the donation for the direct benefit of your dependent. Your donation will also not qualify if you designate a student beneficiary as a condition of your contribution to the school tuition organization. Additionally, the tax credits are not allowed if you agree with another person to designate each other’s contribution to the school tuition organization for the direct benefit of each other’s dependent, a practice commonly known as swapping.
What corporations or companies are eligible for the tax credit program?
Any corporation that pays Arizona corporate state income tax is eligible. (Typically “C” corporations are eligible, while LLCs and “S” corporations are not.*) All local and national insurance companies that pay Arizona 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 consult your tax preparer if this is the case.
How much of a corporate donation can be taken as a credit in a given tax year?
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.
How does the corporate tax credit program differ from the individual tax credit program?
The corporate program has an annual statewide 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.
Can a corporate donor recommend who may receive scholarships from its donation support?
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.
What percentage of each corporate donation is allocated to scholarships?
90% or more of every dollar is directly allocated to provide scholarships for students from low-income families OR disabled/displaced students attending qualified private schools in Arizona.
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