Both a public school and a charter school are considered public, and single taxpayers may contribute a maximum of $200 (married taxpayers filing jointly $400) for 2006. Even if you do not itemize deductions on your tax return, you are eligible for this credit. Fees paid to support extracurricular activities such as field trips, sports and fine arts are qualified for the credit calculation.

The contributions can benefit your dependent or can be made to the central fund. The funds are paid to the individual school and it is important to note that the donation must be made by cash, check or credit card. Donations of goods are not recognized for the tax credit, but will still be eligible for Schedule A on Form 1040. Remember that school offices will be closed during the holiday season. A receipt dated no later than December 31^st is important documentation for the tax credit.

In giving to the private school tuition organization, the maximum allowable tax credits amounts are $500 for a single taxpayer ($1,000 for married taxpayers filing jointly) in 2006. Even if you do not itemize your deductions on your tax return, you are eligible for the credit.

The most challenging of the tax credits is the contribution to assist charities working with the poor. For this tax credit you must have itemized on a tax return at least once between 1996 and 2005 to establish a baseline year (total contributions equals all cash & non-cash deductions). Taxpayers whose filing status has changed subsequent to 1996 must establish a new baseline year and amount after the change occurred.

The current year contribution must exceed the baseline year amount in order to receive the credit. The maximum amount for a single taxpayer is $200 (married taxpayer filing jointly $400) above the baseline year amount.

All three credits are non-refundable dollar-for-dollar credit towards your state income tax liability. If your total contributions exceed your tax liability, the unused portion can carry forward for up to five years. Of course, even if you are not able to claim the state tax credit for a donation, it is still eligible as a federal itemized deduction. It is a win-win idea!

We are always available to answer Arizona tax credits questions or any tax question you have.