Frequently Asked Questions
WHAT IS THE PRIVATE SCHOOL TUITION TAX CREDIT?
Arizona law allows a dollar-for-dollar state income tax credit for donations to the Students First Foundation, an Arizona Department of Revenue certified school tuition organization. Your donation will give students, with a verified financial need, tuition assistance so they can afford private school education.
WHAT DO I HAVE TO DO TO QUALIFY FOR THIS CREDIT?
You must make a contribution to the Students First Foundation by April 15th of the year immediately following the tax year you are filing. Checks, Visa, MasterCard, American Express, Discover and payment plans accepted. You may also donate online.
IS MY DONATION ELIGIBLE FOR A FEDERAL DEDUCTION?
Yes, Students First Foundation is a federally tax exempt 501(c)(3) charitable organization. For federal tax purposes, any deduction must be claimed for the tax year in which the donation was made; the April 15 deadline does not apply. You should consult your tax adviser for specific tax advice concerning deductibility for your situation.
MAY I DESIGNATE MY DONATION FOR A PARTICULAR STUDENT?
All donations are placed in a general fund and distributed to students based on verified financial need. Students First Foundation has never accepted donor designated contributions. The state tax credit law allows donors to recommend a student or school for a tuition scholarship, and we place a high priority on these recommendations and will follow the intentions of the donors to the fullest extent the law will allow. By Arizona law, a school tuition organization cannot award, restrict or reserve scholarships solely on the basis of donor recommendation. A taxpayer may not claim a tax credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer's own dependent.
HOW DO I CLAIM MY TAX CREDIT?
The easy answer for anyone who uses a tax preparation service is that all tax preparers and even the software systems are all set up for this type of tax credit.
If you do your own taxes without the use of a software package, donations to Arizona Tuition Connection for the Original tax credit are filed using Arizona Form 323. Donations made for the PLUS/Overflow tax credit are filed using Arizona Form 348. These two forms are then summarized on Form 301. All forms are available on the Individual tax Credit page here.
Students First Foundation can send you a letter of acknowledgment for your tax records if requested. You may also be able to use your donation receipt as acknowledgement of donation. You should consult your tax adviser for specific tax advice concerning deductibility for your situation.
WHAT IS THE LOW INCOME CORPORATE TAX CREDIT?
Arizona law allows a dollar-for-dollar state income tax credit for “C” & “S” corporations and insurance companies that pay a premium tax for contributions to the Students First Foundation, an Arizona Department of Revenue certified school tuition organization. These donations give students, with a verified financial need, tuition assistance so they can afford private school education at an Arizona qualified school.
IS THERE ANY LIMIT TO THE AMOUNT OF MONEY CORPORATIONS CAN DONATE IN TOTAL IN A FISCAL YEAR?
Yes. The original law set a limit of $10 million for corporate tax credit donations and allowed a 20% increase in this amount each fiscal year. The corporate tax credit donation limitation for fiscal year 2019/20 is $106,993,207. This cap was met in less than one day, July 1, 2016. Students First Foundation will submit applications to the Arizona Department of Revenue on July 1, 2019.
IS THERE ANY LIMIT TO THE AMOUNT OF MONEY A SINGLE CORPORATION CAN DONATE FOR A TAX CREDIT?
Yes and no. There is a limit to how much corporations can donate in total each fiscal year for a tax credit. However, one corporation could donate the entire tax credit amount available.
IS THERE A MINIMUM LIMIT TO CORPORATE TAX CREDIT DONATIONS?
There is a minimum aggregate contribution of $5000 for “S” corporations only.
WHAT IS THE PROCEDURE FOR MAKING A CORPORATE/INSURANCE TAX CREDIT DONATION?
Contact David Farago at 480-930-0169 or email@example.com to initiate the process before July 1, 2019 as the cap is reached quickly. Fiscal year 2018/19 cap was consumed in less than one day.
The application for approval must be submitted by SFF to the ADOR.
If the program cap has not been met, ADOR approves the request within 20 days and notifies SFF.
SFF will immediately notify corporate donor of approval.
The corporation has 20 days from the date of approval by ADOR to make the contribution payable to SFF.
The corporation takes the tax credit on its tax return, but may carry any unused credit forward for up to five years after the contribution was made.
To claim the credit, the corporation lists the credit on the standard 120 form, and files a 335 form attached to the return. The corporation may take either the federal deduction or the Arizona state credit, but not both.
CAN PEOPLE OUTSIDE OF ARIZONA MAKE DONATIONS?
This is an Arizona tax credit program. To be able to take the donation as a dollar-for-dollar tax credit the donor must have an Arizona tax liability and be filing an Arizona tax return. People with no income in Arizona do not file Arizona taxes and therefore may not accept the credit.
With that said, Students First Foundation is a 501(c)3 non-profit organization. If people out of state would like to support your family they can make a donation. Instead of being a dollar for dollar tax credit, these out of state donations are taken as a federal tax deduction. Donors may claim it on their federal tax forms just like they do every other charitable donation they make.
Non-tax credit donations are not limited to the maximums set by the state for tax credit donations. Those donating from a state other than Arizona should consult a tax adviser for specific tax advice concerning deductibility for their situation.