Arizona Tax Credit and CARES Act Information
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Information on the Arizona Charitable Tax Credit
Your gift to SAAF may qualify for the Arizona Charitable Tax Credit! Individuals filing their taxes in Arizona may receive a credit of up to $400 and married couples may receive a credit up to $800 on their state taxes. Make sure your gift is postmarked by April 15, 2021 to receive the credit on your 2020 state tax return. You must use code 20305 to claim the tax credit donation to SAAF.
You can take the Charitable Tax Credit in addition to the School Tax Credit and other credits. And you do not have to file an itemized return to take advantage of this credit!
The Coronavirus Aid, Relief, and Economic Security (CARES) Act creates two temporary benefits to Donors listed below (information taken from Foundation Group).
Universal Deduction for Donations for Tax Year 2020
For the over 9 out of 10 people who no longer itemize their charitable giving, the CARES Act will allow these individual taxpayers to deduct donations to charity of up to $300 on their 2020 federal tax return, even though they take the standard deduction. For Tax Year 2020, married-filing-jointly taxpayers do not get a bump to $600. $300 is the maximum above-the-line deduction per tax return. This deduction can be taken in addition to the Arizona State Tax Credits.
Universal Deduction for Donations for Tax Year 2021
For the over 9 out of 10 people who no longer itemize their charitable giving, the CARES Act will allow these individual taxpayers to deduct donations to charity of up to $300 on their 2021 federal tax return, even though they take the standard deduction. Married-filing-jointly taxpayers DO get a bump to $600 in Tax Year 2021. This deduction can be taken in addition to the Arizona State Tax Credits.
Raising the Charitable Giving Deduction Cap
For those donors who are still able to itemize their deductions, and therefore directly write off gifts to charity, the current deduction cap is 60% of adjusted gross income*. Corporations are able to deduct charitable donations up to 10% of taxable income.
*The 60% of AGI limit is for giving to 501(c)(3) public charities. The deductibility of gifts to 501(c)(3) private foundations is capped at 30% and was not included in this legislation.
The CARES Act lifts these caps to 100% for individuals and joint filers, while corporations will see their cap lifted to 25% for 2020. These are truly substantial changes to the tax treatment of donations. For individuals, it could theoretically mean zero taxable income if someone gives big.
For example, if John Taxpayer has an AGI of $175,000, he would normally be able deduct up to $105,000 for gifts to charity. With the temporary changes in the CARES Act, John could now deduct up to his full AGI of $175,000 if he gives that much to charity in 2020. The math works the same way for corporations.
Please note: Southern Arizona AIDS Foundation does not provide advice about the tax or other treatment of gifts. The above information is provided for informational purposes only and is not intended to provide tax, legal, or accounting advice. Please seek guidance from your professional advisor to learn more about how these deductions and credits may impact your personal finances.