How is a credit different from a deduction?

TAX DEDUCTION EXAMPLE

Mary and John earned $50,000 this year. They made an $800 gift to ABC Charity. Although ABC Charity is a nonprofit 501(c)3, it is not a Qualifying Charitable Organization for the tax credit. Mary and John can take a deduction for their gift which, after itemizing deductions, reduces their taxable income by $800. Their tax liability is now based on $49,200.

Donate to St. Vincent de Paul to support needy families in Arizona.

Step 1

Step 3

Receive your tax credit!
(up to $800)

Step 2

File your taxes and claim the credit by using AZDOR Form 321

How does it work?

A deduction reduces the amount of your income upon which the tax is determined. A credit reduces your tax liability as if you had already paid the tax.

Below are simplified examples that demonstrate the difference.

VS

TAX CREDIT EXAMPLE 1

Betty and Ralph earned $50,000 this year. They made an $800 gift to SVdP which is a Qualifying Charitable Organization for the tax credit. Their Arizona tax liability based on $50,000 in earnings is $1,680. They can take an $800 credit against their tax liability reducing it to $880.

Sam and Linda earned $50,000 this year. They made an $800 gift to SVdP which is a Qualifying Charitable Organization for the tax credit. Their Arizona tax liability based on $50,000 in earnings is $1,680. Their payroll withholding for state taxes was $1,500. After applying their tax credit for their gift to SVdP, they received a refund of $620.

TAX CREDIT EXAMPLE 2

 $1680    Betty and Ralph's original AZ tax liability
− $800    AZ Charitable Tax Credit

   $880    Betty and Ralph's final AZ tax liability

   $1680    Sam and Linda's original AZ tax liability
  − $800    AZ Charitable Tax Credit

     $880    Sam and Linda's final AZ tax liability

− $1500    Payroll Withholding

     $620    Refund due Sam and Linda

FREQUENTLY ASKED QUESTIONS

1. Is this the same as the Working-Poor Tax Credit?
   Credit for Contributions to Qualifying Charitable Organizations was formerly known as the Working Poor Tax Credit. Thanks to the passage of SB 1216 on May 6, 2016, donors may now take up to $400 in tax credit and couples filing jointly may take up to $800 in tax credit for gifts made to St. Vincent de Paul.

2. Can I take this credit in addition to other credits such as credit for donations to schools and foster care agencies?
   Yes. Each tax credit is separate, so you can take the Charitable Tax Credit in addition to tax credits for schools and foster care agencies. See Form 301 on the Arizona Department of Revenue’s website for other credits you may be able to take. 

3. Do I have to donate $400 or $800 at once?
   You do not have to donate the whole amount at once. Donations given throughout the year that add up to the $400 and $800 limits qualify for the tax credit.  We can even set up a monthly gift option for you to spread the gifts out over the year.  For more information, please call Donna Rodgers at 602.261.6884.

4. Do I need a special form from St. Vincent de Paul to take the Tax Credit?
   You simply need a receipt from St. Vincent de Paul, which every donor receives in the mail after making a monetary gift. The form you need to take the tax credit is Arizona Form 321, which is available on the Arizona Department of Revenue’s website and is included with many of the available self-filing tax programs like Turbo Tax.

5. Can I take the Tax Credit by donating food, clothing or other tangible items?
   No. The Tax Credit only applies to voluntary cash donations.

6. What is St. Vincent de Paul’s tax ID?
   St. Vincent de Paul’s tax ID is 86-0096789. Our Arizona QCO code is 20540.
   

This information is for illustration purposes and is not intended to be legal or tax advice. Please consult your tax advisor or visit the Arizona Department of Revenue’s website regarding your individual situation. For more information or to make your tax credit gift to St. Vincent de Paul, please call our donation hotline 602.266.4483