Lowering Income Tax Liability with Paid Fees
Arizona taxpayers may earn a dollar-for-dollar tax credit/reduction for donations made or fees paid to a public school located in Arizona for extracurricular activities (athletics, clubs) or standardized testing fees for college readiness (SAT, PSAT, ACT, advance placement)
The amount of cash donated or fees paid to a public school is deducted from your Arizona income tax liability. The maximum amount deducted must not exceed:
- $200 for single taxpayers or heads of household.
- $400 for married taxpayers filing a joint return.
E.g. John is single and has a tax liability of $500. He has to pay $150 in athletic fees for his child. He can claim $150 as tax-credit and his tax liability will be reduced to $500-$150 = $350.
E.g. Mary is married and has a tax liability of $800. She has to pay $600 in club fees for her child. She can claim $400 (maximum amount for married taxpayers) as tax-credit and her tax liability will be reduced to $800-$400 = $400.
If the allowable tax credit is more than your tax or you have no tax, you may carry unused credit forward for up to five consecutive taxable years’ income tax liability.
Donations or fees made between January 1 and April 15 of each calendar year may be claimed as a tax credit in either the current or the prior year at the taxpayer’s discretion.
Donations or fees made between April 16 and December 31 during a calendar year may be claimed for that tax year.
Note: Taxpayers should consult their tax preparer for further guidance.