A TO Z TAX SERVICE LLC
TAX NEWSLETTER, FALL 2014
THREE COMMON TAX CREDITS
There are 3 common tax credits that most of you can take if you owe Arizona any tax for the year. To determine this, look on your Arizona tax return two-thirds of the way down where it says "Total Tax Due" which is before "Payments". If you have a number above zero there, you pay tax either by check, online, or by withholding from your job. These credits are limited to your tax liability and therefore are not refundable. However, you can take your tax to zero and then receive all of your money you have already paid in through withholding back from Arizona in the form of a tax refund.
A tax credit is a dollar for dollar refund of the money paid, not a deduction, which you only get a portion of the money returned to you in the form of lower taxes.
Maximum credit amount assumes Married Filing Joint. If filing alone, the credit maximum is l/2 of the stated maximum.
1. Public School Extra Curricular Activity Tax Credit. Maximum is $400. Must be paid by December 31st to qualify. Can be taken for fees you pay for your child or as a donation to the school. If it's a donation, you also qualify for a deduction under charity for the amount paid on the federal return in addition to the tax credit on the Arizona return.
2. Working Poor Tax Credit. You must be itemizing your deductions to claim. If you take standard deduction, this one is not for you. Maximum of $400 and list of qualified organizations can be found on the Arizona Department of Revenue's website at http://www.azdor.gov, under "Tax Credits". Must be done by December 31st of this year to qualify.
3. Contributions to Qualifying Private School Tuition Organization. This one is all most of you need to do, unless you prefer the others or have Arizona income liability above the limits of this credit. The maximum amount of tax credit for this year is $2,134. If you are going to do this one, just wait until you do your tax return as you have until April 15th to make the contribution and still take it on this year's tax return! This is the only one you can change your 2014 tax after December 31st of this year. If you want to take advantage of this credit, please make your appointment as early as possible. It is possible to get your Arizona Refund in time to pay the donation if you file before the last week of March.
If you ever pay in more than your liability in any given year, you do receive a 5 year carryover of time to use the credit.
We will in most circumstances do one free amendment if you left off something from your return. Let's say you notice you forgot to include a bank account interest in the return or deduct a charity that you forgot about. No problem. Just let us know by email or phone and we'll take care of it at no charge. Let's say the amendment item requires the filing of an additional form that was not included in your original return. In this case, you will be charged for that form only at the same rates as you would have been charged with the original return.
On all Charity deductions, I wanted to remind you that you must have a receipt no matter the amount. If you give cash, get a receipt or I'm sorry, there is no charity deduction allowed per federal tax law. Also, if you give any one gift of $250 or more, you must have separate written confirmation from the charity that you received nothing in return for your donation and the full amount is deductible. You must have this by the time the return is filed to be valid.