With a Qualifying charity Tax Credit

 Introduction

For taxable years beginning on or after January 1, 1998, Arizona law provides a dollar for dollar credit for cash contributions made to qualified charities that provide help to the working poor.  The maximum amount of this credit for a contribution for the working poor is $400 for a couple and $200 for a single tax payer.

Is Habitat for Humanity a Qualified Charitable Organization?

YES!  Habitat for Humanity meets all the state requirements to qualify as a "Qualified Charitable Organization."

Who can use the tax credit?

The credit is only available to individuals who have itemized deductions and deducted charitable contributions on a prior year's Arizona return (1996 or later) at least once.  Corporations and partnerships may not claim the credit.

Must I have itemized to be eligible for the tax credit?

YES!  A taxpayer must itemize deductions and deduct charitable contributions on the Arizona state income tax return at least one (1996 or later) in order to establish a baseline year and amount.  The credit is then figured on the amounts over and above the baseline amount.

What if I didn't itemize in any of the years between 1996 and the present?  Can I itemize now and still use the credit?

NO!  You must first establish your base-line year in a year prior to the year in which you claim the credit.  For example, if you wish to use the credit and you have not itemized in any of the years between 1996 and the present, then you must itemize this year.  You will then be eligible for a credit next year (assuming of course that your contribution is in excess of the base year of 2002.)

How does a taxpayer determine the baseline year and amount?

If a taxpayer itemized deductions and deducted charitable contributions in 1996, that is by law the baseline year.  The baseline amount is the total dollar amount of charitable contributions deducted on Schedule A.  This amount includes the total contributions deducted pursuant to Section 170 of the Internal Revenue Code including cash amounts, property, or mileage amounts.  Therefore, if a taxpayer deducted a total of $500 in charitable contributions in 1996, that is the baseline amount.

If a taxpayer did not itemize deductions and deduct charitable contributions in 1996, then the baseline year is by law the first taxable year after 1996 that the taxpayer itemized deductions and deducts charitable contributions.

How is the credit amount figured once a taxpayer has established a baseline?

Credit dollars are allowed on the amounts above the baseline dollar amount.  For instance, if a taxpayer has a baseline amount of $500, the taxpayer must give $700 in total contributions.  That includes $200 to a qualifying charitable organization to receive a $200 tax credit.  Likewise, a taxpayer could give $600 in total contributions, including $200 to a qualifying charitable organization, and receive a $100 tax credit.

Where can I obtain more information about this program?

Contact the Arizona Department of Revenue at 602-255-3381.  Request a copy of Arizona Form 321 and publication 708, "Welfare Reform Tax Credits."  Form 321 will be needed to complete your tax return but can also assist you in figuring your tax credit.  Publication 708 provides much more information on this tax credit.

So what are the steps necessary to make a donation?

If you would like to make a donation, your check or money order should be made out to Habitat for Humanity, BUT given or sent to your church (or you may place it in the offering plate) by December 31^st, 2001.  Mt. View Lutheran Church will forward these checks to Habitat of Humanity to assure credit against our monetary commitment.  You will receive a receipt for your donation from Habitat for Humanity, which you will need when completing your tax return.