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What is a Qualified Charitable Organization?

In the state of Arizona there are many individual tax credits, including the Arizona Charitable Tax Credit for Qualified Charitable Organizations. This tax credit allows taxpayers to make charitable contributions to receive dollar-for-dollar reductions on their Arizona state tax requirements and liabilities.

If you’re not sure what defines a Qualifying Charitable Organization in Arizona, that’s okay – you’re not alone. Many, if not most individuals who hold tax responsibilities are unaware that you can combine multiple tax credits and carry forward benefits for multiple years to come.

In short, a QCO meets the qualifications and provisions set by the state and is usually a non-profit 301(c)(3) that promises to spend it’s budget on qualified services that help the community and Arizona residents. To qualify for an Arizona charitable tax credit and receive a dollar-for-dollar reduction, you only need to remember these four steps.

1.) Donate to a Qualified Charitable Organization (Any Below).
2.) Maintain a receipt of your gift(s) from the charity.
3.) Complete Arizona Form 321 and/or 352 during tax preparation.
4.) Calculate your individual tax return while subtracting your dollar-for-dollar credit from your tax liability.

Example: If a single tax payer owes $400 in taxes but donates $400 to a Qualified Charitable Organization in Arizona, the tax liability is reduced to $0.

Note: The Arizona Charitable Tax Credit is a set of two nonrefundable individual income tax credits for charitable contributions to Qualifying Charitable Organizations (QCOs) and Qualifying Foster Care Charitable Organizations (QFCOs). The maximum allowable credit for contributions to QCOs is $800 for married filing jointly filers or $400 for single, married filing separately, and heads of household filers. The maximum credit for contributions to QFCOs is $1,000 for married filing jointly or $500 for single, married filing separately, and heads of household filers.