As easy as it is to make a kid in foster care happy with a bike, it is just as easy for you to help us with the AZ Foster Care Tax Credit!
This tax credit (not deduction) lets you direct a portion of your state taxes to AZ Association of Foster and Adoptive Parents and our Recycle Your Bicycle program. You can get a tax credit of up to $1,000 if you file jointly and up to $500 for single filers. At the end of the day, it doesn't cost you anything to help us make a memory of a bike for a kid!
Here are some answers to the typical questions we receive on this program:
Q: WHAT IS THE ARIZONA TAX CREDIT FOR QUALIFYING FOSTER CARE CHARITABLE ORGANIZATIONS?
A: Arizona law allows you to claim a tax credit of up to $1,000 for taxpayers filing jointly and $500 for individuals for voluntary contributions you make during any taxable year to a Qualifying Charitable Organization and/or a Qualifying Foster Care Charitable Organization. To become a Qualifying Foster Care Charitable Organization you must provide assistance to low income residents of AZ, or chronically ill or disabled children. In addition, you must serve at least 200 children in foster care in Arizona and spend at least 50% of your budget on ongoing services to children in foster care. AZAFAP and Recycle Your Bicycle served more than 2,000 children in 2014, with overhead expenses of less than 5%. Approved charities’ names are listed on the Department of Revenue’s website (www.azdor.gov).
Q: HOW DOES IT WORK?
A: When you receive your W-2 and complete your tax return, one of three things will happen.
You end up having no tax liability.
You overpaid during the year and are receiving a refund or
You owe additional state taxes because not enough withholdings occurred during the year throughout your paychecks.
If you fall into #2 or #3, you’ll pay Arizona state income taxes. Taking advantage of the tax credit allows you either to increase the amount of refund you receive from the state or decrease what you owe to the state. It also allows a say in what your tax payment actually does.
Q: IS THERE A LIMIT TO HOW MUCH I CAN GIVE?
A: Of course, the AZAFAP & Recycle Your Bicycle will accept donations in any amount. The most you can give that will quality for the tax credit is:
$500 – Single Filer
$1,000 – Married Filer
Q: WHO CAN CONTRIBUTE?
A: Anyone can contribute to our program to help a child in foster care. Anyone who pays Arizona state taxes, whether you itemize or not, single or married, can qualify for the tax credit.
Q: WHAT’S THE DEADLINE TO CONTRIBUTE?
A: You must give before December 31 for the Tax Credit to apply to the current tax year.
Q: WHO RECEIVES THE CONTRIBUTIONS?
A: Your donation to AZAFAP/Recycle Your Bicycle will go directly to helping us with parts, helmets, and even the purchase of some bikes for kids in care that may be receiving their first every bicycle. We also use funds to help with the AZAFAP Toy Drive which provides toys, clothing and other types of gifts to kids in care that enables foster families to provide for a memorable holiday season.
Q: CAN I DONATE ONLINE?
A: Yes! Once payment is made online, you’ll receive an email confirmation that the transaction has gone through. At the end of January, a tax record receipt will be mailed to you directly.
Q: DO YOU RECEIVE ANY FUNDING FROM THE STATE?
A: No! As a 501(c)3 nonprofit organization, every contribution is valuable and necessary for our continued success. Our success depends entirely on generous individual and corporation donors.
Q: IS A TAX CREDIT DIFFERENT FROM A TAX DEDUCTION?
A: Yes. Tax deductions are expenses, including charitable donations, that reduce your total taxable income and therefore the amount of tax you pay. A tax credit is different: A tax credit allows you to redirect 100 percent of the amount designated (up to $1000 for taxpayers filing jointly and $500 for individual taxpayers), dollar-for-dollar, to the areas you choose.
Additionally, if you itemize your taxes on your U.S. federal tax return, you may be able to claim your donation as a federal tax deduction, thus lowering the amount of federal tax you’ll pay to the IRS.*
*We encourage you to check with your professional tax advisor for advice on your personal tax situation and to learn how charitable giving to AZAFAP/Recycle Your Bicycle may specifically benefit you.
For more detailed information regarding the Tax Credit program, please call the Arizona Department of Revenue at 602.255.3381 or 800.352.4090 or visit www.azdor.gov.