Investments in education make a stronger workforce
There is a clear and strong correlation between the educational attainment of a workforce and their median wages. Better education and training fuels innovation, investment and economic diversification. Providing expanded access to high-quality education will not only expand economic opportunities but also likely do more to strengthen the overall economy than anything else. By making that investment, not only are you ensuring a robust workforce that has the ability to help your business flourish and grow well into the future but also you can receive a dollar-for-dollar tax credit offset and may be able to claim your contribution on your federal taxes as a donation. (Please consult a tax advisor)
Ways your corporation can contribute:
- Arizona dollar-for-dollar Corporate Tax Credit: See below for 2019 Corporate tax credit pledge form.
- Charitable Donation (Non-Arizona dollar-for-dollar tax credit): Please call 602.698.8855 or 480.823.8052
- Matching gift
In 2006 and then in 2008, the Arizona State Legislature passed into law the Corporate Income Tax Credit and then the Disabled/Displaced Corporate Income Tax Credit(A.R.S. §20-224.06 and § 43-1183), which allows a corporation to contribute to a qualified STO (School Tuition Organization) and receive a dollar-for-dollar Tax Credit up to the total amount of their tax liabilities and may qualify to also claim that amount on their federal taxes as a donation. The statewide Low-Income Corporate Tax Credits for fiscal year 2019/20 is $106,993,207 and Disabled/Displaced Tax Credit is $5,000,000.
On July 2, 2019 STO4KIDZ will submit the pre-approval corporate applications to the Arizona Department Of Revenue (ADOR) on behalf of the corporations which have submitted their pledge forms to STO4KIDZ. ADOR will process the applications on a first-come-first-served basis until the state cap amount is reached and at that point, no more application is accepted. Typically the cap is met within the first hour, so it is important to have your Pledge form filled with us well prior to June 30, 2019.
At no out of pocket cost to you or your corporation, you will receive a dollar-for-dollar State Income Tax Credit AND may qualify to claim your contribution on your federal taxes as a donation to STO4KIDZ, a non-profit charitable organization pursuant to federal law, Section 501c3, which in-turn awards a minimum 90% of every dollar in the same school-year calendar at the beginning of each semester in scholarships to qualified students attending qualified private schools in Arizona . (Please consult your tax advisor) http://www.azdor.gov/TaxCredits/CorporateTuitionTaxCredits.aspx
C-Corporations can allocate up to 100% of their state income tax liabilities for the given tax year as long as it does not exceed the statewide cap for the year. Credit can be carried forward for up to 5 years.
S-Corporations, (as defined in section 1361 of the Internal Revenue Code) can either claim the credit against income taxes at the corporate level (income tax reported on an Arizona 120S corporate income tax return) or it may make an irrevocable election to pass the credit through to its individual shareholders. The S-Corp must make a minimum aggregate contribution of $5,000 within their taxable year in order to pass the credit through to its shareholders and may allocate up to 100% of their state income tax liability for the given tax year, receive a dollar-for-dollar tax credit; then pass the credit on to its shareholders proportionately. If a corporation allocates more than their tax liability, it can be carried forward for up to 5 years. The contribution must be made by the S-corp, not a shareholder, in order to be eligible for the corporate tax credit. Each individual shareholder may claim only a pro rata share of the credit based on the individual’s ownership interest in the S-corp. (A.R.S. § 43-1089.04)
LLCs that are taxed as S-corporations for federal and state purposes are eligible to contribute for tax credit.
Insurance companies which pay Arizona state tax liability on their premium income can allocate up to 100% of their premium tax liabilities.
Can a corporation contribute after the end of its fiscal year and still claim the credit on its prior fiscal year tax return?
No. Corporations can only claim their contribution in the tax year in which the contribution is made. (Plus, five years for carry forward purposes). The law allows your corporation to allocate your tax liability to a School Tuition Organization (STO) such as STO4KIDZ, designating a private school, not a specific student. However, if there are not enough eligible students at your designated school, the money will be awarded among eligible students attending other qualifying private schools in Arizona.
- K-12 Students with a demonstrated financial need
- Pre-K–12 Students with Disabilities
- Kindergarten Students with a demonstrated financial need
- US Armed Forces Dependents
- Foster Children
- Students Transferring from a Public or Charter School with a demonstrated financial need
- Previous Corporate or Switcher Scholarship Recipients
1. Determine how much to allocate based on your corporation’s tax liability for the current year.
2. Complete and submit the Corporate Income Tax Allocation Form to STO4KIDZ by or before June 30, 2019. (This is your pledge)
3. STO4KIDZ will prepare your pre-approval form and will submit to ADOR on July 1, 2019. (ADOR will only accept applications submitted by an STO such as STO4KIDZ)
4. The same day our office receives your approval form from ADOR, we will email your corporation a copy of the approval form with key instructions.
5. Within 20 days you will fund School Tuition Organization 4 Kidz (STO4KIDZ) in order to keep the tax credit for the fiscal year 2019.
We sincerely welcome and appreciate your support and participation in this most worthwhile program at no-out-of-pocket cost to you.