Corporate Tax Credit

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 can claim that amount on their federal taxes as a donation. The statewide Low Income Corporate Tax Credits for fiscal year 2018/19 is $89,161,006 and Disabled/Displaced Tax Credit is $5,000,000.

On July 2, 2018 the Pre-approval applications are submitted by STO4KIDZ on behalf of the corporations. Arizona Department Of Revenue (ADOR) will process the applications on a first-come-first-served basis until the 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 application filled with us well prior to June 30, 2018.

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 scholarships to qualified students attending qualified private schools in Arizona at no out of pocket cost to you or your corporation. (Please consult your tax advisor) http://www.azdor.gov/TaxCredits/CorporateTuitionTaxCredits.aspx

1. 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.

2. 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 shareholder 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)

3. LLCs that are taxed as S-corps for federal and state purposes are eligible to contribute for tax credit.

4. Insurance companies which pay Arizona state tax liability on their premium income can allocate up to 100% of their premium tax liabilities.

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
  • US Armed Forces Dependents
  • Students Transferring from a Public or Charter School
  • Foster Children
  • 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, 2018. (This is your pledge)

3. STO4KIDZ will prepare your pre-approval form and will submit to ADOR on July 2, 2018. (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 2018.

We sincerely welcome and appreciate your support and participation in this most worthwhile program at no out of pocket cost to you.

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Individual Tax Credit Contribution

STO4KIDZ accepts contributions throughout the year. Contributions must be made prior to filing your taxes but no later than April 15. You may choose to claim the tax credit for the previous or current tax year.

You can contribute up to the combined maximum of the Original ARS 43-1089 and Switcher ARS 43-1089.03, or your Arizona tax liability, whichever is less, and receive a dollar-for-dollar Arizona state tax credit. If you have no liability, you cannot receive a dollar-for-dollar tax credit.

You must first contribute the maximum to the Original tuition tax credit program, in order to contribute the additional amount.

When you are filing your taxes, you can claim the tax credit by using the Arizona forms 301 and 323 along with state income tax forms. However, if you contribute to the Switcher program, you also need to file a 348 form. Also use AZ Schedule A to claim the federal deduction. All these forms and more can be found at azdor.gov.

 

TAX FORMS:                                                                                     2017                  Instruction

Form 301 (Tax Credit Summary)                                                  PDF                             PDF

Form 323 (Original Tax Credit)                                                     PDF                             PDF

Form 348 (Switcher/Overflow Tax Credit)                                 PDF                             PDF

Schedule A (Claiming Federal Deduction)                                 PDF                             PDF

Yes! You may recommend anyone who is not your child or dependent. STO4KIDZ selection committee retains discretion regarding all awards. If you have no student preference, you have the option to recommend a private school of your choice. Your tax contribution will then be considered for students attending that school who have completed applications with STO4KIDZ, or you may contribute to STO4KIDZ general funds to be awarded to any qualified student at a private school. The law prohibits parents from swapping tax credit to benefit either taxpayer’s own dependent.

A minimum 90% of your contribution is used for scholarship awards.

Yes. If you contribute online via debit/ credit card you will immediately receive a digital tax receipt at the email address you provide. If you mail in a check, we will mail you a tax receipt by January 31 of the following year. If you need a receipt prior to January 31 please email us at: INFO@STO4KIDZ.ORG

Yes. STO4KIDZ is a 501(c)(3) non-profit, charitable organization, make sure to check with your tax advisor first.
 
We sincerely welcome and appreciate your support and participation in this most worthwhile program at no out of pocket cost to you.

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Student Application

STO4KIDZ is a School Tuition Organization (STO) which falls under Section 501(c)(3) of the Internal Revenue Code. We provide scholarships to qualifying students attending qualified private schools in Arizona through tax credit contributions made by individuals and corporations. STO4KIDZ is certified by the Arizona Department of Revenue (ADOR) to be in compliance with the Private School Tuition Tax Credit Requirements.

 

1.  Complete a STO4KIDZ online application. The application process will cover the Original, Switcher, and Corporate scholarships award opportunities for your student(s). One application is required for each student per school year.

2. Begin the enrollment process with the private school of choice. Your student must either be attending a private school or the enrollment is process.

All students can be recommended for the Individual Original Tax Credit. Monthly, STO4KIDZ awards a minimum 90% of every dollar in scholarship.

Must apply for each student once per school year. The application is good for each school academic year and it expires at the end of each school year.

  • Application OPENS May 1st
  • Application CLOSES August 17th for the 1st scholarship award cycle.   We continue accepting applications during each school year.

Yes! A current completed application must be on file for STO4KIDZ to consider a scholarship for your student for the current academic school year. Application expires at the end of each school year; therefore, the parent/guardian must apply for the student(s) every year. We highly take into consideration the recommendations of tax contributors, but it does not guarantee a scholarship and are not the only factor that STO4KIDZ considers when granting an award. However, we will do our best to meet the tuition needs of every student.

1. Family Financial circumstances
2. A brief narrative about the student by parents/ guardian
3. Letters of recommendation for the student (Considering student’s age)
4. Students with disabilities: Pre-school-12 grade (Must provide supporting documents)
5. Displaced student / Foster child (Must provide supporting documents)

No. Students must be enrolled in a private school full-time to receive STO scholarship.

The ESA statute (A.R.S. §15-2402(B)(3) requires that while a parent has a contract with the ESA program, a student cannot receive both ESA and STO money for the same period.  The ESA program states that student may utilize an STO scholarship up to the start of ESA funding.  Funding from the ESA program is on a quarterly basis and begins in the quarter following acceptance to the program. Once ESA funding begins, any outstanding STO scholarship money must be refunded by the private school to the STO.

STO4KIDZ awards a minimum 90% of every dollar in a scholarship. Original and Switcher awards are distributed monthly, and Corporate scholarships are awarded at the beginning of each semester. You will be notified by an email each time your student receives an award. We will then send a list of students and award amounts along with a check to schools.

*Please contact us, if you are not sure your student may or may not qualify to receive the Switcher (aka) Overflow /PLUS Tax Credit or the Corporate scholarships.

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