The following is a list of Frequently Asked Questions (FAQ's). They are not intended to provide individuals with specific tax or legal advice. Individuals should consult the Arizona Department of Revenue, at (800)352-4090, or their tax advisor for specific guidelines that relate to their particular situation.
For additional information, please contact the CTSO Office at (520) 838-2571 or (520) 838-2558.
- What is the School Tuition Tax Credit?
- What is the Catholic Tuition Support Organization (CTSO)?
- Who is eligible for the education tax credit?
- What are the tax credit limits?
- Is a tax credit the same as a tax-deductible donation?
- How does the Tuition Tax Credit work?
- How does the taxpayer determine tax liability?
- How does the taxpayer claim the tax credit?
- Does the CTSO accept matching gifts from employers?
- Can a taxpayer recommend their contribution go for scholarship support for a specific student or a specific school?
What is the School Tuition Tax Credit?
The State of Arizona provides a tax credit to taxpayers against their tax obligation when they make a cash contribution to a qualified School Tuition Organization. The organization provides scholarships or tuition assistance to students attending qualified private/parochial schools. This bill was passed in 1998.
With the passing of SB 1529, during the 2005 Legislative Session that eliminated the marriage penalty, the school tax credit allows taxpayers up to $1,000 if filing jointly and $500 if filing singly.
The tax credit allows taxpayers to direct a portion of their tax dollars and, at same time, provide tuition assistance for students at no cost to themselves.
What is the Catholic Tuition Support Organization (CTSO)?
The Catholic Tuition Support Organization (CTSO) is a qualified tuition support organization that is incorporated as a non-profit Arizona corporation, tax exempt under section 501 (c) (3) of the Revenue Code. The CTSO receives contributions from taxpayers and distributes educational scholarships or tuition grants to children in the 28 Catholic Schools in the Diocese of Tucson. The CTSO also provides assistance to St. Michael Indian School, which is located in St. Michael, Arizona on the Navajo Indian Reservation.
The Board of Directors is committed to allocating 93% of its annual revenue. The law requires 90% be allocated.
Who is eligible for the education tax credit?
Anyone who pays taxes in Arizona, parents, grandparents, friends, and neighbors.
What are the tax credit limits?
Private/Parochial Schools
- Persons filing tax returns as single individuals or as heads of household are allowed $500 per taxable year.
- Married couples filing a joint tax return are allowed $1000 per taxable year.
- A husband and wife who file separate returns when they could have filed a joint return may each claim 1/2 of the tax credit that would have been allowed on a joint return.
Public Schools
- Persons filing tax returns as single individuals or as heads of household are allowed $200 per taxable year.
- Married couples filing a joint return are allowed $400 per taxable year.
Is a tax credit the same as a tax-deductible donation?
No! A tax credit is significantly more beneficial than a tax deduction. A tax credit reduces your Arizona tax liability dollar-for-dollar by the amount of your contribution. A deduction reduces the taxable income upon which taxes are calculated. However, It may be possible to claim the payment as an itemized charitable deduction on your Federal income tax return as well.
How does the Tuition Tax Credit work?
Taxpayers contribute up to $1000 if filing jointly or up to $500 if filing singly to the CTSO. A printable payment form is available here or obtain a pre-addressed envelope from your school. Payments may be made by check, credit card (Visa, Mastercard, Discover, or American Express), electronic funds transfer in one single payment or monthly. Contributions must be postmarked or received by December 31. The CTSO will send contributors receipts by the end of January.
The CTSO offers an online payment method through the CTSO web site. The process is secure and safe. Payments are only accepted by credit card. The online method is easy and fast and upon authorization of the credit card transaction, your contribution is immediately posted to your account.
How does the taxpayer determine tax liability?
Taxpayers can review their previous year state tax return; it will help you determine what your liability was last year. This is the total of your tax and not necessary the amount deducted from your paychecks, the amount refunded to you, or the amount due.
How does the taxpayer claim the tax credit?
Taxpayers claim the credit when they complete their tax return by writing in their support amount on the designated lines of the Arizona individual income tax return. If you do not pay any income tax to the State of Arizona, no benefit will be received. However, you can carry forward any unused credit for up to five (5) years.
The CTSO will send all contributors the required Arizona tax forms with their receipt in January. The forms are also available by calling the Department of Revenue, (800) 352-4090 or by clicking on the tax form pages on the CTSO website.
Does the CTSO accept matching gifts from employers?
Yes! This is a great way to double or triple your contribution. Contact your employer's human resources or benefits department to verify participation. If they do, fill out the employee portion of the application and send it to:
Catholic Tuition Support OrganizationP.O. Box 31
Tucson, Arizona 85702-0032
You may also mail the matching gift application with your contribution and CTSO will mail the completed application to your employer.
Can a taxpayer recommend their contribution to go for a scholarship support for a specific student or a specific school?
Under the law, a parent or guardian cannot recommend his or her own dependent to receive a scholarship and qualify for the tax credit. In addition, the Catholic Tuition Support Organization (CTSO) does not accept specific student recommendations; however contributors can recommend their money to go to students at a particular school. Funds left undesignated will be distributed to the neediest schools. This is to ensure that students at every school will have an equal opportunity to qualify for scholarships.