Tax credit 2023: quick guide and why it matters for education 

Tax credit 2023: quick guide and why it matters for education 

Another year, another chance to improve ourselves and to become better people. For our society, a good person is one who can also be a good citizen, abiding by the rules that make our modern world keep on. 

To respect those norms, we have to assume different responsibilities. One of them is filing our taxes. Luckily, there are helpful mechanisms that can be beneficial for our financial situation. 

You’re on time to get ready to make the best out of the tax season. Your 2023 income tax return allows you to get tax credits in different ways.

Charitable work is a commendable way to give back. We know you’ve made a great effort to earn income, but the reality is that sometimes there are people who, even if they do their best, their income is not as great. 

Keep reading to find out more about tax credit 2023 and how important it is to contribute to good causes, in this case, the education of unprivileged children and teenagers who, nonetheless, deserve a bright future!

What Is Tax Credit 2023?

Understandably, paying taxes is something that terrifies a lot of people. It might be challenging for some to get the facts right and to need clarification about how much they need to file or pay, etc. 

Nevertheless, when you start to dig in, you’ll find not only that it could be far simpler than you thought (for most people at least!), but also that there are some potential benefits you might get for doing everything on time. 

For example, a tax credit! In Arizona, tax credits are mechanisms by which you can direct tax dollars to qualified organizations supporting different charitable causes, for example, scholarships for children in need. 

With a tax credit, your donation acts as a dollar-for-dollar replacement, to a certain extent, of what you would otherwise owe in income taxes to the state of Arizona.

The way the tax credit works is less complicated than you think: for each dollar that you donate to a qualified entity, like a private school tuition organization—Arizona’s CTSO being one of them—you get a dollar in credit to reduce your tax liability. 

By doing so, you redirect what you would be paying in taxes anyway. You don’t lose anything, nothing is taken away from you! This is one of the reasons tax credit is a great way to give back and support your community. 

Arizona’s taxpayers have this excellent opportunity to advance the causes they cherish the most. If education and the Catholic faith are important to you, supporting deserving students sounds like an excellent way to begin the year. 

In 2022, it was estimated that $130,234,445 were donated through the “individual original donations” and the “switcher individual donations” in Arizona for school tuition organizations (1) 

Established in 1997, the Arizona Private School tax credits are the specific mechanism for low and middle-income families to access private education for their children. Your contribution helps these kids stand a chance for a better future.

In Arizona’s CTSO, we are committed to providing the best faith-filled education that is also academically solid. The vast majority of the children who have received a scholarship through our organization come from low-income households. 

Do you want to learn more about tax credit 2023? Keep reading to know when and how you can apply for this opportunity. 

When and how can I contribute? 

In short: you can donate all year long and benefit from a tax credit. What’s important to consider is the tax year limit dates so you know when to apply. 

Regarding any tax credit 2024, any donation made January 1st through December 31, 2023, is of course included, but donations made January 1st through April 15, 2024, are still taken into account to claim for a credit on the 2023 tax return. 

In 2024, you can still donate for your 2023 tax year. Donations made by April 15, 2024, are still valid for your 2023 tax return!

For more questions regarding your taxes, please contact your tax advisor. This quick guide is just for informational purposes, any specific doubt or situation should be handled professionally. For now, we’ll explain in short how to apply. 

If you’re not familiar with religious schools or the type of education they offer, click here to learn more about how Catholic schools contribute to society.

Tax Credit 2023: the simplest way to do it. 

Keep in mind that the Arizona law allows for this kind of tax credit only for individuals. Corporations are not permitted to file for this mechanism. The credit is equal to the contributed sum, considering the maximum allowed. 

To apply for tax credits that support education, you have to contribute to a private school tuition organization (STO) that has been certified as such. A proper private STO, like Arizona’s CTSO, meets the following criteria:

  1. The organization is tax-exempt.
  2. The organization allocates at least 90% of its annual revenue from donations to scholarships and tuition grants.
  3. The organization grants these mechanisms to students from more than just one qualified school. 

The Arizona Department of Revenue forms 323 and 348 are mandatory for claiming your tax credit when contributing to Certified School Tuition Organizations, which offer scholarships to private schools, such as Catholic schools.

For the 2023 tax year, the maximum donation amount originally is $655 for a single taxpayer and $1,398 for a married couple. To claim this, Credit for Contributions to Private School Tuition Organizations, you need to fill the Form 323 of the Arizona Department of Revenue. 

However, when you exceed this amount, you have the chance to claim the Credit for Contributions to Certified School Tuition Organizations by filling the Form 348, which is also known as the Switcher Individual Income Tax Credit. Limits for 2023 are $652 for a single and $1,301 for a married couple. 

This means that jointly, for the 2023 tax year, you’re allowed a maximum of $1,307 for a single taxpayer or $2,609 for a married couple. The following table sums up this information: 

Filling StatusForm 323Form 348Total Tax Credit
Single$655$653$1,307
Married$1,308$1,301$2,609

To claim your tax credit 2023 by donating to a private (certified) school tuition organization, please follow the instructions in forms 323 and 348 and fill them with all the requested for information. 

Learn more about the important role charity has in society: click here to read about how charitable organizations have helped school dropout decrease.

Your contribution matters!

Donating to a charitable organization is always welcome, it feels good, and it’s a nice way to support your community. One of our teachings is helping those in need and by doing so, you can change lives. 

In Arizona’s CTSO, we believe in strong community ties as a way to heal our modern societies. Through the Lord’s example, we provide children and teenagers with a quality education that otherwise they wouldn’t get.  

Sadly, Arizona’s education levels are not at its best. It is estimated that in 2022 there was a modest decline in high school graduation rate (2).

We like to believe we are part of a solution. By granting thousands of scholarships to deserving students, we want to fight dropouts and help build a better future for our tomorrow citizens. 

All of this, of course, is possible thanks to the generous contribution of our donators. Your contribution matters! The impact a scholarship has might be just enormous. Lives are changed through education. 

A team effort is necessary to keep this going. Through your donations, we continue working to guarantee no child gets behind in our state. And you receive your tax credit. It’s a win-win situation. Please contact us for further information on how to help! 

References

  1. “School Tuition Organization Income Tax Credits in Arizona.” Report of the Arizona Department of Revenue. Retrieval date: February 14, 2024.
  2. “Arizona Education Progress Meter Updated with 2022 Data.” Center for the Future of Arizona. Retrieval date: February 14, 2024.
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© 2021 Catholic Tuition Support Organization, Tucson, Arizona.

Arizona Catholic Tuition Support Organization (CTSO) is an IRS 501 (c) (3) nonprofit organization, and is a qualified tax credit organization under the State of Arizona.