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Bear Market Report Great giving By Teresa Bear This holiday season is a time when we often think about those less fortunate than ourselves. It’s also a time when some begin to think about their taxes. How about combining the two with some little known help from the State of Arizona? Qualifying Charitable Organization Credit (QCO credit) This credit used to be known as the Working Poor Tax Credit. When you write a check to a certified charity, you receive a dollar-for-dollar credit against your Arizona State tax liability. The maximum credit allowed is $400 for single taxpayers and $800 for married couples filing a joint return. The list of qualified charities is 11 pages long and includes local food banks, women’s shelters, homeless shelters, legal aide organizations and health care charities. The organizations serve people around the state. For a list of organizations, check out the following link: https://www.azdor.gov Portals/0/RefundCredits/ CertifiedCharities2016.pdf Qualifying Foster Care Charitable Organization Credit (QFCO credit) This credit is used to help foster children and to aid in the adoption of foster and special needs kids. The contribution limits are the same as the QCO credit, so you can potentially offset your tax by an additional $500 for single taxpayers and $1,000 for married couples. The following organizations are eligible for the credit: https://www. azdor.gov/Portals/0/RefundCredits/ CertifiedFosterCareCharities2016. pdf You might be wondering how it works on your tax return. Let’s assume that Bob and Bev are filing a joint return this year. They are in the 25% federal tax bracket. They itemize their deductions on both their federal and state return. They anticipate that their Arizona tax will be greater than $1,800 so they want to contribute the max. • First they peruse the two lists and decide the charities to which they

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would like to give. They could pick one charity from each list, or more than one as long as the total contribution doesn’t exceed the limit. • Next, they make a contribution to their selected charity or charities and receive a receipt for each payment. • In the spring, they include the $1,800 contribution as a charitable contribution for their federal income taxes. This will save them $450 in federal income taxes ($1,800 X .25 = $400) • Arizona does not allow for both an itemized deduction and a tax credit, so their Arizona itemized deductions are reduced by $1,800. • Form 321 is filed with their Arizona return showing a list of charities and the amounts given to each. The good news: you have until April 15th of 2017 to make your contribution for 2016. However, in this instance, you can’t take the charitable contribution deduction on your 2016 federal return. Accounting wise, it’s much simpler to contribute now. On a personal note, thanks so much to my readers. Have a wonderful holiday and best wishes for a healthy, happy and prosperous New Year. Teresa Bear, CFP™, CPA (www. TeresaBear.com 480-503-0050) specializes in retirement planning and asset preservation for retirees and those about to retire. Teresa is the author of the book “She Retired Happily Ever After”.

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Lovin' Life After 50: Phoenix - Dec. 2016  
Lovin' Life After 50: Phoenix - Dec. 2016