In Arizona, any donations that qualify for the 100% state tax credit are NOT deductible as a charitable contribution on your Federal tax return per IRS final regulations issued August 2020. I have been told TurboTax will not ask you questions regarding if your charitable contributions receive a state tax credit so the onus is 100% on you to NOT include those charitable contributions on your Federal tax return (on Schedule A).
I have made donations to Arizona Tuition Connection for several years. In 2019 when the IRS when proposed the new regulations I made my donations just ahead of the deadline for favorable treatment. In 2020 (and for 2021), I did not include the donations on my Federal return.
The history of this regulatory change was due to the Tax Reform Act limiting SALT deductions to $10,000 and several states tried to adopt tax credits laws like Arizona as a work around. In the end, the IRS got rid of favorable treatment for ALL states which ended the favorable treatment for us Arizonans too.
