Arizona Tax Forms 321 and 323

[Wedding5500]

Good Evening,

My Dad passed away in 7/2024 and this is the first tax year my Mom is filing as Single.

For their Arizona returns, they always donated to Qualified Charitable Organizations (Form 321) and Private School Tuition Organizations (Form 323) to take these two Arizona credits.

They had NO carryover from 2024 to this year for the QCO donations.

They HAVE a $605 carryover from 2024 to this year for the Private School Tuition Organizations.

Under “School Tax Credits”, I checked these boxes:

“I donated to an Arizona private school by April 15, 2026”

“I have a credit carryover for contributions to private schools from 2024”

A Filing Single maximum contribution of $769 was made in 2025 to a private schools tuition organization.  None of this was deducted on the Federal side.

Under “Prior-Year Carryover Information”, here’s what’s listed:

2022 - $1,000 Original Credit Amount and all of that was used in 2022

2023 - $1,000 - Same as above, but used in 2023

2024 - $1,459 was the Original Credit Amount and $854 was used in 2024 (the year my Dad died).  So there should be a $605 carryover based on this info, as well as it is shown on the Carryover Worksheet from 2024 TT, and what 2025 TT shows me under “Confirm Credit Amounts to Claim this Year”

For Form 321 (CQOs):

2025 - $495 in contributions were made (the max for Filing Single)

None of this was a deduction on the Federal side

“Confirm Credit Amounts to Claim this Year” shows their 2024 $605 carryover from the private school donation as well as 2025’s $769 private school contribution, for a total of $1,374.

TT shows my Mom’s Arizona Income Tax is $2,092 minus her credits of $1,869 for a balance due of $223.

Everything is fine UNTIL I get to the Review stage and then it goes haywire.

Form 321 - TT tells me, “Original credit amount should not exceed the maximum credit amount for prior years of:

$470 and the “Original credit amount” box lists $645, which is from 2022 (no carryover)

$470 and the “Original credit amount” box lists $560, which is from 2023 (no carryover)

$470 and the “Original credit amount” box lists $938, which is from 2024 (no carryover)

Form 323 tells me essentially the same thing:

I can’t exceed the maximum credit amount for prior years of $731

$1,000 from 2022 (no carryover)

$1,000 from 2023 (no carryover)

$1,459 from 2024 (carryover of $605 for 2025)

Why is TT all of a sudden trying to force me to use $470 and $731 as maximum credit amounts for prior years?

Is my Mom no longer able to utilize the $605 carryover for the private school org donation because my Dad died?

Finally - how in the world do I fix all of this?  I have no idea what’s happening, why, or what dollar amounts to actually use now.

Thank you so much to anyone who can help me out of this 2025 TY mess.

[AmyC · Accepted solution]

1. Prior year issue:

• The software is applying a "validation rule" based on your mom’s current filing status (Single) to her prior years' data.
• The Logic Error: For 2024, the maximum credit for a Single filer was $470 (Form 321) and $731 (Form 323). Because your mom is now filing as Single, TT’s error-checker is looking at her 2022–2024 entries and saying, "Wait, you can't have a credit of $938 or $1,459 because that's over the Single limit!"
• The Reality: Those credits were perfectly legal because they were generated on a Joint return. Arizona law generally allows a surviving spouse to retain their portion (and often the full amount in community property states like AZ) of a carryover credit, but the software's "Review" phase isn't sophisticated enough to realize the status changed after the credits were earned.

2. Carryover $605 

Yes. Your mom did not lose the carryover just because your dad passed away. Under Arizona's community property laws, credits earned during the marriage belong to the "community." Since she is the surviving member of that community, she is entitled to utilize the carryover on her single return until it is exhausted (within the 5-year carryover window).

3. Going through the Interview

1. Open to Arizona State  
2. find the Credit Carryover screens for Forms 321 and 323.
3. For the years with no carryover remaining (2022 and 2023), simply delete the data or enter $0. Since the credit was fully used in those years, it doesn't actually need to be reported on the 2025 return. Arizona only requires you to list prior years if there is an available carryover from them.
4. For 2024, since you have a $605 carryover, TT is forcing the "Original Credit" box to be under the Single limit. Try entering the "Original Credit" as $731 (the 2024 single max) and then adjust the "Amount Previously Used" so that the "Available Carryover" still equals exactly $605.
   • Example: If the goal is a $605 carryover, enter: Original $731, Used $126. This results in the same $605 carryover but "tricks" the software into passing the error check.

[Wedding5500]

@AmyC , I zeroed out the years where there was no carryover, and entered your work-around of $731 as the original credit and $126 as the used amount, leaving $605 as the intended carryover.  

I went through all the rest of the screens to the review, and IT WORKED!  No more errors!

I cannot thank you enough for your comprehensive response so I know *why* it happened, as well as how to fix it!!  I truly appreciate you, thank you so much.