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robzenuk
New Member

Is it valid to claim a donation to the Arizona Tuition Connection (a valid 501c3 State Tuition Organization) on your Federal form as a valid charitable cash donation?

Arizona provides a dollar for dollar state tax CREDIT for the donation.  I am not making the donation for one of my children and am not swapping donations with another parent (the caveats documented by the IRS and on the Arizona Tuition Connection website).  It is a nice bonus if this is a valid federal deduction as well.  Since the State Tuition Organizations don't directly say this is a valid federal deduction, but to check with your tax professional, I wanted to get some opinions.

3 Replies
AmyT
New Member

Is it valid to claim a donation to the Arizona Tuition Connection (a valid 501c3 State Tuition Organization) on your Federal form as a valid charitable cash donation?

If the organization to which you made the donation is a 501(c)(3) organization, you are able to include the amount of the donation with your other charitable contributions as an itemized deduction.

Monsterdaddy
Level 2

Is it valid to claim a donation to the Arizona Tuition Connection (a valid 501c3 State Tuition Organization) on your Federal form as a valid charitable cash donation?

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.

Monsterdaddy
Level 2

Is it valid to claim a donation to the Arizona Tuition Connection (a valid 501c3 State Tuition Organization) on your Federal form as a valid charitable cash donation?

That is incorrect.  

 

Any donation that receives a certain percentage of a state tax credit (not sure the threshold, Arizona is 100% so that is easy) should not be deducted on your Federal return.

 

Technically, you could add it as a deduction on your Federal return but ONLY if you do not receive a state tax credit (which is worth much more) or donate more that the state tax credit you received (and only the difference would count).

 

Really wish TurboTax would add this warning in for residents of certain states with these state tax credits.

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