Frequently Asked Questions
We've collected some Frequently Asked Questions (FAQ's) below that we hope will answer some of your general questions.
These questions and answers are not intended to provide individuals with tax or legal advice. Interested persons should consult the Arizona Department of Revenue, the Internal Revenue Service, or their tax advisor for specific guidance relative to their particular tax situation.
- What are the allowable tax credit limits
- What are the benefits of contributing online
- How does the Tuition Tax Credit work?
- How do I determine what my tax liability is?
- How do I claim the credit on my tax return?
- Where do I get the tax forms needed to claim the credit?
- Can I also claim my payment as a deduction?
- Does the Catholic Tuition Organization accept matching gifts from employers?
- What does this School Tuition Tax Credit Act provide for?
- What has the Diocese of Phoenix done to provide a mechanism to implement this legislation in the Catholic schools?
- How does a tax credit differ from a tax deduction? Can I claim both?
- How do I claim my tax credit from the Arizona Department of Revenue?
- Can two married taxpayers filing a joint return both be eligible to claim the maximum credit?
- Can I also take advantage of the public school credit for support of extracurricular activities?
- What is a qualified school?
- Can a taxpayer designate their payment to go for scholarship support for a specific student or a specific school?
- How will the Catholic Tuition Organization distribute the funds available?
- How will this program work for families in the Diocese of Phoenix who wish to make a payment to the Catholic Tuition Organization?
- Where can I obtain more information regarding the Arizona Tuition Tax Credit program?
Additional information may be obtained from the Department of Revenue by calling (602) 255-3381 in Phoenix or (800) 352-4090, toll-free for other areas. Information can also be obtained by contacting the Catholic Tuition Organization office at 602.218.6542, or e-mail us.
Q. What are the allowable tax credit limits
A. With the passing of SB 1529, during the 2005 Legislative Session that eliminated the marriage penalty, the school tax credits have increased as follows:
Private School
- $500 per taxable year for a single individual or head of household;
- $1000 per taxable year for a married couple filing a joint tax return. A husband/wife who file separate tax returns for a taxable year in which they could have filed a joint tax return may each claim only 1/2 of the tax credit that would have been allowed for a joint return. This amount will increase to $1000 for the tax year 2006.
Public School
- $200 per taxable year for a single individual or head of household;
- $400 per taxable year for a married couple filing a joint tax return. A husband/wife who file separate returns for a taxable year in which they could have filed a joint tax return may each claim only 1/2 of the tax credit that would have been allowed for a joint return.
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Q. What are the benefits of contributing online?
A. Catholic Tuition Organization offers an online contribution method that allows you to make your payment directly on our web site. The process is secure and safe, using Verisign Secure Site. The online payment method is easy and fast and provides an instant tax receipt for your records.
And upon authorization of the credit card transaction, your contribution is immediately received and posted.
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Q. How does the Tuition Tax Credit work?
A. A.R.S. AZ 43-1089 provides for a credit of up to $1000 against state income tax obligations to any Arizona taxpayer for payments made to a qualified School Tuition Organization that provides scholarships or grants to students in qualified private schools. Since the credit is dollar-for-dollar, giving to the Catholic Tuition Organization will cost you absolutely nothing. Your payment must be made no later than December 31st of each year to qualify for the tax credit.
Credit card payments should be mailed by December 15th to allow for processing time. For your convenience, you can make an online credit card payment.
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Q. How do I determine what my tax liability is?
A. By reviewing your previous year state tax return, you can determine what your liability was last year. This is the total of your tax and not necessarily the amount deducted from your paychecks, the amount refunded to you, or the amount due.
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Q. How do I claim the credit on my tax return?
A. The credit may be claimed on the designated lines of your Arizona individual income tax return. The credit will benefit you only to the extent that you incur an Arizona income tax liability. If you do not pay any income tax to the state of Arizona, no benefit will be received. However, you can carry forward any unused credit for up to five (5) consecutive years.
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Q. Where do I get the tax forms needed to claim the credit?
A. The Catholic Tuition Organization will send you Arizona Forms 301 and 323, along with your tax receipt, for your convenience. The forms are also available by calling the Department of Revenue or visiting their web site.
Typically, the forms are available in early December of each tax year.
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Q. Can I also claim my payment as a deduction?
A. The amount claimed as a tax credit on your Arizona State tax return cannot also be claimed as a deduction. However, you may be able to claim the payment as a charitable contribution on your Federal income tax return in addition to the tax credit on your Arizona return.
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Q. Does the Catholic Tuition Organization accept matching gifts from employers?
A. Absolutely! This is a great way to double or triple your personal payment. Contact your employer's human resources or benefits department to verify participation. If they do, fill out the employee portion of the application and send it to:
Catholic Tuition Organization
2025 North Third Street, Suite #165
Phoenix, AZ 85004-1426
or mail it along with your payment. We will submit the completed application to your employer and notify you when we receive the matching payment.
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Q. What does this School Tuition Tax Credit Act provide for?
A. The Arizona Tuition Tax Credit Act (A.R.S. 43-1089) provides a credit against state income tax obligation up to a maximum of $1000 to any Arizona taxpayer for a cash contribution to a qualified School Tuition Organization that provides scholarships or grants to students in qualified private schools. This bill took effect for tax year beginning January 1, 1998. Payments must be made by December 31st of each year to be eligible for the tax credit against the current years income tax. What makes this law unique is that it allows a taxpayer to contribute up to $1000, which will be credited dollar-for-dollar against his or her Arizona income tax. (Therefore, it doesn't cost the taxpayer anything to participate!)
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Q. What has been done to provide a mechanism to implement this legislation in the Catholic schools?
A. The Catholic Tuition Organization of the Diocese of Phoenix is incorporated as a non-profit Arizona corporation, tax exempt under section 501(C)(3), Internal Revenue Code. Its purpose is to receive payments and other revenue and distribute these funds for educational scholarships or tuition grants to children to allow them to attend qualified schools. Those are the 28 elementary, five high schools and three kindergartens owned and operated by the Roman Catholic Church of the Diocese of Phoenix. The Catholic Tuition Organization also supports one school outside the Phoenix Diocese: St. Michael Indian School, which is located on the Navajo Indian Reservation but falls under the jurisdiction of the Diocese of Gallup, New Mexico. To assure its recognition as a qualified School Tuition Organization, the Catholic Tuition Organization is committed to allocate at least 93% of its annual revenue to scholarships or grants, and to make scholarships or grants available to students of more than one qualified school.
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Q. How does a tax credit differ from a tax deduction? Can I claim both?
A. A tax credit is significantly more beneficial than a deduction. A credit reduces your Arizona taxes dollar-for-dollar while a deduction reduces the taxable income upon which taxes are calculated. If you claim the tax credit on your Arizona return, you cannot also claim a deduction on your Arizona return. However, you may be able to claim the payment as an itemized deduction on your Federal income tax return, thus lowering the amount of Federal tax paid.
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Q. How do I claim my tax credit from the Arizona Department of Revenue
A. The credit may be claimed on the designated lines on your Arizona individual income tax return. Fillable and printable tax forms or available by clicking on the Tax Forms page of this web site. The credit will benefit you only to the extent that you incur an Arizona income tax liability. Thus, if you don't pay any income tax to the state of Arizona, no benefit will be received. However, you can carry forward any unused credit and receive a benefit against any Arizona income tax liability for up to five consecutive years.
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Q. Can two married taxpayers filing a joint return both be eligible to claim the maximum credit?
A. No. The statute allows only the $1000 maximum for the credit for taxpayers choosing to file a joint return. Further, married taxpayers that file separate returns can claim only one-half of the allowable credit on each return.
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Q. Can I also take advantage of the public school credit for support of extracurricular activities?
A. Yes! Contact the public school of your choice for details. The Catholic Tuition Organization is unable to accept payments for the public school credit
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Q. What is a qualified school?
A. A qualified school is a non-governmental primary or secondary school located in Arizona that does not discriminate on the basis of race, color, sex, handicap, familial status or national origin. The primary school begins with kindergarten, and the secondary school ends with grade twelve. Subsequent legislation in 1998 allows single-gender schools, that is, serving only boys or girls, to be eligible to receive funds under this legislation.
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Q. Can a taxpayer designate their payment to go for scholarship support for a specific student or a specific school?
A. Under the law, a parent or guardian cannot designate his or her own dependent to receive a scholarship and qualify for the tax credit. In addition, the Catholic Tuition Organization does not accept specific student designations, however contributors can designate their money to go to the students at a particular school. Funds left undesignated will be placed in a general fund which is distributed where needed most. This is to ensure that students at every school will have an equal opportunity to qualify for scholarships.
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Q. How will the Catholic Tuition Organization distribute the funds available?
A. Each school year, every student entering one of the diocesan schools in grades K-12 who is interested in receiving scholarship support will be asked to complete an application. The primary criteria for scholarships will be financial need. Based on the amount of money known to be available, scholarships will be awarded until all of the allocated funds are expended. Individual scholarships are limited to a maximum of 65-75% of tuition for elementary grade levels and up to 60% for high schools.
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Q. How will this program work for individual Arizona taxpayers who wish to make a payment to the Catholic Tuition Organization?
A. Anytime between now and December 31st, write a check or provide a credit card number to the Catholic Tuition Organization for up to $1000. Click here for a printable form or obtain a brochure from your local parish or school.
Catholic Tuition Organization offers an online contribution method that allows you to make your payment directly at our web site. The process is secure and safe, using Verisign Secure Site. The online payment method is easy and fast and provides an instant tax receipt for your records.
And upon authorization of the credit card transaction, your contribution is immediately received and posted. Feel secure knowing your payment is promptly received.
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Q. Where can I obtain more information regarding the Arizona Tuition Tax Credit program?
A. The Arizona Department of Revenue publishes a pamphlet entitled "School Tax Credits" which is identified as "PUB 707" and is available on the Internet.
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Learning is not attained by chance. It must be sought for with ardor and attended to with diligence.