Frequently Asked Questions
The Helping the Working Poor Fund was established in Arizona to provide services for employed families struggling to make ends meet. To encourage charitable contributions specifically for this purpose, the Arizona Legislature allows most donors to take a credit against their Arizona Income Tax.
Q: What is the difference between a tax
credit and a tax deduction?
A: A tax credit is applied as a reduction to your final tax bill.
In this case, the tax credit comes right off the top of your state
tax bill, lowering the amount of money that you must pay. For
example, if you qualify and give $400 to Helping the Working Poor,
you will pay $400 less in state taxes. A tax deduction, on the
other hand, is an item that helps calculate what your final tax bill
will be. In addition to the state tax credit, your gift to
Upward Foundation to help the working poor can be taken as a
deduction on your federal taxes.
Q: How do I qualify?
A: You must itemize charitable contributions on your income tax
return. You must establish a baseline year for charitable
contributions (1996 or later). Your donation to Upward
Foundation for helping the working poor that exceeds charitable
contributions in your baseline ye4ar is your tax credit. For
example, if you itemized $100 to charity in your baseline year, you
must give $100 to charity and then up to $400 to Upward Foundation
for helping the working poor. The amount you give above the
$100 is your tax credit.
Q: What is my baseline year?
A: If you itemized charitable contributions on your federal tax
return in 1996, this is your baseline year. If not, the first
year after 1996 that you itemized your deductions becomes your
baseline year. If you do not itemize charitable contributions
on your federal return, you are not eligible for the tax credit.
Your baseline year remains unchanged for future years.
Q: Do I qualify for the credit if I do
not owe any taxes at year end?
A: Assuming you have a state tax liability, the credit reduces it
independently from any tax that you may have withheld during the tax
year. If you withheld an amount equal to or greater than your
tax liability, the credit will increase your state tax refund
accordingly.
Q: How do I file for the credit?
A: You or your accountant complete a simple form, which is included in the materials provided by the State of Arizona to all state tax filers, and send it along with your state tax return.
To learn more, you can go to the Arizona Department of Revenue Web Site.
To get the Arizona Income Tax Form you need to claim the credit, click here.