Learn More About the Arizona Foster Care Tax Credit

The Arizona Foster Care Tax Credit is a charitable contribution you can give to qualifying 501 (c)(3) organizations that work with over 200 foster children a year.

When you take advantage of the Arizona Foster Care Tax Credit by donating to a qualifying organization like Christian Family Care, you receive a dollar-for-dollar tax credit and reduce what you pay the state in taxes–all while making a difference in the lives of vulnerable youth.

Be sure to make your tax credit donations by April 15, 2024, in order for them to apply to your 2023 tax return. We recommend that you consult with your tax advisor when filing your taxes! 

Read on to learn more about the Arizona Foster Care Tax Credit…

Top 5 Things to Know About the Arizona Foster Care Tax Credit

Before we dive into the full guide, we want to cover the top five things you should know about the Arizona Foster Care Tax Credit. 

1. The Arizona Foster Care Tax Credit is a charitable contribution you can give to qualifying 501(c)(3) organization that works with over 200 foster children in a year. With it, you can reduce what you pay the state in taxes while allocating your tax dollars to a qualified organization or charity that you are passionate about and feel best serves your community. In other words, you can either pay the state or you can help Christian Family Care serve at-risk children in the name of Jesus Christ.
2. Giving to a qualifying organization allows you to claim a dollar-for-dollar tax credit up to a certain amount. For the Arizona Foster Care Tax Credit, that amount is:
   • For 2023 state tax returns: $526 for single filers and $1,051 for joint filers; 
   • For 2024 state tax returns: $587 for single filers and $1,173 for joint filers.
     Learn more about maximum donation amounts here.
3. Tax credits are more valuable than a tax deduction. Tax credits either reduce what you pay the state in taxes to the state or increase your refund, dollar-for-dollar.
4. You may carry the tax credit forward up to five years.
5. The deadline for making a donation to Christian Family Care or another Qualified Foster Care Organization (QFCO) and receiving a tax credit for the year 2023 is April 15, 2024. You must make your tax credit donations by April 15, 2024, in order for them to apply to the 2023 tax year.

Understanding Arizona Tax Credits

Arizona Tax Credits give taxpayers the amazing opportunity to give their money to charitable organizations rather than pay the state.

These tax credits are utilized by taxpayers more and more every tax season. Between 2011 and 2016, about $34 million was donated to qualifying charities in Arizona. 

Tax Credits give the Taxpayer More Control

Arizona Tax Credits allow the taxpayer to choose where a portion of their state income taxes will go. It’s all about having a choice! Let me give you an example of how it works.

Let’s say a married couple filing their taxes jointly decides to give Christian Family Care, a Qualified Foster Care Organization (QFCO), a $1,051 donation at Christmas time. This couple feels passionate about Christian Family Care’s mission: to serve kids and strengthen families in Arizona. When the couple files taxes, they fill out the necessary information on the forms to put that $1,051 toward what they need to pay the state in income tax. Their state income taxes have been redirected to help support an organization of their choosing. 

If the couple hadn’t donated to a qualified organization to receive a tax credit, they would be required to pay their state income taxes as usual, with their money going into the general fund. In other words, they would lose control of where their tax dollars are invested. 

When you donate to Christian Family Care for the Arizona Foster Care Tax Credit, you help us strengthen families and serve at-risk youth in the name of Jesus Christ.

The Difference Between a Tax Credit and a Tax Deduction 

A tax credit reduces the amount of money you owe in taxes. For every dollar you give, a dollar you owe the government is subtracted. That’s why we say our tax credit is dollar-for-dollar (up to a certain amount).

Here’s an example that demonstrates a tax deduction. Let’s say you donate $526 to a charity that is not a Qualified Charitable Organization (QCO) or a Qualified Foster Care Organization (QFCO). The $526 you donated is considered a tax deduction. If you are an individual making $50,000 in taxable income a year, your taxable income becomes $49,474 after giving a tax-deductible gift of $526. You still owe income taxes on $49,474. For the sake of this example, we are saying the Arizona tax rate is three percent (please see the IRS website for the current Arizona state income tax rate). After the tax deduction, this person would owe $1,484 in state income taxes.

A tax deduction is a reduction of income that is able to be taxed.

Here’s an example that demonstrates a tax deduction. Let’s say you donate $526 to a charity that is not a Qualified Charitable Organization (QCO) or a Qualified Foster Care Organization (QFCO). The $526 you donated is considered a tax deduction. If you are an individual making $50,000 in taxable income a year, your taxable income becomes $49,474 after giving a tax-deductible gift of $526. You still owe income taxes on $49,474. For the sake of this example, we are saying the Arizona tax rate is three percent (please see the IRS website for the current Arizona state income tax rate). After the tax deduction, this person would owe $1,484 in state income taxes.

Overall, tax credits are more valuable than a tax deduction. A tax credit will help reduce what you pay the state in taxes and is not impacted by your tax withholdings during the course of the year. If you withheld more than what you owe, the credit will result in an increase in your state tax refund.

If you do not need to pay the state of Arizona any income tax for the current year, you may carry the tax credit forward for up to five years. Also, you don’t have to itemize it on your state taxes–even working teens can donate for tax credit!

Learn more about Arizona Tax Credits here.

More Information on the Arizona Foster Care Tax Credit 

Here are some other important things to know about the Arizona Foster Care Tax Credit.

Additional Requirements

• All tax credit donations must be financial. Tax credit donations cannot come in the form of goods or services. 
• All tax credit donations must be made to a certified charitable organization. Only donations made to Qualifying Charitable Organizations (QCOs) and/or Qualified Foster Care Organizations (QFCOs) are eligible for tax credit. Learn more about QCOs and QFCOs here.
• All tax credit donations must be made before April 15, 2024, to be eligible for 2023 state taxes. Note that the IRS has different deadlines for federal taxes; you can learn more about IRS deadlines here.

Contact Information

If you have any questions or need assistance with applying for the Arizona Foster Care Tax Credit, you can contact the Arizona Department of Revenue or the Christian Family Care team. 

We also strongly encourage you to consult with your personal tax advisor!

Arizona Department of Revenue

Phone (Phoenix area): (602) 255-3381
Phone (toll-free): (800) 352-4090
Website: azdor.gov

Christian Family Care

Phone: (602) 234-1935
Email: TaxCredit@cfcare.org

Donate to Christian Family Care and Earn the Arizona Foster Tax Credit

Follow these steps to earn the Arizona Foster Care Tax Credit on your state income taxes:

1. Fill out the donation form below to make your donation to Christian Family Care.
2. Keep a record of the donation for when you file your taxes. 
3. Ask your tax advisor to help you claim the dollar-for-dollar credit when you file your Arizona state tax return.
4. Place the Christian Family Care Qualifying Foster Care Charitable Organization (QFCO) code on form 352 when filing your Arizona state tax return. Our QFCO code is 10024. 
5. File your taxes.  

Thank you for supporting us as we serve vulnerable children, and congratulations on successfully taking advantage of the Arizona Foster Care Tax Credit!