NORTHERN ARIZONA CHRISTIAN SCHOOL SCHOLARSHIP FUND
Information For Withholding Reduction Donations General Overview The withholding tax reduction law became effective January 1, 2010. It allows individual income taxpayers to authorize their employer(s) to reduce their state withholding tax amount in order to make donations to a charitable organization, public school, and/or a school tuition organization. (NACSSF is a school tuition organization.) Employer participation in this is strictly voluntary. Private school tuition tax credit donations to be awarded as scholarships to students attending schools on our list can be sent to NACSSF by the employer quarterly and NACSSF will help facilitate this process. The public school tax credit and the low income tax credit will each be facilitated by the qualified schools or non-profit organizations that accept those donations.
Please consult your tax adviser for questions about your specific situation.
Important Facts for EmployeesThe primary advantage of using this option for you as an employee is that it allows you to make your donation without having to provide the money up front or in one large sum. This does not reduce your actual state tax liability. It simply changes the order in which your tax credit donation(s) and your state taxes are collected and paid should you choose to participate. It is your responsibility to present this to your employer,keeping in mind that this is voluntary on their part. NACSSF will provide specific forms to you and your employer for this process, and we will be available to answer any questions that we can. The donation portions withheld during each pay period cannot exceed your Arizona state tax with holdings being reduced for that same pay period. Therefore, it is important for you to clearly communicate how much and in what priority the donations should be withheld and paid by your employer if you are opting to use more than one Arizona state tax credit. The donation portions withheld will be sent quarterly and will be accepted by payroll date. Rather than by postmark date on the check, since the law allows employers to send in the donation within 15 days after the end of each calendar quarter. It is advisable for you to consult your tax preparer regarding your specific expectations for your state tax liability, withholdings, and intended donation amount(s). For 2018, the maximums that can be claimed under the private School Tuition Individual Tax Credit law are $555 for a Single person and $1,110 for a Married Couple Filing Jointly. If your donation exceeds your state tax liability, the excess portion may be claimed on the following year’s taxes for up to a total of 5 years. Additionally, under a new tax credit called The SWITCHER Individual Tax Credit, a Married Couple Filing Jointly can donate $1,103 and a Single Person can donate $552. The SWITCHER Individual Tax Credit is ONLY available to individuals that have first donated the maximum amount allowed for a credit under A.R.S. 43-1089, the ORIGINAL Individual Tax Credit.For a Married Couple the total allowable is $2,213 and Single total of $1,107 through April 15 for tax year 2018. NACSSF will send a receipt to you each January, or sooner upon request, stating the total of your tuition tax credit donation(s) for the prior tax year, whether they came from withholding reductions, regular donations, or any combination of both.
Important Facts for Employers
The primary advantage to you as an employer for providing this service is the benefit to your employee(s) at a minimal cost to you. Participation is voluntary on each employer’s part. NACSSF will facilitate this process to the best of our ability and we are happy to answer any questions we can. Employee communication regarding this withholding reduction is confidential information. Employers will be required to file Arizona Form A1-C with the Arizona Department of Revenue each January following the tax year in which the withholding donations were made or within 15 days of an employee leaving or being let go from employ. This form is available from our website www.NACSSF.org. This statement shows the total amount donated through withholding reduction donations for the tax year. NACSSF will also provide each donor a receipt showing the total of their donation for that year. NACSSF’s Withholding Donation Procedure: Step 1 – Donors should fill out and submit a Withholding Submission Form to NACSSF or call and provide your intended donation information over the phone. Step 2 – NACSSF will provide you with two forms – a form for you to keep for your records and an authorization form to sign and give to your employer. Step 3 – Your employer, if they agree to participate, will reduce your state tax withholdings by a prorated amount per pay period and will proceed to withhold and send in the donation for you quarterly. Step 4 –Your employer will file an A1-C form with the Arizona Department of Revenue. (See point 4 under “Important Facts for Employers” for more information about this.) In January, or earlier upon your request, NACSSF will also mail you a receipt showing the total of your donation(s) to use with Form 323 in claiming your tax credit. References: v A.R.S. 43-1089 v A.R.S. 43-401 v A.R.S. 43-1503 (C) v Arizona Form A1-C