Arizona has several tax credits available for individuals: Working Poor Tax Credit, Corporation Tuition Tax Credits, School Tax Credits for Individuals, Health Insurance Premiums, and Water Conservation Systems. These few are mentioned specifically on their website.

It's getting to be that time of the year again; we're close to the end of the year, and your last chance to make donations to lower your tax liability for the year of 2010.

Did you know you may be eligible for tax credits if you live in the State of Arizona? There is a subtle difference between tax credits and tax deductions.  They both lower your tax liability, but tax credits tend to be more direct.  Nonetheless, if we're eligible for a tax credit, we should definitely take it. Read more about the difference between tax credits and deductions here.

Working Poor Tax Credit

Go to Arizona's Department of Revenue Working Poor Tax Credit page to learn more. You can find a list of qualified charities on that page, as well as Frequently Asked Questions.

I am most familiar with this tax credit, and here are a few bullet points of information.

• You must itemize your Arizona state taxes (although you do not have to itemize your Federal taxes)
• Those filing single and head of household can claim up to $200; you must file married filing joint to claim up to $400
• You claim the credit by listing the name of the charity and the dollar amount donated
• The charity you donated to MUST be on the list of qualified charities so check before you donate

Here are the others which are all listed at the Arizona Department of Revenue's website. Go to the main page, and on the left hand side you will see a link that says Tax Credits. Once you click on it, you will see it expand to show all the tax credits available. It looks like this:

Here are the individual links to each tax credit. Click on the links to learn more directly from the Arizona Department of Revenue.

School Tax Credit for Individuals – There are two school tax credits available to individuals.  There is also a very informative article at About.com Arizona Charitable Tax Credits on how to use the school tax credit. Here are a few bullets points according to the About.com page:

• You do not need to have a child in school
• You do not need to donate to the school in your district
• You need to have donated in the tax year to a qualifying school
• You must have a tax liability for the amount of your donation
• The donations can only be used for extracurricular activities

Health Insurance Premium Tax Credit – This credit is first come, first served with a cap of $5 million dollars.

Water Conservation Systems – Click on the link for the applications and you will also find Publication 565 which will give you all the details so that you are eligible for this tax credit.

• This tax credit is for individuals who have installed water collection systems (greywater or rainwater)
• There is also a tax credit available for corporations

There is one other tax credit that I know about. It's the Clean Elections Tax Reduction.

Please note I am not a tax professional, I am sharing this information based on my personal interpretation of the information found at the Arizona Department of Revenue website. The purpose of this post is to help make Arizona residents aware of these tax credits. Please consult your tax professional for more information.