How it Works
As a qualifying charitable organization, CDT Kids is able to take advantage of the AZ tax credit program. The Arizona State Tax Credit program allows you to make a donation to an eligible organization and receive a dollar-for-dollar credit against Arizona state taxes owed. Arizona Tax Credits allow the taxpayer to choose where a portion of their state income taxes will go. It’s all about having the choice and contributing to an organization or cause that is meaningful.
In Arizona, individual taxpayers (and married couples filing separately) are able to donate up to $400. For married couples filing jointly, they can donate up to $800 to a Qualified Charitable Organization and receive a tax credit up until April 15. An individual/family is able to contribute to more than one eligible tax credit organization and to more than one tax credit category.
What is 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).
Example explaining a tax credit: Let’s say you make $50,000 in taxable income per year. For the purposes of this example, let’s say the state of Arizona’s tax rate is three percent (please see the IRS website for the current Arizona state income tax rate) You owe the state of Arizona $1,500 in state income taxes at tax season. Now, if you are a single taxpayer and decide to give the maximum amount of $400 to CDT Kids, that $400 will be subtracted from your Arizona state income taxes that you owe. This is a tax credit. Instead, that $400 help to CDT Kids services while you will only owe the state the remaining $1.100 in state income taxes rather than $1,500 in state income taxes.
A tax deduction is a reduction of income that is able to be taxed.
Example that demonstrates a tax deduction: Let’s say you donate $400 to a charity that is not a Qualified Charitable Organization (QCO). The $400 you donated is considered a tax deduction. If you are an individual making $50,000 in taxable income a year, after giving your tax-deductible gift of $400, your income becomes $49,600 in which you still owe state income taxes on. For the sake of this example, we are saying the Arizona tax rate is three percent. After the tax deduction, this person would now owe $1,488 in state income taxes. Please contact your personal tax advisor for assistance in your personal income tax situation.
Overall, tax credits are more valuable than a tax deduction. A tax credit will help reduce your overall state tax liability and is not impacted by your tax withholdings during the course of the year. If you withheld more than what you owed, the credit will result in an increase in your state tax refund.
Payments can be set up as one time donation, or as recurring payments/donations to CDT for weekly, every other week, 2x/month, or monthly. If you decided to contribute before taxes are filed, you would still designate CDT Kids when filing, so you get the money back with your tax refund.
CDT Kids Tax Credit Category: Arizona Credit for Donations Made to Qualifying Charitable Organizations (QCO)
CDT Kids QCO Code: 20169
Follow QR Code below for link to donation platform -OR- you can go to www.cdtkids.com > How to Help > Donate to submit donation amount.
CDT Kids Donation Platform
DISCLAIMER: This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. No warranty or representation, express or implied, is made by CDT Kids, nor does CDT Kids accept any liability with respect to the information provided on our website. You should consult with your professional advisor(s) prior to acting on the information.