Important Changes to Arizona Tax Credits

Courtesy of BeachFleischman

On August 23, 2018, the IRS released some much anticipated regulations to address the various state tax credits available to taxpayers. The resulting rules will have a significant impact on the Federal tax treatment of the various Arizona charitable tax credits.

The effective date of these rules are proposed to apply to amounts paid after August 27, 2018. As a result of these proposed regulations, we are encouraging clients that take advantage of these credits to make all eligible contributions prior to midnight on August 27, 2018. We are attaching an updated summary of the various individual income tax credits available to Arizona taxpayers.

The new regulations would reduce the charitable contribution deduction by the amount of any state or local tax credit that the taxpayer receives. As a result of these changes, taxpayer’s who make a donation after August 27, 2018 and claim an Arizona credit on their tax return will no longer be able to also claim the Federal charitable contribution for the associated donation.

Please keep in mind that these are only proposed regulations and are not final. Our concern is if made final, the date of August 27, 2018 will already be passed and Arizona taxpayers will no longer be able to claim their tax credit as a federal deduction.

As always, if you would like to know more about these credits or find out how they would apply to your specific tax situation for 2018, please contact BeachFleischman.

For more tax credit specifics, please access link.