What a week in Washington. From Supreme Court nominee hearings to health care bills.
State tax credit could mean money in your pocket
Arizona taxpayers who itemize can claim a state tax credit for donations to charities that qualify. In fact, that donation can also be taken as a deduction on the federal return. As KJZZ's Terry Ward reports from Phoenix, a taxpayer can actually turn a profit.
It sounds counter-intuitive but that donation can help your favorite charity and it can mean money in your pocket. Its called the working poor tax credit. And tax accountant Brad Huss explains how it works.
BRAD HUSS: A tax credit comes directly off your tax bill. So if you owe $600 in AZ taxes and you gave $400 to working poor, you'd owe $200.
Or if you had a refund coming, that refund would be increased by the amount you gave. But here's where it gets even more enticing. Along with the tax credit on your state return, you can take the donation as a deduction on your federal return. With a deduction you get a portion of the amount of the donation. For example lets say you're in the 25% tax bracket and you gave $400 to a qualifying charity.
BRAD HUSS: 25% of $400 is $100. So you'd save $100 on your federal return. You'd also save $400 on your state return. So you can come out ahead of what you gave.
All this assumes that you itemize on both your state & federal returns. Individuals can give a maximum of $200. Couples can give up to $400. There are no income limits. You can link to a complete list of qualifying charities here: http://www