Corporations with an Arizona corporate
income tax or insurance premium tax liability
can redirect up to 100 percent of their tax liability to a state approved School
Tuition Organization, such as ASCT, and receive dollar-for-dollar tax credits
for their contribution.
The statewide cap on corporate tax credits for the 2011-12
school year is $24.883 million and will increase by 20 percent each year. This
funding pool will be exclusively used to support scholarships for low-income students in
Arizona.
Scholarships are awarded to students who are income eligible for the federal
government's free or reduced lunch program.
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The process for corporations to enroll is very simple, and ASCT can handle all
the paperwork for your corporation. Information on eligibility is
also available on the
Arizona Department of Revenue (ADOR)
website.
For a corporation to take advantage of this unique opportunity to help
economically disadvantaged children, a corporation should begin by simply contacting ASCT and pledging
to make a contribution. From there, ASCT will complete an application that
is submitted to the ADOR on behalf of the corporation. As long as the tax
credit cap has not been met, the ADOR approves the request within 20 days.
The corporation has 10 days from the date of approval by the ADOR to make the
contribution. The contribution may not be designated for any specific
student(s). The corporation takes the tax credit on its tax return, but
may carry unused credit forward for up to five years.
The corporation may take either the federal deduction or the Arizona state
credit, but not both. To claim the credit for corporate income tax
redirections, the corporation lists the
credit on the standard 120 form, and files a
335 attached to the return.
To claim the credit for insurance premium tax redirections, the corporation
lists the credit on the Schedule STO within Form E-Tax.
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