Corporate Donation Application Deadline Fast Approaching

The Arizona state cap on corporate tax credit donations will be opening on July 2nd, 2018. The donation application must be received before that date to be submitted on time to the AZDOR. With the new federal tax laws in place, IBE expects the state cap to be met immediately. If you have any questions, please contact our Corporate Program Coordinator, Wendi Hauser, at (520) 512-5438. Read below to understand how the new federal tax laws will affect local S-corps and LLCs that file as S-corps.

New Federal Tax Law Creates Huge Opportunity for S-Corps and Most LLCs

The new Federal tax law has capped the SALT (State and Local Tax) deduction to $10,000.  This means that Arizona taxpayers who itemize on their Federal 1040 form for 2018 may no longer be able to itemize the full amount of this SALT deduction as they had previously.  Below is a chart that shows how the SALT deduction worked in 2017 for S-Corp owners and LLCs that filed their taxes as an S-Corp and how the SALT deduction will work for 2018 without making an Arizona Corporate Tax Credit donation. 

2017 Taxes
S.A.L.T Deduction
State Income Taxes	$  20,000.00
Real Estate Taxes	$    4,000.00
Vehicle Licenses	$     1,000.00
S.A.L.T. Deduction	$  25,000.00

2018 Taxes
S.A.L.T Deduction (capped at $10,000)
State Income Taxes	$  20,000.00
Real Estate Taxes	$     4,000.00
Vehicle Licenses	$      1,000.00
S.A.L.T. Deduction	$   10,000.00

Because there was no limit on the SALT deduction in 2017, the top scenario was common.  With the new Federal tax plan, the bottom scenario is how the same Individual’s 2018 SALT deduction will look if they file exactly the same way.  With their SALT deduction limited to $10,000, 2018 tax return will result in approximately $4,000 in Federal taxes that they did not pay in 2017.  They have lost $15,000 worth of deductions!

Making a dollar-for-dollar 2018 Corporate Tax Credit contribution will be necessary if shareholders want to realize the highest potential itemized deduction. This amazing opportunity is available for S-Corps and LLCs that file as an S-Corp (on the 1120S Form with your K-1).  Shareholders will be taking their Individual State tax liability out of the SALT deduction and putting it into the Charitable Contribution deduction resulting in a HUGE savings in Federal taxes owed and a dollar-for-dollar tax credit on your State taxes! This is how this scenario looks:

2018 Taxes
S.A.L.T Deduction (capped at $10,000)
Real Estate Taxes	$     4,000.00
Vehicle Licenses	$      1,000.00
S.A.L.T. Deduction	$     5,000.00
Charitable Deduction
State Income Taxes	$  20,000.00
Charitable Deduction	$  20,000.00

The shareholder removed their State taxes out of the SALT deduction by making a dollar-for-dollar 2018 Arizona Corporate Tax Credit contribution.  This allows them to put their State taxes into a Charitable Contribution Deduction and they are now able to realize the same amount of deductions as in 2017.  This will save the taxpayer the same approximate $4,000 they would have paid if they had not made a dollar-for-dollar Arizona state tax credit.

As a Corporate donor, you can still recommend a specific Arizona private school.  Please contact Wendi Hauser at 520-512-5438 or wendi@ibescholarships.org for more information.

Why IBE...?

• IBE retains only 5% of corporate donations for admin costs, allowing more money to go to students in need. Other STOs keep up to 10%.
• IBE has been a trusted School Tuition Organization (STO) since 1998.
• IBE works with more schools in Arizona than any other STO.
• IBE is recommended by donors, parents & schools for our commitment to customer service.

How often do we get a chance to make a difference in the lives of Arizona children while saving on our Federal taxes?