Understanding Tuition Tax Credits
Private schooling has often been perceived as a more costly but higher-quality education option for children. However, states, such as Arizona, have implemented tuition tax credits as a way to counteract these higher costs. Understanding tuition tax credits can help you decide if private education is right for your family.
The process begins with the standard taxes put toward education. In Arizona, people’s taxes can be taken out of their paychecks or they are paid quarterly for people operating a business.
That money is typically distributed to public schools throughout the state. However, by making a donation to a tax tuition credit organization, that money can go toward financing private school education programs. When filing your taxes, list these donations made and the state will return the profits in full as long as it remains under the legal limit for returns.
The largest caveat with the system is that they will only return donations if the amount is under the amount you paid in state taxes throughout the year. This can be a deterrent for people who filed for smaller amounts. It’ll still have some impact on the students, you will just not be able to see that cash returned to you.
For additional information on tuition tax credits, please review the attached video.