S-Corp Tax Credit Program to Help Low-Income or Disabled Kids

As a construction company here in Phoenix, are you still figuring out ways you can give back to society while still being able to enjoy tax breaks? While you've perhaps already given to charity, it's possible many you've given to don't help as many people as you prefer. Also, the tax breaks maybe aren't as significant with what you've given.

Here in Arizona, taking the S-Corp tax credit program gives you a chance to help where it truly matters: Children in need.

Through the Arizona Tuition Connection, you can use an S-Corp tax credit to turn it into a scholarship for low-income or disabled kids. It's a tax process you'll want to take seriously, though you need to learn about specific reporting requirements first.

Here are some things to consider:

Why You Should Consider This Program

There isn't any better tax break or charitable program available in Arizona where it can help your bottom line while making the most difference for kids.

Arizona Tuition Connection is a non-profit School Tuition Organization approved to work with private schools throughout the state. Your company can give as little as $5000 and still help many lives needing proper education to succeed.

Every donation you give goes directly into providing tuition scholarships for kids dealing with disabilities or coming from low-income families. This applies specifically to all K-12 schools in Arizona.

When Can You Start Donating?

The date you can start donating is July 3, so take some time to consider your donation as soon as you can. With a state cap of around $74 million, this could close fast if the cap gets met early. It's a good idea to get your paperwork filed now so your donation can become accepted on the first day.

This program does have some leeway in allowing you to choose the school where you want to donate money. Your only stipulation is all shareholders can't directly benefit from giving the donation.

What Are the Reporting Requirements for an S-Corp?

You can easily pass on your tax credit onto your shareholders, and you don't have to worry about having tax liability to give the credit.

In a scenario where you pass on the tax credit to a shareholder, they'll have to report it at the end of the tax year, or when your fiscal year ends. An individual taxpayer would claim their credit share once their taxes become completed.

Different state tax forms need filling out, depending on if the donation you're giving goes to low-income kids, or ones disabled:

  • Fill out form 335-S and submit it with your 120S if giving a donation to low-income families.
  • Use form 341 and 341-S when giving donations to disabled kids. Submit this with your usual 120S.

Reporting Requirements for Individual Shareholders

One great aspect of this tax credit is there isn't any limiting on the credit when donating. No matter what they give, they can take the full credit amount without cuts.

When the individual shareholder claims the credit, they have to receive a copy of the 335-S form you filled out. Then they have to fill out a 335-I form to make it official for donations to low-income children. The individual taxpayer has to fill out form 341-I to give donations to disabled kids.

Perhaps the individual taking the credit in your company worries about still being able to take advantage of their switcher credits. They can still take the latter without any complications, making this a very convenient way to give back and save money.

To make this complete, you have to give your donation to Arizona Tuition Connection within 20 days of the start date. Successfully taking the credit is only possible after initial Arizona Department of Revenue approval.

Visit us at Foster Financial CPA to use our CPA services to take advantage of the S-Corp tax credit this July.