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10.62.P.2 Tax Credit Contributions
PROCEDURE PROCEDURE
Tax Credit Contributions

Pursuant to A.R.S. 43-1089.01, a taxpayer is allowed a credit for the amount of any fees or cash contributions made to a public school for the support of extracurricular activities or character education programs.  Donations are limited to the amounts of two hundred dollars for a single individual or a head of household and four hundred dollars for a married couple filing a joint return.  A contribution for which a credit is claimed and that is made on or before April 15 following the taxable year may be applied to either the preceding taxable year or to the current year.

“Extracurricular activities,” as defined in A.R.S. 15-342 and A.R.S. 43-1089.01, are any optional, noncredit, educational, or recreational activities that supplement the education program of the school, whether offered before, during, or after regular school hours.  They are school-sponsored activities that require enrolled students to pay a fee in order to participate.  At least some monetary amount must be levied to participate in an extracurricular activity in order for the tax credit to be available.  A blanket waiver of all activity fees would make the activity ineligible for the tax credit.  Examples of extracurricular activities include paying fees for band uniforms, equipment or uniforms for varsity athletic activities, scientific laboratory materials, and in-state or out-of-state trips that are solely for competitive events.  Extracurricular activities do not include any senior trips or events that are recreational, amusement or tourist activities.

“Character education programs,” as defined in A.R.S. 15-719, must include instruction in the definition and application of at least six of the following character traits: truthfulness, responsibility, compassion, diligence, sincerity, trustworthiness, respect, attentiveness, obedience, orderliness, forgiveness, virtue, fairness, caring, citizenship, and integrity.  The course of study for each grade, kindergarten through twelfth, may be developed by the district.  Activities, discussions, and visual media and literary presentations should be used to illustrate and reinforce the application of the character traits, and presentations should be made by teachers or mentors who demonstrate the character traits. 

Using forms prescribed by the Arizona Department of Revenue, a recipient school of any contribution must provide the following information to the Department by February 28 of each year:
  • The total number of fee and cash contribution payments received during the previous calendar year.
  • The total dollar amount of fees and contributions received during the previous calendar year.
  • The total dollar amount of fees and contributions spent by the school during the previous calendar year, categorized by specific extracurricular activity or character education program.

In addition to this report to the Department, schools should issue a receipt to the taxpayer for any fees or cash contributions received.  The receipt should include the public school name, school district name and number, taxpayer name and address, fees paid or amount contributed, date paid or contributed, and a description of the activity being supported.

The use of contributions that are not designated for a specific purpose shall be determined by the site council of the public school that receives the contributions.  In the absence of a site council, the principal, director, or chief administrator of the school shall make the determination.  If, at the end of a fiscal year, there remain any unspent contributions that were previously designated for a specific purpose of program, and that purpose of program has been discontinued or has not been used for two consecutive fiscal years, these contributions shall be considered undesignated in the following fiscal year.