Churches Can Receive State of Arizona Working Poor Tax Credit

Your Church can own a limited liability company (LLC) which can receive donations that allow donors to claim the State of Arizona’s Working Poor Tax Credit.

A tax credit is more advantageous to the donor than a tax deduction, because it reduces the donor’s tax liability by the full amount of the credit. Donors can give $400 (married couple) or $200 (individual) the church-owned LLC, and receive a credit against their tax liability.  Donors must itemize deductions on their State tax return, but not on their federal return, to qualify for the credit.

To receive donations that will allow donors to receive the credit, your Church can create an LLC owned by the Church. Donations must be made to the LLC and deposited into a separate bank account of the LLC. Because the LLC is owned by the Church, it does not need to separately qualify as 501(c)(3) tax exempt organization, and does not need to file a separate Form 990 with the IRS. The LLC must obtain a certification from the Arizona Department of Revenue and must spend at least 50% of its budget to provide qualifying services (including cash assistance or other assistance that is reasonably necessary to meeting immediate basic needs) to Arizona low-income households.

Cost to establish the LLC and apply for certification from the State of Arizona is about $2,500. For more information, contact Scott Wakefield, Esq., Ridenour, Hienton & Lewis, PLLC, 201 N. Central, Suite 3300, Phoenix, AZ  85004, at 602-254-9900, or swakefield@rhlfirm.com or Bob Brown, Esq. at 602-744-5748 or RBrown@RHLfirm.com.

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