I just discovered how to pay Arizona income taxes with a credit card—with no fee. And, you can help send kids to school at the same time. Here's how:
The Arizona Tuition Scholarship Tax Credit lets you to take a dollar-for-dollar tax credit for a donation to a scholarship tuition organization (STO). You can also nominate a kid to receive a scholarship. (If you like this idea, I hope you'll PM me for a suggestion ....)
The beautiful part is that some STOs don't charge a fee on credit card donations. So, if you owe $1,000 in Arizona income taxes (or had those taxes withheld throughout the year) you can donate $1,000 to a STO with a credit card, bank the points/miles, and get a $1,000 credit (or refund) against your AZ taxes. The max for 2018 is $2,213 (filing married) or $1,107 (filing single).
Step-by-Step Directions (it's really quite easy)
- Determine your state tax liability by reviewing Line 48 on Arizona Form 140. The amount on Line 48 is the amount you can direct to a scholarship, up to $2,213 (filing married) or $1,107 (filing single) for 2018.
- Instead of writing a check to the state, you will pay that amount to the Arizona Private Education Scholarship Fund. If the taxes were deducted from your paycheck, you will get a refund after you file. This whole process costs you nothing and it could earn you a bonus (see the next step). There are other STOs, but I have confirmed that APESF does not charge CC fees.
- You can give online with a credit card to earn cash back or frequent flier miles. There are no credit card fees.
- Please consider recommending my kid under the “Recommendations” section. Or not. (Think of it as a referral bonus.) Either way, you get points/miles for paying your taxes with no CC fees.
- In order to claim the tax credit for your donation, file Arizona tax forms 301, 323, and 348.
- The state will send you a refund, up to $2,213 (filing married) or $1,107 (filing single).
This post is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.