Donations made by an individual to private school tuition organizations can be made through a deduction from withholding, where the employee takes part of the individual's withholding taxes and sends it to the designated STO, such as YES Fund for Kids, Inc. Individual income tax payers authorize their employer to reduce their state withholding tax amount in order to make donations to a school tuition organization. This does not reduce the actual state tax liability. It simply changes the order in which the taxpayers tax credit donation(s) and their state taxes are collected and paid should one choose to use this option.
Employer participation in this program is purely voluntary. Check with your employer to see if this option will work for you.
Notice: A School Tuition Organization cannot award, restrict, or reserve scholarships solely on the basis of a donor's recommendation. A taxpayer may not claim a credit if the taxpayer agrees to swap donations with another taxpayer to benefit either taxpayer's own dependent. A.R.S. 43-a603(c).
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