It is your responsibility to present this to your employer. Remember this is a voluntary program for the employer. TOPS will provide the needed forms to you and your employer for this process and will be available to answer any questions as they arise.
The donation portions withheld will be sent quarterly and will be accepted by payroll date, rather than by postmark date on the check since the law allows employers to send in the donation within 15 days after the end of each calendar quarter.
The donation portions withheld during each pay period cannot exceed your Arizona state tax withholdings being reduced for that same pay period. Therefore, it is important for you to communicate how much and in what priority the donations should be withheld and paid by your employer if you are opting to use more than one Arizona state tax credit.
It is advisable for you to consult your tax advisor regarding your specific situation for your state tax liability, withholdings, and intended donation amount. The maximums that can be claimed under the private school tuition tax credit are $500 for a single person and $1000 for a married couple filing jointly. If your donation exceeds your state tax liability the excess portion may be claimed on the following year’s taxes for up to a total of 5 years.
You may make a separate donation directly to TOPS for Kids if your withholding reduction amounts for this tax credit will not total up to the actual dollar amount you would like to donate, so long as the donation is postmarked or contributed online no later than December 31st of the tax year for which you want to claim the credit.
TOPS for Kids will send a receipt to you in January stating the total of your tuition tax credit donation for the prior tax year, whether it came from withholding reductions, a regular donation, or a combination of both.
What is the process I should follow to setup my payroll reduction donation:
First, you should contact TOPS for Kids to give us your contact information, mailing address for receipt, intended total donation, employer name, and any recommendation information. You may use the current donation brochure to do this if you prefer.
Next, TOPS for Kids will provide you with 2 forms: one form for you to keep with your records and one form to sign and give to your employer.
Next, Your employer, if they agree to participate in this program, will reduce your state tax withholdings by a prorated amount per pay period, per your request, and will proceed to withhold and send TOPS for Kids the donation for you.
Finally, in January, after the end of the tax year, your employer will provide you and the Arizona Department of Revenue with a statement showing the total donation amount withheld and paid. TOPS for Kids will mail you a receipt showing the total amount of your donation to use with the appropriate Arizona tax form (Forms 323 and/or 301), so you can claim your tax credit.
Facts for the Employer
The primary advantage to you as an employer for providing this is that it is a benefit to your employees at minimal cost to you.