Streamlined ‘working poor’ tax credit to help thousands

By Joyce Coronel | Dec. 1, 2009 | The Catholic Sun

Supporting your favorite charity just got a whole lot easier.

The Arizona Legislature has streamlined the process by which residents who pay taxes can donate to organizations that provide services to the working poor.

Previously, donors had to dig through past tax returns, establish a baseline year for their donations and then compare it to their existing donations. Jumping through that many hoops meant many people chose not to participate.

Ron Johnson, executive director of the Arizona Catholic Conference, said the change would go a long way toward helping the state’s poor.

“People itemizing their taxes can now more easily claim a dollar-for-dollar tax credit for their donations to nonprofit organizations primarily serving low income people,” Johnson said.

Organizations like Catholic Charities, St. Vincent de Paul and the Foundation for Senior Living will each benefit from the new law. Married couples are allowed to contribute $400 to these and other organizations and receive a tax credit. The process is simple.

An individual or couple gives a donation to a qualified organization and then claims the Arizona tax credit when they do their taxes. Assuming they have a tax liability — and most people do — they get their money back.

“It’s a way in which people can use the money they have earned which they otherwise would pay in taxes to support specifically those organizations that they truly believe in,” said Steve Zabilski, executive director of the St. Vincent de Paul Society for the Diocese of Phoenix.

Guy Mikkelson, president and CEO of the Foundation for Senior Living, an organization that helps the at-risk elderly population, agreed.

“It allows them to direct some of their income into charitable things they are specifically interested in. It’s a recognized tax credit,” he said.

No hard choices

Paul Mulligan, executive director of the Catholic Tuition Organization of the Diocese of Phoenix, is pleased with the development. He said that taxpayers will still receive a tax credit for their donations to CTODP — up to $1,000 for a married couple — but will also be able to support organizations that help the poor.

“The tax credit opens up a whole new avenue of giving for people who might otherwise be limited in their ability to support a charity due to their financial situation,” Mulligan said.

Zabilski said the new law means taxpayers don’t have to choose between helping the poor and supporting the Catholic or public school of their choice.

“The beauty of this is, and what a lot of people don’t recognize, is that you don’t have to make a choice — you can do both,” Zabilski said.

Family finds help

Mike and Mary Santana and their grandson Rhiley exemplify those who are helped by Catholic Charities, one of the organizations that will benefit from the streamlined tax credit.

Last fall, the Santanas were living in a trailer in Flagstaff with no heat and winter fast approaching. Although they were employed and had decent incomes, the couple had amassed large debts and had many bad financial habits.

On top of those challenges, they also had problems with drugs and alcohol. A friend told them about Catholic Charities and today the family lives in its permanent supportive housing program.

“They’ve got us back on our feet,” Mike said. “We were at the bottom, living paycheck to paycheck. I’ve never been so low in my whole life.”

The Santanas slowly began the hard work of learning budgeting and money management and began attending a drug and alcohol recovery group. Both have been clean and sober for nearly a year and are receiving family counseling.

In preparation for an independent life, they pay reduced monthly rent, and have paid down approximately $4,000 of their debt in the last year alone. They’ve completed homebuyer education classes and are participating in a program to help them build their own network of resources toward a life free from poverty and homelessness.

Mary Santana was so grateful for the services that she undertook training to allow her to volunteer her time to teach others the new skills she has learned. 

Those who wish to participate in the tax credit for the working poor need to make their contributions by Dec. 31.

“The money that people are giving really goes to serve the poorest and most vulnerable among us,” said Tom Egan of Catholic Charities. “It’s a wonderful way for people to get involved.”