1. 2015 ADOR UPDATE

2. Income Tax Brackets Adjusted for Inflation

4. Credit for Contributions Made or Fees Paid to Public Schools Starting with the 2015 return, individual taxpayers will be able to claim qualified contributions or fees paid on or before the 15 th day of the 4 th month following the close of the taxable year on either the current year or the proceeding taxable year (considered to be made on the last day of the year). (Arizona Form 322)

5. Credit for Contributions Made or Fees Paid to Public Schools The credit was also amended to allow fees or contributions for: –Standardized testing fees for college credit or readiness, –Technical Industry certification assessment, –Preparation courses, and –Materials for standardized testing The payment still has to be made directly to the school and not to the testing organization.

6. Change to the Credit for Increased Excise Taxes Must have a valid social security number (No ITIN) Either a valid social security number or an individual taxpayer identification number for the claimant’s spouse and any qualifying children.

7. Credit For Increased Excise Taxes (Con’t) Note: In the case of a married couple in which one of the spouses is disqualified from claiming the credit because they were sentenced to jail/prison for 60 days or more during the year, the other spouse will still be able to claim the credit for himself/herself (but not the disqualified spouse)and their qualified children as long as the spouse that was not disqualified has a valid social security number. If the only spouse with a valid social security number is the spouse that was disqualified due to incarceration then no credit will be allowed at all.

8. Miscellaneous Individual Changes The standard deduction was indexed for inflation in 2015: –Single or married filing separate is $5,091 (was $5,009) –Head of household or married filing joint is $10,173 (was $10,010) The box for making voluntary gifts to the National Guard Relief Fund has been removed. Credit for Qualified Health Insurance Plans (Arizona Form 347) repealed.

9. Miscellaneous Individual Changes The credit for qualifying Charitable Organizations (Arizona Form 321) was amended to a allow services provided to persons under age 21 that are in a transitional independent living program to be counted toward the required services for a Qualified Foster Care Organization. Previously only actual services provided for foster children qualified.

10. Individual Subtraction for Net Long- Term Capital Gain from Assets Acquired After 12/31/11 Increased For taxable years from and after 12/31/14, the subtraction is equal to 25% of the net long- term capital gain included in federal adjusted gross income (previous year 20%)

11. Filing Married AZ Schedule S “Allocation of Income by Same–Sex Couples Filing a Joint Federal Return” was discontinued after the 2013 return. For 2014 forward, if you qualify as married for federal purposes, you qualify as married for Arizona purposes and must file using the status of either married filing joint or married filing separate.

12. STO Credits 2015 Indexed for Inflation The limits are $535 for single or head of household and $1070 for married filing joint (Arizona Form 323). For 2015 the limits are $532 for single or head of household and $1064 for married filing joint (Arizona Form 348).

13. STO Credits New Credit for Business Contributions by an S Corporation to School Tuition Organization - Individual (Arizona Form 335-I) –Beginning from and after December 31, 2014, Arizona law allows an individual shareholder to claim a nonrefundable tax credit for the pro rata amount of qualifying contributions made by an S corporation to a school tuition organization.

14. STO Credits The amount of the allowable credit is based on individual’s ownership interest. The S corporation must make an irrevocable election to pass the credit through to its individual shareholders on Arizona Form 335. For more information see Arizona Forms 335 and 335-I.

16. STO Credits New Credit for Business Contributions by an S Corporation to School Tuition Organization for Displaced Students or Students with Disabilities - Individual (Arizona Form 341-I) –Beginning from and after December 31, 2014, Arizona law allows an individual shareholder to claim a nonrefundable tax credit for the pro rata amount of qualifying contributions made by an S corporation to a school tuition organization for Displaced Students or Students with Disabilities.

17. STO Credits The amount of the allowable credit is based on individual’s ownership interest. The S corporation must make an irrevocable election to pass the credit through to its individual shareholders on Arizona Form 341. For more information see Arizona Forms 341 and 341-I.

19. Expanded Credit for Renewable Energy Investment and Production for Self- Consumption by Manufacturers and International Operations Centers For 2015, International Operations Centers (IOC) were added to the credit. Claimed on Arizona Form 351.

20. Miscellaneous Corporate Changes For 2015 the corporate tax rate drops to 6.0% from 6.5% in 2014. In 2016 the rate will be 5.5% and for 2017 and after the rate will be 4.9%. In 2015 a taxpayer that chooses the enhanced apportionment ratio, the sales factor will be weighted at 90% and the property and payroll factor will each be weighted 5%.

21. Upcoming TPT Changes Revised forms: JT-1 & TPT-1 Location-based reporting Renewals this fall TPT Bulk File – TPT returns can be filed electronically via XML files

22. Questions?