AZ form 321 tax credit "basline yr" explanation

[AZ-Tax]

I pick up this client in 2004. Until 2007 he never donated to any qualifying AZ tax credit charities but donated to charities 2004, 05 and 06 and now 07 tax yrs that were reported on his Federal Sch A.

My ProSeries help states "If you itemize deductions and deducted charitable contributions in 1996 or the first year after that, that is your established. baseline year.

So where does this put my client's baseline year?

[Gary]

Baseline

The baseline year is entered on Arizona form 321, line 4.

On line 5, you enter total charitable contributions deducted as an itemized deduction of the Arizona schedule A. Thus, he must have itemized in a previous year in AZ. If this is his first year in AZ, then 2007 is his baseline year, and he can take the credit in 2008 (if he donates to a qualifying organization next year). The total contributions have to be greater than the baseline year contributions (in other words, you can't decide to not contribute money t , say the church, and give it to the charity to get the credit). If you don't get the full credit in one year, it carries over to next year.

Gary

[AZ-Tax]

Still confused....

From the AZ dept of Rev website:
If a taxpayer itemized deductions and deducted charitable contributions in 1996, that is by law the baseline year. The baseline amount is the total dollar amount of charitable contributions deducted on Schedule A. This amount includes the total contributions deducted pursuant to Section 170 of the Internal Revenue Code including cash amounts, property, or mileage amounts. Therefore, if a taxpayer deducted a total of $500 in charitable contributions in 1996, that is the baseline amount.

If a taxpayer did not itemize deductions and deduct charitable contributions in 1996, then the baseline year is by law the first taxable year after 1996 that the taxpayer itemizes deductions and deducts charitable contributions.

Are they referring to itemized deductible charitable contributions my client made on his Federal Schedule A or the Arizona Schedule A adjustment to charitable contributions in 1996 or the first year thereafter?

[Gary]

Line 5

Line 5 on AZ 321 says "total contributions deducted as an itemized deduction on your Arizona return for the baseline year listed on line 4". If the taxpayer itemized and had charitable contributions but did not file an AZ return, then this would not be a baseline year. If the taxpayer moved to AZ in 2005, itemized and had charitable contributions for 2005, this would be his baseline year. He could not take the credit in 2005, even if he contributed to the Working Poor. In 2006, if he contributed $200 ($400 MFJ) to the working poor, he could take the $200 credit ($400 if MFJ) if his total contributions for 2006 were at least $200 ($400) more than the amount for the baseline year. This is to prevent a person from not giving as much to other charities in order to just get the credit. If Taxpayer gives $200 to the appropriate charity, but his total charitable contributions are only $100 more than the baseline year, then he only gets $100 credit and the other $100 carries over to the next year.

I hope this clarifies your concerns.

Gary