Arizona State - Credit 320 - Employment of TANF Recipients Credit

 Arizona law provides a nonrefundable credit for employers that employ recipients of Temporary Assistance for Needy Families (TANF). TANF is assistance granted under Section 403 of Title IV of the Social Security Act, as it exists after August 21, 1996.

The credit for employing TANF recipients is equal to:

1. One-fourth of the taxable wages paid to each qualified employee in the first year or partial year of employment, not to exceed $500 per net new employee.

2. One-third of the taxable wages paid to each previously qualified employee in the second year of continuous employment, not to exceed $1,000 per net new employee.

3. One-half of the taxable wages paid to each previously qualified employee in the third year of continuous employment, not to exceed $1,500 per net new employee.

You cannot take a deduction for the same wages for which you claim a credit. For more information, see the instructions under "Other Additions to Income" for the income tax return you will file.

You cannot claim this credit for any position that is eligible for any other Arizona employment credit based on wages paid.

If the allowable credit exceeds your income tax liability, you may carry over any unused amount for up to five consecutive taxable years.

This credit is available to individuals, corporations, and S corporations. A partnership may pass the credit through to its partners. An S corporation may pass the credit through to its shareholders.

This credit is also available to an exempt organization that is subject to corporate income tax on unrelated business taxable income (UBTI). The credit must result from the activities that generate UBTI.

For more information on this credit, see the department’s publication, Pub 708, Credit for Employment of Recipients of Temporary Assistance for Needy Families.

Individuals: You must also complete Arizona Form 301, Nonrefundable Individual Tax Credits and Recapture, and include Forms 301 and 320 with your tax return to claim this credit.

Corporate taxpayers including S corporations claiming this credit and exempt organizations with unrelated business taxable income: You must also complete Arizona Form 300, Nonrefundable Corporate Tax Credits and Recapture, and include Forms 300 and 320 with your tax return to claim this credit.