312: Agricultural Water Conservation System Credit (2024)

Who files this form

Use Arizona Form 312 to claim the Agricultural Water Conservation System Credit for tax year 2024. The form covers your own qualifying expenses, pass-through credits from partnerships and S corporations, and available credit carryovers.

You must have a qualified conservation plan on file and in effect with the United States Department of Agriculture Soil Conservation Service. If you answer “No” to this question in Part 1, the form says to stop because you cannot claim the credit.

What you'll need

Have the following information available to complete the form:

• Your name and Social Security number or EIN, plus your spouse’s name and Social Security number if filing jointly.
• The date your conservation plan was filed and the location of the Soil Conservation Office.
• The type of water conservation system or system change installed.
• Total qualifying expenses for the current taxable year and total reimbursements.
• Forms 312-P from partnerships and Forms 312-S from S corporations, if you received pass-through credits.
• Original credit amounts and amounts previously used for any carryovers from 2019 through 2023.

How to file

Include Form 312 with your tax return.

1. Complete Part 1 with your conservation plan information and the type of system or change installed.
2. In Part 2, subtract reimbursements from qualifying expenses and multiply the net amount by 75%. Add any partnership and S corporation pass-through credits.
3. In Part 3, calculate available carryovers by subtracting amounts previously used from the original credit amounts.
4. In Part 4, enter your current-year credit, available carryover, and total available credit.

If you did not make the Small Business Income election, transfer lines 17, 18, and 19 to Form 301, Part 1, line 4, columns (a), (b), and (c), respectively.

If you did make that election, transfer those amounts to Form 301-SBI, Part 1, line 3, columns (a), (b), and (c), respectively.

Common mistakes

• Claiming the credit without a qualified conservation plan. The form says to stop if you do not have a plan on file and in effect with the United States Department of Agriculture Soil Conservation Service.
• Taking a subtraction for the same expenses used to claim the credit. An individual cannot do both.
• Missing the required addition to income for your own credit. An individual claiming a current-year credit on line 7 must include the net qualifying expenses from line 6 under “Other Additions to Income” on the Arizona individual income tax return.
• Missing the required addition to income for an S corporation credit. An individual shareholder claiming a current-year pass-through credit on line 9 must include the pro rata share of net qualifying expenses from Form 312-S, line 1, under “Other Additions to Income.”

Questions people ask

How is the credit for my own qualifying expenses calculated?

Subtract reimbursements from total qualifying expenses, then multiply the net amount by 75% (.75).

What if I received more than one partnership or S corporation credit form?

Add the amounts on line 1 of all Forms 312-P and enter the total on Form 312, line 8. Add the amounts on line 2 of all Forms 312-S and enter the total on Form 312, line 9.

Which carryover years are listed on the 2024 form?

Part 3 lists 2019, 2020, 2021, 2022, and 2023. For each year, subtract the amount previously used from the original credit amount to calculate the available carryover.

Can I describe a system change that is not listed?

Part 1 includes an “Other” checkbox with space to describe the system change or system installed.

Official sources

• https://azdor.gov/forms