320: Credit for Employment of TANF Recipients (2025)
Arizona · Arizona DOR · Used for tax years 2025
Arizona Form 320 calculates the Credit for Employment of TANF Recipients. It reports qualified employment positions, qualifying employees and wages, the current year's credit, and available credit carryovers. Include it with your tax return.
Who files this form
Arizona Form 320 is used to claim the Credit for Employment of TANF Recipients. The 2025 form provides for:
- C corporations.
- S corporations claiming the credit at the corporate level.
- Partnerships passing the credit through to corporate partners.
- Exempt organizations with unrelated business taxable income (UBTI).
The form states that this credit is no longer available to individual taxpayers.
What you'll need
Have the following information ready to complete the form:
- Business name, location, and Employer Identification Number.
- Average numbers of qualified employment positions for the current and immediately preceding taxable years, plus positions eligible for other Arizona income tax credits.
- Numbers of new employees hired and qualified new employees.
- Employee names, Social Security numbers, hire dates, and whether each employee was an Arizona resident and receiving TANF benefits on the hire date.
- Employee wages for the current taxable year, less wages subsidized under A.R.S. §46-299, and whether each employee is in the first, second, or third year of employment.
- For carryovers, the originating taxable year, original credit amount, and amount previously used.
Corporate partners report current-year pass-through amounts from Forms 320-P. The form also includes employee schedules 320-1 and 320-2.
How to file
Include Form 320 with your tax return. The supplied form does not specify a mailing address or an e-file method.
- Partnerships must complete a separate Form 320-P for each corporate partner and furnish that partner a copy. Do not complete Parts 6 and 7 of Form 320.
- C corporations, S corporations claiming the credit at the corporate level, and exempt organizations with UBTI transfer the current-year credit, valid carryover, and total available credit to Arizona Form 300, Part 1, line 4, columns (a), (b), and (c), respectively.
- If you have more than 25 qualifying employees, complete additional Form 320-1 schedules and include them behind that page.
- If you are claiming a credit for more than 11 qualifying employees, complete additional Form 320-2 schedules and include them behind that page.
Common mistakes
- Taking a subtraction for the same wages. The form says not to take a subtraction for the same wage expense for which a credit is claimed.
- Missing the wage-expense add-back. When claiming a current-year credit, the listed corporations, partnerships passing the credit to corporate partners, and exempt organizations with UBTI must add back the total net qualifying wage expenses from line 16, column (b), under “Additions related to Arizona tax credits” on their tax return.
- Completing the wrong partnership sections. Partnerships must not complete Parts 6 and 7. They must complete and furnish a separate Form 320-P for each corporate partner.
- Leaving out extra employee schedules. Include additional schedules when you exceed the employee spaces on Form 320-1 or Form 320-2.
Questions people ask
Can an individual taxpayer claim this credit?
No. The 2025 form states that the credit is no longer available to individual taxpayers.
How is the maximum number of qualifying net new employees calculated?
Subtract the preceding year's average qualified employment positions from the current year's average. Then subtract positions eligible for any other Arizona income tax credit. On line 11, enter the smaller of that result from line 8 or the number of qualified new employees on line 10.
What credit percentages and wage limits appear on the form?
The credit percentages are 25% for qualifying net new employees, 33.33% for previously qualified employees in their second year of continuous employment, and 50% for those in their third year. Form 320-2 limits allowable wages per employee to the lesser of wages after the specified subsidy reduction or $2,000 for year one and $3,000 for years two and three.
How do I report an available credit carryover?
In Part 6, list the taxable year, original credit amount, and amount previously used. Subtract the amount used from the original amount to find the available carryover, then total the available amounts on line 22. Partnerships are instructed not to complete this part.