Arizona Withholding
Arizona Withholding Tax Changes
Arizona changed how to calculate the withholding rate for employees. Prior to July 1st 2010 rates were based on a percentage of Federal taxes after the percentage had been manually entered into AccountEdge. After July 1st, the withholding rates are calculated as a percentage of gross wages. The state should have sent businesses information and new A-4 forms.
Effective July 1, 2010, state withholding is de-linked from the federal income tax withholding. Withholding will apply to each employee's gross taxable wages, the amount that appears in Box 1 of Form W-2. This is gross wages net of pretax deductions such as the employee's portion of health insurance premiums. The percentages are:
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For employees with gross earnings of less than $15,000 annually, 1.3 percent, 1.8 percent, 2.7 percent, 3.6 percent, 4.2 percent, or 5.1 percent.
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For employees with gross earnings of $15,000 or more, 1.8 percent, 2.7 percent, 3.6 percent, 4.2 percent, or 5.1 percent.
Therefore, Employees subject to Arizona income tax withholding must fill out a new form that will go into effect on July 1, 2010, and give the completed form to their employer.
Implementation: Once the correct rate is determined, AccountEdge users will need to enter that rate in the Allowances field on the employees Card in Payroll Details-->Taxes after selecting State.
To Learn more about this change you can visit the following
Arizona site: