Tuesday, May 18, 2010

Arizona Income Withholding Changes

Many Arizona clients have been getting notice that Arizona is making a change to the way withholding will be figured for income subject to withholding. A little background: historically Arizona residents selected withholding based on a percentage of the amount of Federal withholding, so you would select 20% and if you Federal withholding was $100 that would result in $20 in Arizona withholding.

This change is slated to take effect for payments on 7/1/2010 through the end of the year. The change results now in a calculation that will be a percentage of your taxable income that is paid by that employer or pension provider. The choices are 1.8%, 2.7%, 3.6%, 4.2% or 5.1% and you can elect to have an additional dollar amount withheld per paycheck or pension payment.

I have been fielding several phone calls or reqeuests for assistance with this issue. The calculation can be straight forward but if you need assistance you can contact the offices of Gaylor Tax Services, LLC for assistance.

If your payroll or human resources department has not sent out the form, you can download the form at the Arizona Department of Revenue Website here