ABC Taxes, Tips & Tools

Last year the fed­eral gov­ern­ment decided to give a tax break to work­ers in the mid­dle of the year by reduc­ing the amount of tax with­held from each paycheck.

Unfor­tu­nately, this meant the Ari­zona state income tax with­held went down, as AZ with­hold­ing is based on a per­cent­age of the Fed­eral income tax with­held.  So some­where in the mid­dle of the year, Ari­zona changed its with­hold­ing rates and required employ­ers to get new A4’s from their employ­ees select­ing a new higher with­hold­ing tax rate.

This year the tax break is spread out over the entire year, there­fore Fed­eral with­hold­ing went up just a smidgeon.  So at the begin­ning of the year, all employ­ers were required to new A4s from their employ­ees select­ing slightly lower with­hold­ing tax rates as Ari­zona had to adjust its with­hold­ing per­cent­ages again.

But hold on, we are not done yet.  The Ari­zona Depart­ment of Rev­enue (AZ DOR) has been tasked with com­ing up with a state with­hold­ing tax rate that is inde­pen­dent of the fed­eral amount with­held.  The AZ DOR has now posted the new AZ A-4s at their web­site: http://www.azdor.gov/LinkClick.aspx?fileticket=9_U8ufG2wH8%3d&tabid=265&mid=884 If this link is bro­ken you can find it by going to the AZDOR.gov forms pages.  

Ari­zona employ­ers will need to get their employ­ees to com­plete new A-4s before July 1, 2010 and start with­hold­ing amounts in accor­dance with those new A-4s on July 1, 2010.  The new A-4s list  AZ With­hold­ing amounts as a per­cent­age of income; they are not valid until July 1, 2010. 

A good start­ing place for an employee would be to see what per­cent­age of income taxes were in 2009.   For exam­ple if an employee had an AZ adjusted gross income of 70,000 and was required to pay 1,700 in AZ taxes in 2009 their tax was about 2.4 % of their income.  They might opt for the 2.7% check box on their AZ A-4 assum­ing their sit­u­a­tion in 2010 is sim­i­lar to their sit­u­a­tion in 2009.   For a tax­payer that had $30,000 in AZ adjusted gross income for 2009 and paid $500 in taxes, their tax was about 1.7 % of their adjusted gross income in 2009. They might opt for the 1.8% check box on their AZ A-4 assum­ing their sit­u­a­tion in 2010 is sim­i­lar to their sit­u­a­tion in 2009. The new A-4 on-line the form actu­ally has a work­sheet to help them fig­ure out what their with­hold­ing should be.  NOTE:  As an employer you should not advise employ­ees as to what amounts to with­hold, but you can sug­gest they use the work­sheet that is part of the new AZ with­old­ing form.

In other news as a fund-raising mea­sure AZ DOR will now require busi­nesses, which have a Trans­ac­tion Priv­i­lege, Use and Sev­er­ance Tax License (TPT)  issued before July 1. 2009 to “renew” them and pay a fee AND they are rais­ing the fee for a license and updates effec­tive June 15, 2010.  Art & Busi­ness Con­sult­ing LLC has an inquiry out to the AZ DOR as fur­ther infor­ma­tion about this change to TPT did not appear to be located on their web­site as of the day we received notice of the change.   We will update you when we receive fur­ther infor­ma­tion, such as how much the new license fee will be, are they going to mail the “renewal notices” out to cur­rent license hold­ers, how often the license will need to be renewed, etc.

If you need help with this issue or any other, remem­ber, small busi­ness ser­vices and tax­a­tion are our busi­ness.  Please give Art & Busi­ness Con­sult­ing a call.  We would love to engage you as a client.

The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in.  Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure:  As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein.  Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice.  Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.