Thursday, June 11, 2009

Changes to Arizona Income Tax Withholding

Effective May 1, 2009 Arizona withholding options have changed. The amounts, on or after May 1, 2009 through June 30, 2010, required to be withheld for Arizona withholding purposes will continue to be a percentage of the federal withholding.The new percentage options are available at or by contacting the Arizona State Revenue Department . Amounts withheld on or after July 1, 2010, must be based on a table prescribed by the department. The department plans to have the new withholding tables available sometime in the late spring of 2010.

All current employees withholding options should be changed to the new applicable rate. Employers must notify their employees of the change and make available the revised Arizona form A-4 or A-4v if employees elect to chose a different rate.

A new employee must complete the revised 2009 Arizona Form A-4 within the first five days of employment to elect an Arizona withholding percentage. If the new employee does not complete the revised Arizona Form A-4, the employer must withhold Arizona income tax from the employee’s wages at the greater of the applicable minimum percentage (11.5% or 21.9%). A new employee who is an Arizona resident working outside of Arizona may elect voluntary Arizona income tax withholding for 2009 by completing the revised Arizona Form A-4V. The employer must withhold Arizona income tax from the employee’s compensation at the greater of either the percentage elected by the employee or the applicable minimum percentage (11.5% or 21.9%).

An Arizona payroll software can make this transition very simple. Payroll Mate conveniently updates the tax tables for their customers. Users will not need to manually input any percentage rates.

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Download a free demo version of the software and try it for yourself:Payroll Mate.