AZ Credit for school tuition organization

[AZ-Tax]

43-1089 Credit for contributions to school tuition organization. A client asked me if they could reduce or eliminate their AZ income tax withholdings from their paycheck by approx $20/week. Then claim the $1000 School Tuition credit on their 2010 AZ tax return.

I have never been asked this question before but 1st the tax credit will need to stay in place and remain at $1000 for 2010 tax year. 2nd, can an employee elect not to have AZ income tax withheld from their paycheck? I feel like I am missing something else.

[BHoffman]

43-1089 Credit for contributions to school tuition organization. A client asked me if they could reduce or eliminate their AZ income tax withholdings from their paycheck by approx $20/week. Then claim the $1000 School Tuition credit on their 2010 AZ tax return.

I have never been asked this question before but 1st the tax credit will need to stay in place and remain at $1000 for 2010 tax year. 2nd, can an employee elect not to have AZ income tax withheld from their paycheck? I feel like I am missing something else.

Nope. The fact that they will receive a refund because of the school tax credit isn't going to fly with their employer who is required to withhold based on information the employee gave on their form A-4.

[S T]

Agree

I think you would have to go through the calculation on the Az tax withholding form, to see whether or not the taxpayer could reduce their income tax withholdings.

Then on the other side, is the taxpayer only going to have the Tax Credit for 2009 or 2010, what about future years? Once you tell the Employer the withholding amount, it remains until you submit a "new" withholding certificate.

I use the Tax Credits as a "Piggy Bank" for a State Refund, rather than use them as a "reduction for State Withholding"

Do you have a "good Tax Software Program" that can calculate the "what ifs" for projecting income/expenses and credits? If not, you might want to invest in one and then you would be able to give some "conservative estimates"

Sandy