Need AZ guidance

[DTS]

Client emailed a couple days ago. Beginning July 1, 2010, Arizona tax withholding rates will be based on a percentage of gross taxable wages. As a result, Arizona has issued a revised Form A-4 that contains new tax rate options. The state is requiring all current employees to complete the revised form for wages paid after June 30, 2010. The options if annual compensation is $15,000 or more is 1.8%, 2.7%, 3.6%, 4.2% or 5.2%.

She will be making about $50,000 this year, there is add’l net SE income close to the same amount from a spouse and they itemize.

I feel the 4.2% or 5.2% should be OK with regards to having a small balance due or getting modest AZ refund? Or, should/can add’l amounts be taken out if the t/p requests it?

Thanks.

[BHoffman]

Hi DTS:

If their taxable income will be roughly the same amount and character as 2009, you could look at the amount of AZ tax owed in '09 and calculate the percentage that way.

Your client can always make estimated tax payments using form 140-ES:

http://www.azdor.gov/Forms/Individual.aspx

[AZ-Tax]

I cannot believe I have only one client contact me about this

and I suggested they go with the 5.2% in 2010 then we will see how it turns out on their 2010 tax return.

"Taxpayer's dont plan to fail (or do they) they fail to plan (???)

[DTS]

Thanks

The wage income for them was half the '09 amount, but I could get there just fine doing as you suggest.

I was not thinking about ES vouchers for AZ. I always get on this board when I'm not sufficiently filled with caffeine!

[DTS]

and I suggested they go with the 5.2% in 2010 then we will see how it turns out on their 2010 tax return...

I will see what their comfort level is and go from there. In the past, there is no drama when I tell them they owe a little or getting a little back. Personally, I never mind owing a little at the end, but thought the 4.2-5.2% sounded about right for them.

Appreciate your suggestion.