Am I reading this correctly, AZ changing to tax on the "gross taxable wages" and their definition of gross taxable wages is Box 1 of all W-2's. One of my retired clients receives about $28K of pensions and IRA dists for which $2500 is excluded from AZ tax. On the AZ DOR website, I see no mention of Box 1 of form 1009-R yet my retired clients are receiving letters from the issuers of the 1099-R with form A-4.
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You are reading this correctly. AZ withholding rates used to be percentage of FWH. Now, it will be a percentage of Gross wages. AZ is basically taking an interest-free loan from our poorer working citizens.Originally posted by AZ-Tax View Post
I have some clients who receive the $2,500 "government pension" exclusion on line C20 form 140 as well.
I think 1099R withholding is still voluntary. The only clients who have called me about this new A-4 form are those who opted to have State tax withheld in the past. The pension admin would need an updated form. -
FWH based vs Gross Taxable Wages based withholding
Assume TP will have the same $100K (all W-2) in 2010 as in 2009 and elected the top AZ % withheld under the old based FWH and now the top % based on the new Gross Taxable Wages, Am to believe the TP will have more withheld under the Gross Taxable Wages tax law?Comment
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I think they have posted some sort of conversion table. You can find all that info here:
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