Appendix D-Tax Setup Information > Arizona State Tax

Arizona State Tax

Arizona is now using a percentage of gross taxable wages for state withholding. Employers should update their rates on the 5-2-1 Employees Calculations tab for the Arizona State Tax Calculation from the revised Form A-4, which is effective for wages paid after June 30, 2010.

For your convenience, if Sage 100 Contractor finds one of the previously allowed Arizona rates on the 5-2-1 Employees Calculations tab for the Arizona State Tax Calculation in the left column below, it will use the corresponding new rate from the right column below during the payroll compute. If any other rates are found, Sage 100 Contractor will use these rates to compute taxes using the new Arizona process.

For example, if the old rate as a percentage of federal was 10.7%, the new rate of 1.3% is used to calculate the state taxes. The program calculates with any percentages entered in 5-2-1 Employees.

 

Old Arizona rates % of Federal Tax New Arizona Rates % of Taxable Wages
0 0
10.7 1.3
20.3 1.8
24.5 2.7
26.7 3.6
33.1 4.2
39.5 5.1

Note: As of January 1, 2011, an additional rate is available on the A-4 form for Arizona.

Sage 100 Contractor requires a marital status on all state tax calculations in 5-2-1 Employees Calculations tab, even though Sage 100 Contractor does not use marital status when calculating Arizona state withholding taxes. Use the status that applies to each employee below. The marital status has no affect on the amount of state withholding.

Marital Status

Description

1-Single

Single Person

2-Married

Married

3-Head of Household

Head of Household

4-Married/Separate

Married Filing Separately

5-Married/Jointly

Married Joint

Payroll Calculation

Setting up payroll calculations in Arizona requires some special provisions.

To set up payroll calculations on an employee for Arizona State Tax:

Caution! Do not include any rates or maximums in the payroll calculation.

1 Open 5-3-1 Payroll Calculations.
2 In the Tax Type list, click State Income Tax.
3 In the State box, type AZ.
4 After setting up the payroll calculation and updating it to the employee records, enter each employee’s rate in the employee records.

To set up employee rates for Arizona State Tax:

1 Open 5-2-1 Employees.
2 Using the data control, select the employee.
3 Click the Calculations tab.
4 In the Marital cell of the Arizona Income Tax row, enter the corresponding marital status number.
5 In the Rate cell of the Arizona State Tax row, enter the employee’s rate declared on Form A-4.
6 On the menu bar click File menu, then select Save.
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