Consultant Contract Under Withholding In Phoenix
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If you make this election, your employer will not withhold Arizona income tax from your wages for payroll periods beginning after the date you file the form. Zero withholding does not relieve you from paying Arizona income taxes that might be due at the time you file your Arizona income tax return.
Withholding of Arizona state income tax from the commencement of employment is required for any resident employee physically working in the state of Arizona regardless of where the employer is based.
Note: Under-withholding can result in you owing tax and/or underpayment penalties when you file your Arizona return at the end of the year. For tax year 2023 and beyond, the tax rate for Arizona taxable income is 2.5%.
Nonresident individuals must file income tax returns in both Arizona and their home state. Although it may appear as though a nonresident taxpayer is paying taxes twice on the same income because of reporting requirements, credits allowed offset that income.
The employee should complete Form A-4 electing their withholding percentage and return it to the employer. Arizona law requires every employer to withhold Arizona income tax from those employees for services provided within Arizona.
The employee completes this form to notify his/her employer of the amount of Arizona withholding to be taken from his/her paycheck.
For questions about withholding tax payments, visit the Arizona Department of Revenue website or call them at (602) 255-3381.
Arizona has a flat 2.50 percent individual income tax rate. Arizona has a 4.9 percent corporate income tax rate. Arizona also has a 5.6 percent state sales tax rate and an average combined state and local sales tax rate of 8.38 percent.
Withholding Percentage Options Keep in mind for tax year 2023 and beyond, the tax rate for Arizona taxable income is 2.5%.