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Beginning June 1, 2013 the Arizona sales tax rate will be reduced from 6.6% to 5.6% due to the expiration of a temporary increase on May 31, 2013.
Sales tax returns (form TPT-1) for the June period, due in July, will reflect the decreased rate. Those who file sales tax reports quarterly will report the June period with the reduced rate on one line of the return and the April 1 to May 31 period with the original rate on a separate line. Annual filers will use one line for June 1 to December 31 on one line using the decreased rate and a separate line for January 1 to May 31.
Prime contractors will pay the reduced rate on any cash receipts after June 1, 2013, including receipts on contracts entered into before June 1. For accrual contractors the date the contract is signed determines the rate to be applied.
The new rate for Yavapai County will be reduced from 7.35% to 6.35%. This link provides more information as well as county rates for the rest of Arizona.
If you have questions related to any of the above, call Schutte & Hilgendorf, pllc – CPA’s for more information and a free initial consultation. Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area. Call us at 928-778-0079 or visit www.prescottaccountants.com
2011 YEAR END TAX CONSIDERATIONS AND PLANNING
FOR YOUR BUSINESS
The Holidays are here and that brings us thoughts of sugarplums and year-end close for your business. Below are some items for you to consider.
PURCHASE OF BUSINESS EQUIPMENT:
Qualifying new property placed in service before December 31 can be written off under 100% bonus depreciation. The bonus rate is scheduled to fall to 50% in 2012.
Section 179 depreciation applies to new or used equipment that can also be written off 100% up to a $500,000 purchase cost. This phases out after $2,000,000 of total qualifying purchases. Section 179 expensing will still be available in 2012, but the limits will be much lower.
As in previous years there are special rules and limits for vehicle purchases, so contact us if you have questions regarding those.
The qualifying equipment can be purchased on credit and expensed in 2011 as long as it is placed in service before year end.
IMPROVEMENTS ON YOUR BUSINESS REAL PROPERTY:
There are a variety of energy–related incentives that are scheduled to expire at the end of 2011. If you have, or are still considering some energy efficient improvements to your commercial building such as lighting, heating, cooling, and hot water systems this could be beneficial. There are certain standards that must be met to qualify.
VEHICLE USE EXPENSE IN YOUR BUSINESS:
A mileage log is required to prove your business-mile percentage if you use the vehicle for personal use or for commuting to work. This is required whether you use the standard mileage rate or actual vehicle expense, (i.e. gas, repair, etc). A value for personal mileage on a business vehicle needs to be calculated and added to your W-2 as an “auto fringe”. Call us for details or to calculate the personal value.
OFFICER WAGES AND HEALTH INSURANCE:
S-Corporation owners MUST pay themselves a reasonable wage and issue a W-2 to themselves. A “reasonable wage” is often described as what you would have to pay someone else to do your job. If you have taken “draws” out of the company this year and no wages, call us to reclassify an amount to wages and calculate payroll taxes on the amount. These payroll taxes must be paid by January 15, 2012 to avoid interest and penalties.
As a business owner, your personal health insurance premiums paid through the business should be added to your W-2 and thus deducted in full on your personal return– if they are not added to your W-2, the deduction is not a business deduction and will be taken on Schedule A- Itemized Deductions subject to the 7.5% medical adjustment. Call us for more information on how to handle this for maximum tax benefit.
HEALTH CARE TAX CREDIT FOR EMPLOYEES
If you pay any portion of health insurance premiums for employees you may be eligible for a credit on your tax return. There are eligibility requirements and the credit is limited to those who have 25 or fewer employees with average income of $50,000 or less. If you think you may qualify for this credit, contact us for more information.
HIRE ACT
The HIRE ACT, passed in 2010, provided credit for employers for each new person hired between February 4, 2010 and December 31, 2010 who had been unemployed for 60 consecutive days prior to hiring. The payroll tax credit was given on payroll taxes paid in 2010, but an additional credit is allowed if this employee was employed by you for the following consecutive 52 weeks. The additional credit is allowed to be taken on the 2011income tax return if this requirement is met. If this applies to your company, be sure to let us know.
PAYROLL
As of January 1, 2012, Arizona minimum wage will increase to $7.65. This amount is higher than the Federal minimum; however, Arizona employers must follow the Arizona statute.
THINGS TO DO:
Start gathering your business receipts, update your mileage logs, and tally up your income and expenses for the year. Remember to note the business reason for any travel, meals, and entertainment expenses on your receipts. If this is an over-whelming task for you, call us for help. We do provide this service at an hourly fee.
If you have employees, make sure you have up-to-date information on them – W-4 and A-4’s for deductions, addresses, name change if married/divorced during the year, and verify you have the correct Social Security number before you issue the W-2’s. If you pay year-end bonuses, be sure to add the amount to the W-2 and calculate and pay the additional payroll tax.
If you paid service providers/subcontractors over $600 during the year, make sure you have current addresses and a business EIN # or Social Security number for them. You must issue a 1099-MISC form to them by January 31. This also includes anyone you paid rent to if the amount is $600 or above. If you need assistance in this area give us a call.
We hope that this year was a prosperous one for your business. Call us before year-end at 928-778-0079 if you need an updated estimate of tax liability and to discuss any tax planning considerations.
Remember the filing deadline for Corporations and S-Corporations is March 15 – personal and Partnership returns is April 15.
This tip brought to you by Schutte & Hilgendorf, CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting, bookkeeping, tax preparation and planning, Quickbooks accounting and setup to individuals and small businesses.
Contact us for a free initial consultation 928-778-0079
The attached article was written by John E. McEnroe, Jr. and was such a great summary of steps that every Non-Profit should follow, we thought we’d give John credit here and share the article on our website. We found the article when searching for information on the little-mentioned topic of Non-Profit Arizona Registration with the Arizona Secretary of State.
We have observed that many of our non-profit charitable clients are not aware of the registration requirement with the AZ Secretary of State before accepting any charitable donations. Many Non-Profits feel that receiving the IRS determination letter for a 501(c)(3), incorporating through the AZ Corporate Commission, and registering with the AZ Department of Revenue satisfies all setup requirements. Apparently, not so. This doesn’t seem to be widely enforced by the Secretary. An annual renewal is also required every September. Although free, if filed late, there is a $25 fee.
Click on the link below for a copy of the very informative Non-Profit Registration and Reporting Requirements article:
NPO Registration and Reporting_2010
Click here for a link to the Registration Form for the AZ Secretary of State:
SOS Reg Form
Please call Schutte & Hilgendorf, CPAs with any questions related to this article or any non-profit related audit, accounting or tax question. Schutte & Hilgendorf is a Prescott CPA firm specializing in providing audit, tax and accounting services to non-profits, for-profits, and homeowners associations. We also provide tax planning and preparation, bookkeeping, and QuickBooks consulting to individuals and small businesses. We service the greater Yavapai County and Northern Arizona Region. Call us at 928-778-0079 with any of your accounting, auditing or tax needs. Check the rest of our website for constant updates at www. prescottaccountants.com
MILTARY FAMILY RELIEF FUND TAX CREDIT
There is an Arizona Tax Credit available for military members and their families that is not widely known. The Arizona Department of Veteran’s Services administers the Military Family Relief Fund. The fund helps service members and their families faced with unforeseen expenses when a loved one becomes a casualty of war. Your donations of $200.00 for single taxpayer and $400.00 for married filing jointly to the fund may qualify for this income tax credit.
This credit is available for tax years 2011 and 2012. Donations will qualify if the total amount donated to the fund during the calendar year has not exceeded 1 (one) million dollars state wide. Qualifying credit will be determined on a first come basis. Information available indicated only about $200,000 has been received by the Fund so far in 2011.
This is a credit similar to the Working Poor and Public School credit which directly reduces your tax liability to the State of Arizona. This credit is available only to individuals. Corporations and other business entities may not claim this credit.
You must receive a receipt from the Arizona Department of Veterans’ Services to verify your donation qualifies for the credit.
Click here to get the form to mail in with your check.
This tip brought to you by Schutte & Hilgendorf, CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting,bookkeeping,tax preparation and planning, Quickbooks accounting and setup to individuals and small businesses.
Contact us for a free initial consultation at 928-778-0079
How does an employer know whether to make Arizona withholding payments on a quarterly basis or more frequently?
QUARTERLY BASIS PAYMENTS: An employer must make its Arizona withholding payments on a quarterly basis if the average amount of Arizona income taxes withheld during the preceding four calendar quarters does not exceed $1,500.
MORE FREQUENT PAYMENTS: An employer must make its Arizona withholding tax payments at the same time as its federal withholding deposits if the average amount of Arizona income taxes withheld during the preceding four calendar quarters exceeds $1,500.
WHY DOES THE EMPLOYER MAKE THIS COMPUTATION? Arizona law requires an employer, at the beginning of each new quarter, to compute its average Arizona withholding tax liability for the preceding four calendar quarters. This calculation is performed to determine the correct Arizona withholding payment schedule.
HOW DOES THE EMPLOYER MAKE THIS COMPUTATION? An employer that has four full consecutive calendar quarters of Arizona withholding liability historical data must use the regular withholding payment schedule computation. An employer that does not have four full consecutive calendar quarters of Arizona withholding liability historical data must use the alternate withholding payment schedule computation. Refer to the “Arizona Withholding Liability/Payment Schedule” section of the Form A1QRT instructions for further information
Per the State of Arizona – Department of Revenue – Arizona Withholding FAQ’s
Should you have questions regarding this post or any other tax needs, contact us at Schutte & Hilgendorf, PLLC, Prescott accountants serving the greater Yavapai County with tax, accounting, auditing, and QuickBooks consulting expertise.
Article provided by Paychex, July 12, 2011:
Because Arizona was one of the 30+ states that borrowed money from the feds after our unemployment coffers were depleted as a result of our most recent recession, all Arizona employers who are subject to State Unemployment Tax are subject to a Special Assessment beginning July 20th 2011.
Here are a few of the details:
All employers subject to Arizona UI Tax in 2011 and 2012 are also subject to the SA.
- Reimbursement employers are exempt from the SA.
- “Taxable wages” are the first $7,000 of gross wages paid to each employee in a calendar year.
- The SA rate is 0.40% of taxable wages paid in 2011 (maximum $28 per employee).*
- The SA rate is projected to be 0.60% of taxable wages paid in 2012 (maximum $42 per employee).*
- Payment of the SA for the first three quarters of 2011 is due by October 31, 2011, payable as follows:
- In mid to late September 2011, DES will mail employers statements of the SA amounts they owe, if any, for the first two quarters of 2011.
- Beginning with the third quarter of 2011, SA amounts due are payable with quarterly UI taxes and reported on Line 7, Part C of the Unemployment Tax and Wage Report (form UC-018).
- Employers may include the amount of SA due for the first two quarters of 2011 on their third quarter 2011 report and remit a single payment for all amounts due.
- Alternatively, employers may pay the SA for the first two quarters separately from a report, via the online Tax and Wage System (TWS) at www.azuitax.com or by check or money order.
Please see attached article (Special Assesment change with SUI) from DES for details, or visit the below website:
https://www.azdes.gov/main.aspx?menu=316&id=6767
Private School Tuition Credit
AZ Tax Credit-Qualifying School Tuition Organizations
Frequently Asked Questions (from the AZ DOR Website:
http://www.azdor.gov/ReportsResearch/SchoolTaxCredit.aspx )
What do I have to do to qualify for this credit?
To qualify for this credit, you must make cash or payroll
withholding contributions to a school tuition
organization that provides scholarships or grants to
qualified schools.
What is the maximum dollar amount of the credit?
The credit is limited to the actual amount of the
contribution. However, in 2011 the credit cannot exceed
$500 for single or head of household taxpayers. For
married taxpayers that file a joint return, the 2011 credit
cannot exceed $1,000. If married taxpayers file separate
returns, each spouse may claim only 1/2 of the credit that
would have been allowed on the joint return. Please Note:
Starting in 2011, the maximum credit amounts will be
annually adjusted (although never downward) in
accordance with changes in the metro Phoenix consumer
price index.
Must the private school tuition tax credit be claimed
in the year of donation?
No. Beginning in 2011, a contribution made by April 15
may be treated for purposes of this tax credit as if it was
made on December 31 of the prior year. For example, a
contribution made to a school tuition organization from
January 1, 2011 to April 15, 2011 could be used as a tax
credit on either your 1) 2010 or 2) 2011 Arizona income
tax return
What is a school tuition organization?
A school tuition organization is one that is tax exempt
under Section 501(c)(3) of the Internal Revenue Code,
allocates at least 90 percent of its annual revenue to
scholarships or grants, and makes its scholarships/grants
available to students of more than one qualified school.
Will the Department of Revenue certify school
tuition organizations?
Yes. Beginning January 1, 2011, the Arizona
Department of Revenue is required to begin certifying
school tuition organizations. The Arizona Department
of Revenue will maintain a registry of currently
certified school tuition organizations on its website,
www.azdor.gov.
What is a qualified school?
A qualified school is a non-governmental preschool for
handicapped students, or a non-governmental primary
or secondary school located in Arizona. The school
cannot discriminate on the basis of race, color,
handicap, familial status, or national origin. The
primary school begins with kindergarten, and the
secondary school ends with grade 12.
Are there situations where a contribution to a school
tuition organization, as defined in statute, would not
qualify for the tax credit?
Yes. Your donation to the school tuition organization
will not qualify for the credit if you designate the
donation for the direct benefit of your dependent. Your
donation will also not qualify if you designate a student
beneficiary as a condition of your contribution to the
school tuition organization. Additionally, the tax credit
is not allowed if you agree with another person to
designate each other’s contribution to the school tuition
organization for the direct benefit of each other’s
dependent, a practice commonly known as swapping.
May I make credit eligible contributions through
payroll withholding?
Yes. You may now be able to make credit eligible
contributions to a school tuition organization through
payroll withholding. Check with your employer to see
if your employer has agreed to withhold contributions
that qualify for this credit from your pay.
Written and originally published by the Arizona Department of Revenue,
Changes to Arizona Withholding for Wages Paid After December 31, 2010.
The Department prescribed new withholding tables in early 2010 in accordance with Senate Bill 1185 (Laws 2009, 1st Reg. Session, Chapter 2). The new tables were effective for wages paid after June 30, 2010.
The new withholding tables are based on a percentage of gross taxable wages. “Gross taxable wages” is the amount that meets the federal definition of “wages” contained in IRC § 3401 and that will generally be included in box 1 of the employee’s federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee’s portion of health insurance premiums).
Each employee subject to Arizona income tax withholding was required to complete a new Arizona Form A-4.
The Department has revised Arizona Form A-4 effective for wages paid after December 31, 2010.
The changes include:
■Providing an additional withholding percentage of 0.8%. Previously available percentages are unchanged.
■Removal of the $15,000 annual compensation threshold. All seven withholding percentage rates are available to all employees, regardless of annual compensation.
■Relaxing the exemption requirements. The employee only has to expect that there will be no Arizona tax liability in the current taxable year (instead of not having a liability in the prior year and not expecting one in the current year). However, this withholding exemption election will need to be renewed annually, similar to federal requirements.
Unlike the previous changes effective July 1, every employee is not required to complete a new Arizona Form A-4. Employees wanting to renew their withholding exemption are required file a new Form A-4 with their employer. Employees wanting to take advantage of the lower withholding percentage must file a new Form A-4 with their employer. Individuals with a current withholding percentage elected on Arizona Form A-4P or Arizona Form A-4V may also file a new form to take advantage of the new withholding percentage.
Withholding percentage options for wages paid after December 31, 2010.
Rates are a percentage of gross taxable wages.
Percentage Rates
0.8%
1.3%
1.8%
2.7%
3.6%
4.2%
5.1%
The 2011 Arizona Form A-4, Arizona Form A-4P, and Arizona Form A-4V are available on the
Department’s website at http://www.azdor.gov/Forms/Withholding.aspx
Arizona Withholding Tax Basics For Arizona purposes, an employer must withhold Arizona income tax from the payment of wages to an employee whose compensation is for services performed in Arizona.
Arizona income tax withholding is a percentage of the employee’s gross taxable wages.
“Gross taxable wages” is the amount that meets the federal definition of “wages” contained in IRC § 3401 and that will be included in box 1 of the employee’s federal Form W-2 at the end of the calendar year (i.e. gross wages net of pretax deductions, such as the employee’s portion of health insurance premiums). Employees may also have their employer withhold an additional amount.
The employee completes Arizona Form A-4, Employee’s Arizona Withholding Percentage Election, to elect an Arizona withholding percentage. Amounts that are considered wages for federal tax purposes are also considered wages for Arizona income tax and withholding purposes.
Amounts that are included in wages and are subject to mandatory federal withholding are subject to mandatory Arizona withholding. Amounts that are excluded from wages and are excluded from mandatory federal withholding are excluded from mandatory Arizona withholding.
An employer must withhold Arizona tax from wages paid for services performed within Arizona regardless of whether the employee is a resident or nonresident of Arizona. However, there are two exceptions to the general mandatory withholding requirements for nonresident employees temporarily performing services for their employer in Arizona. Although a nonresident employee may be exempt from Arizona income tax withholding, the employee may be required to file a nonresident Arizona income tax return if the employee meets the filing requirement.
An employer may not have to withhold Arizona tax from wages paid to a nonresident performing services in Arizona if:
■The employee is physically present in Arizona for less than 60 days in a calendar year for the purpose of performing a service that will benefit the employer; AND
■The employer is an individual, fiduciary, partnership, corporation or limited liability company having property, payroll and sales in Arizona, or of a related entity having more than 50% direct or indirect common ownership.
An explanation of this exemption (including examples) is included in the Employer’s Instructions for the Arizona Form A-4.
If you need more information about the article above, contact Schutte & Hilgendorf, CPAs serving all of Yavapai County with accounting, tax preparation and planning, auditing, bookkeeping, payroll, and QuickBooks consulting.
Arizona Department of Revenue has revised Arizona Form A-4 effective for wages paid after December 31, 2010. The changes include:
1) Providing an additional withholding percentage of 0.8%. Previously available percentages are unchanged.
2) Removing the $15,000 annual compensation threshold. All seven withholding percentage rates are available to all employees, regardless of annual compensation.
3) Relaxing the exemption requirements. The employee only has to expect that there will be no Arizona tax liability in the current taxable year (instead of not having a liability in the prior year and not expecting one in the current year). However, this withholding exemption election will need to be renewed annually, similar to federal requirements.
Unlike the changes that took effect on July 1, not every employee is required to complete a new Arizona Form A-4. Individuals with a current withholding percentage elected on Arizona Form A-4P or Arizona Form A-4V may file a new form to take advantage of the new withholding percentage. However, employees wanting to renew their withholding exemption or those wanting to take advantage of the lower withholding percentage are required to file a new Form A-4 with their employer.
Click here to download a new 2011 Arizona A-4.
Changes to Arizona Withholding for Wages Paid After December 31, 2010, Arizona Department of Revenue, December 7, 2010.
Should you have questions regarding this post or any other tax needs, contact us at Schutte & Hilgendorf, PLLC, Prescott accountants serving the greater Yavapai County with tax, accounting, auditing, and QuickBooks consulting expertise.
On July 1, 2010 the Arizona withholding rates will change. They are currently based on a percentage of the Federal withholding. Starting on July 1, 2010 the rates will change to being based on a table prescribed by the Arizona Department of Revenue. The rates effective July 1, 2010 have recently been issued along with the new Form A-4. This form will need to be completed by employees prior to the change on July 1, 2010.
The tax rate did not increase – Arizona is now using a different method for calculating withholding
The following table can be used as a guide for determining your new rate:
If your rate
Before July 1 was |
|
Then use this rate
After June 30 |
| 10.7% |
|
1.3% |
| 20.3% |
|
1.8% |
| 24.5% |
|
2.7% |
| 26.7% |
|
3.6% |
| 33.1% |
|
4.2% |
| 39.5% |
|
5.1% |
Should you have questions regarding this post or any other tax needs, contact us at Schutte & Hilgendorf, PLLC, Prescott accountants serving the greater Yavapai County with tax, accounting, auditing, and QuickBooks consulting expertise.
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We Are The Piece That Fits.
Schutte & Hilgendorf PLLC
3140 Stillwater Drive
Prescott, AZ 86305
Phone: 928-778-0079
Fax: 928-778-0261
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