FAQs  |  Contact Us  |  Site Map    skip navigation
AZ.gov Arizona's Official Web Site
State of Arizona
Department of Revenue
Setting the Standard for Tax Services
 

Frequently Asked Questions About Arizona Withholding

I am withholding for employees in Arizona. What do I need to do?

You must register your EIN with the department in order to file withholding returns. You may register either by sending the completed Arizona Joint Tax Application to the address on the form, or online at www.AZTaxes.gov.

Do I need an employer identification number to remit Arizona withholding?

Every employer needs to have an employer identification number (EIN). You may apply for one online at www.irs.gov.

How do I report a change of address for my Arizona withholding account?

Complete the Transaction Privilege/Use/Withholding License Update form, available on the department’s website at https://www.azdor.gov .

How do I know which withholding return form to file?

Form A1APR, Annual Payment Withholding Tax Return – the department will notify you if you qualify to use this form. If you qualify to use this form, do not file the Forms A1QRT, A1R, or A1WP.

Form A1QRT, Quarterly Withholding Tax Return – use this form if you are required to make your Arizona withholding payments on a quarterly, monthly, semiweekly, or onebanking day basis, or you are a monthly payor who incurred a onebanking day payment obligation during the quarter.

Form A1R, Withholding Reconciliation Tax Return – use this form if you file the Form A1QRT. This form is filed annually to reconcile your withholding liability and withholding payments for each quarter of the year with the total amount withheld as shown on the federal Forms W2, W2c, W2G, and 1099R. It is also used to transmit the state copies of these federal forms.

What are the filing due dates for the withholding returns?

Form A1APR and Form A1R: February 28 of the year following the close of the calendar year for which the payments were made. If February 28 is a Saturday, Sunday or legal holiday, the return is considered timely if filed by the next business day.

Form A1QRT: First quarter April 30; second quarter July 31; third quarter October 31; fourth quarter January 31.

Extended Form A1QRT due dates available to taxpayers who have made every payment on time. ARS § 43-401 (E) has been amended to allow some employers additional time to file Form A1QRT. Employers who have made every payment on time during the preceding calendar quarter may have ten additional days in which to file their A1QRT. First quarter May 10; second quarter August 10; third quarter November 10; fourth quarter February 10. If any due date is a Saturday, Sunday or legal holiday, the return is considered timely if filed the next business day.

How do I obtain an extension of time to file the Form A1APR or Form A1R?

Form A1APR extension: send the completed Form A1APR EXT and the required annual withholding payment to the department on or before the due date of the return.

Form A1R extension: send the completed Form A1R EXT to the department on or before the due date of the return.

Does the extension of time to file the Form A1APR or Form A1R apply to the federal Forms W2, W2c, W2G and 1099R?

Yes. The state copies of the federal forms are considered an integral part of the reconciliation required on these forms. The extension granted to file the Form A1APR or Form A1R applies to the state copies of the federal forms.

May I obtain an extension of time to file the Form A1QRT?

No. Arizona law does not allow the department to grant an extension of time to file this return.

Do I have to send a completed Form A1WP to the department with each withholding payment?

No. Some employers do not need to use the Form A1WP, Payment of Arizona Income Tax Withheld, to transmit their withholding payments.

EMPLOYERS MAKING PAYMENTS ON AN ANNUAL BASIS: Do not use the Form A1WP. Send the payment with the completed Form A1APR.

EMPLOYERS REQUIRED TO MAKE PAYMENTS ON A QUARTERLY BASIS: Do not use the Form A1WP. Send the payment with the completed Form A1QRT.

EMPLOYERS REQUIRED TO MAKE PAYMENTS ON A MONTHLY, SEMIWEEKLY OR ONEBANKING DAY BASIS: Use Form A1WP to make your withholding payments if you do not make your withholding payments via electronic funds transfer (EFT) or at https://www.AZTaxes.gov .

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.

How does an employer who is required to make withholding payments on a quarterly basis report its quarterly withholding liability on the Form A1QRT?

Enter the quarterly liability in Part II, Section A, and Part III, as instructed on the form. Refer to the form instructions for further information.

Does an employer who has a zero withholding tax liability for the quarter have to file the Form A1QRT?

Yes. If this is a final return, check the withholding account cancellation box on page one of the form and indicate the reason for the cancellation on page two of the form.

How does an employer who has a withholding overpayment obtain a refund?

Overpayment listed on Line 3 of Form A1QRT: The overpayment will be offset against any outstanding liability, and then a refund of any balance will be sent automatically.

Overpayment on line 10 of Form A1APR: The overpayment will be offset against any outstanding liability, and then a refund of any balance will be sent automatically.

How do I know if a worker is an employee or an independent contractor for Arizona withholding tax purposes?

Refer to Arizona Withholding Tax Ruling WTR 933. The determination by the Internal Revenue Service regarding a worker’s employment status (employee or independent contractor) controls the determination for Arizona withholding tax purposes.

How do I compute the amount of tax to withhold from compensation paid to my employees for services performed in Arizona?

The employee must complete Form A4, Employee’s Arizona Withholding Percentage Election, within the first five days of employment. If the employee does not complete the form, the employer must withhold at the statutory minimum rate depending on the amount of the employee’s annual compensation. Refer to the Employer’s Instructions for the Form A4 for further information on the employer’s responsibilities.

How does an employee change the amount of Arizona income tax withheld?

The employee must complete Form A4 to choose a different withholding percentage option.

Can an employer elect not to withhold in December?

Yes. The employer must first notify each employee and then file Form A1E, Employer’s Election to Not Withhold Arizona Taxes in December. Form A1E must be filed with the department by July 1 of the year to which it will apply. It applies to all employees.

Does Arizona law require mandatory withholding from compensation paid to an Arizona resident employee who works outside of Arizona?

No. Arizona withholding from the payment of compensation to an Arizona resident employee who performs services outside of Arizona is voluntary. The employee and employer must complete Form A4V, Voluntary Withholding Request for Arizona Resident Employed Outside of Arizona.

Does Arizona law require mandatory withholding from compensation paid to a nonresident employee who works in Arizona?

Yes, unless the employee qualifies for certain limited exceptions. Refer to the Employer’s Instructions for the Form A4 and the Form WEC for further information.

Do I have to withhold Arizona income tax from compensation paid to Native Americans?

No, if the employee meets the criteria listed on the Form WECI. The employee must complete the form.

Do I have to use optical media to file the state copies of the federal Forms W2, W2c, W2G and 1099R?

No. You may file the state copies of the federal forms on paper or on optical media. The department encourages, but does not require, the employer to use optical media filing for 250 or more federal forms.

How can I obtain additional information (including specifications) regarding optical media filing of the state copies of federal Forms W2, W2c, W2G and 1099R?

Refer to Publication 701, Optical Media Reporting, for information regarding optical media specifications for reporting federal Forms W2, W2c, W2G, and 1099R.

What are the Arizona information return reporting requirements?

The Arizona law requiring general information return reporting was repealed effective August 21, 1998. Refer to Arizona Withholding Tax Ruling WTR 991 for further information. The employer must file the state copies of the federal Forms W2, W2c, W2G, and 1099R as part of the reconciliation required in Arizona Forms A1APR and A1R.

Does Arizona law require mandatory withholding from pension and annuity payments?

No. Arizona withholding from an amount paid as a pension or annuity is voluntary. The recipient may request voluntary Arizona income tax withholding by completing the Form A4P, Annuitant’s Request for Voluntary Arizona Income Tax Withholding, or by sending a letter to the payor of the pension or annuity. The recipient may change the amount of tax withheld or terminate withholding by the same methods. Refer to Arizona Withholding Tax Ruling WTR 992.

Does Arizona require separate return reporting of nonpayroll withholding from federal Forms W2G and 1099R?

No. Employee compensation withholding and nonpayroll withholding (on federal Forms W2G and 1099R) may be reported in the same withholding return.

How do I obtain information regarding Arizona unemployment insurance?

Unemployment insurance is administered by the Arizona Department of Economic Security. Information is available on the DES website at http://www.azdes.gov under the “employers” link.

How do I obtain information regarding Arizona workers’ compensation coverage?

Workers’ compensation is administered by the Industrial Commission of Arizona. Information is available on the commission’s Internet home page at http://www.ica.state.az.us.

Online Services