NEW! Redirect your Payroll Tax

Effective January 1, 2010

Arizona passed a new law which allows individuals to redirect a portion or all of their payroll tax withholding amount in order to make a contribution to a School Tuition Organization (APESF), public school or other charitable organization. This is GREAT NEWS for taxpayers…Now you can “take the credit” to support school choice without having to provide money upfront or in one large sum!

If your employer voluntarily elects to participate, you can request that they re-direct a portion of your state tax withholding amount to APESF and they will make quarterly payments to us on your behalf. APESF will help facilitate this process with your employer. At the end of the year, you will receive a statement from APESF and your employer indicating the total amount of your contribution. Your employer will also send a statement to the AZ Department of Revenue.

Steps to Redirect your Payroll Tax Withholdings

  1. Fill out the  Payroll Redirect Form (coming soon!) and send it to APESF.
  2. APESF will send you a form that you can sign and give to your employer.
  3. If your employer decides to participate, they will make quarterly payments to APESF on your behalf.
  4. At the end of the calendar year, APESF will send you a receipt showing the total amount of your tax credit through paycheck redirects or general contributions. You may use that receipt when you file your tax return the following year.

Fast Facts

  • Reducing your tax withholding amount does not change your state tax liability. It simply means that you are paying taxes to APESF directly, rather than making a contribution and receiving it back as a credit the following year.
  • You are responsible for requesting this change from your employer. Participation is completely voluntary on their part. APESF will help facilitate the process by providing the necessary forms for you and your employer and answer as many questions as we can.
  • Payments will be made quarterly by your employer and will be accepted by the payroll date, rather than the postmark date. In accordance with the law, employers are allowed to send payments within 15 days after the end of each calendar quarter.
  • The portion contributed to APESF during each pay period cannot exceed the total amount of state tax withholding allocated for that pay period. It is important for you to clearly communicate how much and in what order contributions should be held if you are taking multiple state tax credits.
  • We recommend that you consult your tax adviser regarding your expected state tax liability, withholding and anticipated contribution amount. The maximum credit for married taxpayers is $1000 and $500 for single. If your total contribution exceeds your state tax liability for a given year, the excess amount may be rolled over and claimed on the following year’s taxes for up to 5 years.
  • You may make a separate contribution to APESF if the amount withholding for APESF does not exactly equal the total amount you wanted to give.
  • Employers will be required to provide a statement to each employee participating as well as to the AZ Department of Revenue, indicating the total amount contributed through withholding reductions for the tax year, or upon that employee leaving the company. APESF will also send you a statement by January 31 of each year with your total contribution amount from withholding reductions, regular contributions or a combination of both.

References