Tax Credit Giving via Payroll Withholdings

Did you know, without affecting your Take-Home Paycheck, you can redirect your state income taxes towards education!

Withholding Tax Reduction Form / Instruction
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Give Without Affecting Your Take Home Paycheck Through Payroll Withholding

Arizona’s withholding tax reduction law (A.R.S. 43-401)  allows individuals to authorize their employer to send their state withholding tax amount to STO4KIDZ a School Tuition Organization that awards scholarships to eligible K-12 private school students in Arizona. This dollar-for-dollar tax credit works just like a lump sum contribution, but payroll withholding lets you give in smaller amounts without affecting your take-home pay. You’ll still claim the credit at tax time—payroll giving is an easy way to support school choice and change a child’s future.

 

For EMPLOYEE:

  1. Check with your employer to see if they are willing to  provide this benefit.
  2. Complete the A-4 form (and Instruction), present it to your employer,
  3. Then, fill out this pledge form and mail or email it to info@sto4kidz.org.
  4. Your employer, if they agree to participate, will reduce your state tax withholding per-pay-period and will send that amount to STO4KIDZ on your behalf. This portion cannot exceed your state withholding dollar amount for each pay period that is set with your employer. Consult your payroll department to know the withholding percentage per-pay-period to determine how much will be contributed for the year to indicate on your pledge form.
  5. Once withholding tax reduction is set up, contributions are automatic for the rest of the year, and will automatically stops once your contribution limit is reached. (the limit you indicate on our pledge form).
  6. If your contribution exceed your state tax liability for the year, you can still claim the excess amount to reduce the following tax year. (up to 5 years)

 

FOR EMPLOYER

Participation is voluntary

  • Employer can determine the timeline and send in the withheld contribution. However, according to the withholding law fund must be send to STO4KIDZ at least quarterly. STO4KIDZ can provide the required tax form to accompany the contribution.
  • Employer mail withholding tax reduction checks quarterly to STO4KIDZ along with form A-1QTC. (and Instruction)
  • Employers are no longer required to file Arizona A1-C tax form to show where the withheld money has been directed to.
  • STO4KIDZ will email a tax receipt to each contributor (employee) disclosing their total contribution dollar amount for the year.
  • All communications related to an employee’s contribution through withholding tax reduction are confidential.

For detail please refer to A.R.S. 43-401G at https://azdor.gov/