140Nr Form – Fill Out and Use This PDF

220

Arizona Form

140NR

Nonresident Personal Income Tax Booklet

This Booklet Contains:

Form 140NR –

Nonresident Personal Income Tax

Return

Schedule A(NR) –

Itemized Deduction

Form 204 –

Extension Request

WHO MUST USE

ARIZONA FORM 140NR?

File a Form 140NR if you were not an Arizona resident but earned income from an Arizona source in 2020.

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The federal adjusted gross income that you use on your Arizona return may not be the same as the federal adjusted gross income from your federal tax return. Also, the federal Schedule A deductions used on the Arizona return may be different from the federal Schedule A deductions taken on your federal return.

Each year the Arizona State Legislature considers if they will adopt changes made

to the federal tax law during the prior year. These forms assume the Legislature will adopt all federal law changes made after January 1, 2020. If you use the amounts from your 2020 federal tax return to complete your Arizona return and the Legislature does not adopt the 2020 federal changes, you may have to amend your return at a later date for any difference between Arizona and federal law. For more details, visit www.azdor.gov and click on the link for 2020 conformity.

Due date for calendar year filers

Your 2020 individual income tax return is due by midnight on April 15, 2021. If you file under a valid extension, your extended due date to file your income tax return is October 15, 2021.

Itemized Deductions

Recent legislation amended Arizona Revised Statutes

§43-1042, relating to the allowable deduction for state income taxes paid.

Taxpayers itemizing deductions on their Arizona income tax return and claimed charitable contributions as a state tax payment on their federal 1040 Schedule A are required to make an adjustment for the amount of charitable contributions taken as a state tax payment claimed on the taxpayer’s federal itemized deductions (Form 1040 Schedule A).

2020 Arizona Standard Deduction Amounts Adjusted

The 2020 Arizona standard deduction amounts are:

•$12,400 for a single taxpayer or a married taxpayer filing a separate return;

•$24,800 for a married couple filing a joint return; and

•$18,650 for individuals filing a head of household return.

Standard Deduction Increase for Charitable Contributions (New Adjustment)

Taxpayers who did not itemize deductions on their federal return and who elect to take the standard deduction on the Arizona tax return and claim the allowable standard deduction increase must reduce the total amount of the 2020 qualifying charitable contributions by the amount for which the taxpayers took the allowable deduction on their federal return.

2020 Individual Income Tax Brackets Adjusted for Inflation

For 2020, the Arizona individual income tax brackets on Tax Table X & Y were adjusted for inflation.

The 2020 Optional Tax Table (for taxpayers with taxable income less than $50,000) was also adjusted for inflation. For specific amounts, see the Optional Tax Table and Tax Table X & Y.

Credit for Contributions to Private School Tuition Organizations (Form 323)

The allowable current year credit for contributions to private school tuition organizations was adjusted for inflation purposes. For 2020, the maximum current year credit is:

•$593 for single and head of household taxpayers

•$1,186 for married taxpayers filing a joint return

Credit for Contributions Made to Certified School Tuition Organizations (Form 348)

The allowable current year credit for contributions to a certified school tuition organization was adjusted for inflation purposes. For 2020, the maximum current year credit is:

•$590 for single and head of household taxpayers

•$1,179 for married taxpayers filing a joint return

Tax Credits Available

Over 100,000 eligible Arizona families failed to receive thousands of dollars in tax credits because they did not file a tax return. You may qualify for these special credits w hen you file your state and federal taxes.

For information or help, call one of the numbers listed:

Tax forms, instructions, and other tax information

If you need tax forms, instructions, and other tax information, go to the department’s website at www.azdor.gov.

Income Tax Procedures and Rulings

These instructions may refer to the department’s income tax procedures and rulings for more information. To view or print these, go to our website and click on Reports and Legal Research then click on Legal Research and select a document and category type from the drop down menus.

Publications

To view or print the department’s publications, go to our website and click on Reports and Legal Research then click on Publications.

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NOTE: FOR ALL COMPOSITE NONRESIDENT

PERSONAL INCOME TAX RETURNS

• If this return is filed as a Nonresident Composite Personal

Income Tax Return check box 13 on page 1 of the return and see the instructions, beginning on page 26, for completing a composite

return.

• A composite nonresident return cannot be e-filed. Partnerships

and S corporations filing a composite return on behalf of its

nonresident partners or nonresident shareholders must mail Form 140NR to the department.

AVOID PROCESSING DELAYS: Are you mailing

your Arizona income tax return? If you are mailing your return to the department, see page 23 for assembly order (for sequence) information.

Are You Subject to Tax in Arizona?

If you are in this state for a temporary or transitory purpose or did not live in Arizona but received income from sources within Arizona during 2020, you are subject to Arizona tax. You are subject to Arizona income tax on all income derived from Arizona sources. Income from Arizona sources includes the following:

•wages;

•rental income;

•business income;

•the sale of Arizona real estate;

•interest and dividends having a taxable or business situs, in this state; and

•any other income from an Arizona source.

Do You Have to File?

Arizona Filing Requirements

These rules apply to all Arizona taxpayers.

If you are a nonresident, you must report income derived from Arizona sources. To determine if you meet the gross income threshold amount above, multiply the amount by the percentage of your Arizona gross income that is of your federal adjusted gross income (income ratio shown on line 27 of Form 140NR).

To see if you have to file, figure your gross income the same as you would figure your gross income for federal income tax purposes. Then you should exclude income Arizona law does not tax. Income Arizona law does not tax includes:

•interest from U.S. Government obligations,

•social security retirement benefits received under Title II of the Social Security Act,

•benefits received under the Railroad Retirement Act, tier 1 or tier 2 railroad retirement benefits, railroad disability benefits reported on federal forms RRB-1099 and RRB- 1099-R, railroad unemployment benefits and railroad sickness payments paid by the Railroad Retirement Board, or

•pay received for active service as a member of the Reserves, National Guard, or the U.S. Armed Forces.

Income earned by a qualifying out-of-state employee, from performing qualified disaster recovery work during a disaster period, is exempt from Arizona income tax. For more information, see the instructions for line 15.

NOTE: Even if you do not have to file, you must still file a return to get a refund of any Arizona income tax withheld.

Do You Have to File if You Are an American Indian?

You must file if you meet the Arizona filing requirements unless all the following apply to you:

•You are an enrolled member of an Indian tribe.

•You live on the reservation established for that tribe.

•You earned all of your income on that reservation.

For information on the Arizona tax treatment of American Indians, see the department’s ruling, ITR 96-4, Income Taxation of Indians and Spouses.

Do You Have to File if You Are The Spouse of an American Indian and You Are Not an Enrolled Indian?

You must file if you meet the Arizona filing requirements. For more information, see the department’s ruling, ITR 96-4, Income Taxation of Indians and Spouses.

Do You Have to File if You Are in the Military?

NOTE: If you were an Arizona resident when you entered the

service, you remain an Arizona resident, no matter where

stationed, until you establish a new domicile. For more information, see the instructions under Residency Status.

You must file if you meet the Arizona filing requirements unless all the following apply to you:

•You are an active duty member of the United States armed forces.

•Your only income for the taxable year is pay received for active duty military service.

•There was no Arizona tax withheld from your active duty military pay.

If Arizona tax was withheld from your active duty military pay, you must file an Arizona income tax return to claim any refund you may be due from that withholding.

You must also file an Arizona income tax return if you have any other income besides pay received for active duty military service.

If you are not an Arizona resident, but stationed in Arizona, the following applies to you:

•You are not subject to Arizona income tax on your military pay.

•You must report any other income you earn in Arizona. Use Form 140NR, Nonresident Personal Income Tax Return, to report this income.

To find out more, see the department’s publication, Pub. 704, Taxpayers in the Military.

If You Included Your Child's Unearned Income on Your Federal Return, Does Your Child Have To File An Arizona Return?

No. In this case, the child should not file an Arizona return. The parent must include that same income in his or her Arizona taxable income.

Determining Residency Status

If you are not sure if you are an Arizona resident for state income tax purposes, we may be able to help. For more information, see the department’s procedure, ITP 92-1, Procedure For Determining Residency Status.

Residents

You are a resident of Arizona if your domicile is in Arizona. Domicile is the place where you have your permanent home. It is where you intend to return if you are living or working temporarily in another state or country. If you leave Arizona for a temporary period, you are still an Arizona resident while gone. A resident is subject to tax on all income no matter where the resident earns the income.

If you are a full year resident, you must file Arizona Form 140, Form 140A, or Form 140EZ.

Part-Year Residents

If you are a part-year resident, you must file Arizona Form 140PY, Part-Year Resident Personal Income Tax Return. You are a part-year resident if you did either of the following during 2020:

•You moved into Arizona with the intent of becoming a resident.

•You moved out of Arizona with the intent of giving up your Arizona residency.

Nonresidents

If you are a nonresident, you must file Arizona Form 140NR, Nonresident Personal Income Tax Return.

What if a Taxpayer Died?

If a taxpayer died before filing a return for 2020, the taxpayer's spouse or personal representative may have to file and sign a return for that taxpayer. A personal representative can be an executor, administrator, or anyone who is in charge of the deceased taxpayer’s property.

If the deceased taxpayer did not have to file a return but had tax withheld, a return must be filed to get a refund.

The person who files the return should use the form the taxpayer would have used. The person who files the return should print the word "deceased" after the decedent's name. Also, enter the date of death after the decedent's name.

If your spouse died in 2020 and you did not remarry in 2020 or if your spouse died in 2021 before filing a return for 2020, you may file a joint return. If your spouse died in 2020, the joint return should show your spouse's 2020 income before death and your income for all of 2020. If your spouse died in 2021, before filing the 2020 return, the joint return should show all of your income and all of your spouse's income for 2020. Print "Filing as surviving spouse" in the area where you sign the return. If someone else is the personal representative, he or she must also sign the return.

Are any Other Returns Required?

You may also have to file a fiduciary income tax return (Form 141AZ). For details about filing a fiduciary income tax return, call the department at (602) 255-3381.

Claiming a Refund for a Deceased Taxpayer

If you are claiming a refund for a deceased taxpayer, you must complete Arizona Form 131, Claim for Refund on Behalf of Deceased Taxpayer. Place the completed Form 131 on top of the front of the return.

What are the Filing Dates and Penalties?

When Should You File?

Your 2020 calendar year tax return is due no later than midnight, April 15, 2021. File your return as soon as you can after January 1, 2021, but no later than April 15, 2021.

If you are a fiscal year filer, your return is due on the 15th day of the fourth month following the close of your fiscal tax year.

What if You Cannot File on Time?

You may request an extension if you know you will not be able to file on time.

NOTE: An extension does not extend the time to pay your income tax. See the instructions for Arizona Form 204.

To get a filing extension, you can either

•Apply for a state extension (Arizona Form 204). To apply for a state extension, file Form 204 by April 15, 2021. See Form 204 for details. You do not have to include a copy of the extension with your return when you file, but make sure that you check box 82F (above your name) on page 1 of the return. If you must make a payment, use Arizona Form 204, or visit www.AZTaxes.gov to make an electronic payment.

•Use your federal extension (federal Form 4868). File your Arizona return by the same due date. You do not have to include a copy of your federal extension with your return, but make sure that you check box 82F (above your name) on page 1 of the return.

When Should You File if You Are a Nonresident Alien?

The due date for your Arizona return is not the same as the due date for your federal return. Your Arizona return is due by April 15, 2021, even though your federal return is due on June 15, 2021. If you want to file your Arizona return after April 15, 2021, you must ask for a filing extension. You must file this request by April 15, 2021. Arizona will allow up to a 6-month extension. This will allow you to file your return by October 15, 2021. See Form 204 for extension filing details.

If you have a federal 6-month extension, you can file your Arizona return under that extension. If you file using your federal extension, Arizona will also allow you an extra 6 months.

Because we will allow only 6 months, the due date for your Arizona return is not the same as the due date for your federal return. In this case, your Arizona return will be due by October 15, 2021, even though your federal return will not be due until December 15, 2021. If you file your 2020 Arizona calendar year return after October 15, 2021, your return will be late.

If you are a fiscal year filer, your return is due on the 15th day of the fourth month following the close of your fiscal year.

What if you File or Pay late?

If you file or pay late, we will charge you interest and penalties on the amount you owe. If the U.S. Post Office postmarks your 2020 calendar year return by April 15, 2021, your return will not be late. You may also use certain private delivery services designated by the Internal Revenue Service (IRS) to meet the “timely mailing as timely filed” rule. For more information, see “Mailing Your Return” at the end of these instructions.

Late Filing Penalty

If you file late, we will charge you a late filing penalty. This penalty is 4½% (.045) of the tax required to be shown on the return for each month or fraction of a month the return is late. This penalty cannot exceed 25% (.25) of the tax found to be remaining due.

Late Payment Penalty

If you pay your tax late, we will charge you a late payment penalty. This penalty is ½ of 1% (.005) of the amount shown as tax for each month or fraction of a month for which the failure continues. We charge this penalty from the original due date of the return until the date you pay the tax. This penalty cannot exceed a total of 10% (.10) of the unpaid tax.

Extension Underpayment Penalty

If you file your return under an extension, you must pay 90% (.90) of the tax shown on your return by the return's original due date. If you do not pay this amount, we will charge you a penalty. This penalty is ½ of 1% (.005) of the tax not paid for each 30 day period or fraction of a 30 day period. We charge this penalty from the original due date of the return until the date you pay the tax. This penalty cannot exceed 25% (.25) of the unpaid tax. If we charge you the extension underpayment penalty, we will not charge you the late payment penalty under Arizona Revised Statutes (A.R.S.) § 42-1125(D).

NOTE: If you are subject to two or more of the above penalties, the total cannot exceed 25%.

Interest

We charge interest on any tax not paid by the due date. We will charge you interest even if you have an extension. If you have an extension, we will charge you interest from the original due date until the date you pay the tax. The Arizona interest rate is the same as the federal rate.

When Should You Amend a Return?

If you need to make changes to your return after you have filed, do not file a new return using Form 140NR. You must file Arizona Form 140X, Individual Amended Income Tax Return. File your amended return after your original return has processed. Generally, you have four years to amend a return to claim a refund.

If you amend your federal return for any year, you must also file an Arizona Form 140X for that year.

If the IRS makes a change to your federal taxable income for any year, you must report that change to Arizona. You must file Form 140X within 90 days of the final determination of the IRS. You may use one of the following two options to report this change.

Option 1

You may file a Form 140X for that year. If you choose this option, you must amend and mail your Arizona return within 90 days of the final determination of the IRS. Include a complete copy of the federal notice with your Form 140X.

Option 2

You may file a copy of the final federal notice with the department within 90 days of the final determination of the IRS. If you choose this option, you must include a statement in which you must:

1.Request that the department recompute your tax.

2.Indicate if you agree or disagree with the federal notice.

If you do not agree with the federal notice, you must also include any documents that show why you do not agree. If you choose option 2, mail the federal notice and any other documents to:

Individual Income Audit

Arizona Department of Revenue

PO Box 29084

Phoenix, AZ 85038-9084

Do You Need to Make Arizona Estimated Payments in 2021?

You must make Arizona estimated income tax payments during 2021 if:

What if You Make Your Estimated Payments Late?

We will charge you a penalty if you are late or if you fail to make any required payments. See Arizona Form 221.

Can You Make Estimated Payments Even if You Do Not Have To?

If you do not have to make Arizona estimated income tax payments, you may still choose to make them. For details, see Arizona Form 140ES.

Line-by-Line Instructions

Tips for Preparing Your Return

•You must complete your federal return before you can start your Arizona return.

•Make sure that you enter your Social Security Number (SSN) on your return.

•Complete your return using black ink.

•You must round dollar amounts to the nearest whole dollar. If 50 cents or more, round up to the next dollar. If less than 50 cents, round down. Do not enter cents.

•If you are mailing your return, see page 23 for assembly order.

•Make sure you include your daytime telephone number.

•If filing a fiscal year return, fill in the period covered.

Entering Your Name, Address, and SSN

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If you met the income threshold for 2020, you must make estimated payments during 2021 unless you are sure you will not meet the threshold for 2021. As a nonresident, your Arizona gross income is that part of your federal adjusted gross income derived from Arizona sources. Your Arizona gross income is on line 26 of the 2020 Form 140NR.

Use the worksheet for Arizona Form 140ES to figure how much your payments should be. For more information about making estimated payments, see the department’s publication, Pub. 012, Arizona Individual Estimated Income Tax Payments.

Lines 1, 2, and 3 -

NOTE: Make sure that you enter your SSN on the appropriate

line and your SSN is correct. If you are filing a joint return,

also make sure that you enter your SSNs in the same order every year.

Enter your name, address, and SSN in the space provided. If you are filing a joint return, enter your SSNs in the same order as your first names. If your name appears first on the return, make sure your SSN is the first number listed.

If you are married filing separately, enter your name and SSN on the first line 1. Then enter your spouse’s name and SSN on the second line 1.

If you are a nonresident of the United States or a resident alien who does not have an SSN, use the individual taxpayer identification number (ITIN) the IRS issued to you.

Make sure that you enter your SSN on your return. Make sure that all SSNs are clear and correct. You may be subject to a penalty if you fail to include your SSN. It will take longer to process your return if SSNs are missing, incorrect, or unclear.

NOTE: If a partnership or S corporation files a composite

return on behalf of its nonresident partners or shareholders, the

entity filing the return should enter its EIN in place of the SSN.

For example if the entity’s EIN is 98-7654321, the entity would enter its EIN as 987-65-4321.

Use your current home address. The department will mail your refund to, or correspond with, you at that address.

For a deceased taxpayer, see page 2 of these instructions.

Foreign Addresses

If you have a foreign address, enter the information in the following order: city, province or state, and country. Follow the country’s practice for entering the postal code. Do not abbreviate the country name.

Last Names Used in Last 4 Prior Years

If the last name that you or your spouse are using on this return is not the same as the last name you or your spouse used on returns filed for the last 4 years, enter any other last name(s) that you or your spouse used when filing your return during that period.

Identification Numbers for Paid Preparers

If you pay someone else to prepare your return, that person must also include an identification number where requested.

A paid preparer may use any of the following:

•his or her PTIN,

•his or her SSN, or

•the EIN for the business.

A paid preparer who fails to include the proper identification number may be subject to a penalty.

Determining Your Filing Status

The filing status that you use on your Arizona return may be different from that used on your federal return.

Use this section to determine your filing status. Check the correct box (4 through 7) on the front of Form 140NR.

If you qualify as married for federal purposes, you qualify as married for Arizona purposes and must file using the status of either married filing joint or married filing separate.

If you are single you must file as single or if qualified you may file as head of household (see the instructions for box 5).

Box 4 - Married Filing Joint Return

If you are married and filing a joint return, check box 4.

You may file a joint return if you were married as of December 31, 2020. It does not matter whether or not you were living with your spouse. You may file a joint return, even if you and your spouse filed separate federal returns.

You may file a joint return if your spouse died during 2020 and you did not remarry in 2020. See page 2 of these instructions for details.

If you are married to an Arizona full year resident, you may file a joint return with your Arizona resident spouse. If filing a joint return with your Arizona resident spouse, you must use Form 140NR.

NOTE: For help on filing a joint return with your full-year resident spouse, see the department’s ruling, ITR 14-1, Filing a

Joint Tax Return When a Resident Spouse is Married to a Part- Year Resident or Nonresident.

Box 4a - Injured Spouse Protection of Joint Overpayment

Check box 4a only if you and your spouse are filing a joint return and you or your spouse qualify as an injured spouse and are requesting protection from application of any joint overpayment against the other spouse’s delinquencies or debts.

NOTE: You cannot use Form 203 to request protection from offset for past-due federal taxes. You must contact the IRS.

You must complete Arizona Form 203, Request for Injured Spouse Protection from Application of Joint Overpayment Against Spouse’s Delinquencies and Debts, and include that form with your tax return, when filed. Place the completed form on top of your income tax return. For more information, see the instructions for Form 203.

Box 5 - Head of Household Return

If you are filing as a head of household, check box 5. Enter the name of the qualifying child or dependent in the space provided. You may file as head of household on your Arizona return, only if one of the following applies:

•You qualify to file as head of household on your federal return; or

•You qualify to file as a qualifying widow or widower on your federal return.

Box 6 - Married Filing Separate Return

If you are filing a separate return, check box 6 and enter your spouse's name and SSN on the second line 1.

If you were married as of December 31, 2020, you may choose to file a separate return. You may file a separate return, even if you and your spouse filed a joint federal return.

Arizona is a community property state. If you file a separate return, you must figure how much income to report using community property laws. If one spouse is a resident and the other spouse is not, special rules apply when filing a separate return.

For more information on how to report income in this case, see the department’s ruling, ITR 93-20, Income Reporting Requirements of Resident and Nonresident Spouses Who File Separate Arizona Individual Income Tax Returns; and the department’s publication, Pub. 200, Income Tax Issues Affecting Married and Divorced Taxpayers.

a)first and last name;

b)social security number;

c)relationship to taxpayer;

d)the number of months this person lived in your home; Temporary absences: Your child or dependent is considered to have lived with you during periods of time when temporarily absent due to special circumstances such as: illness; education; business; or vacation. Your child is also considered to have lived with you during any required hospital stay following birth, as long as the child would have lived with you during that time but for the hospitalization.

e)- check box 1 (for box 10a) if this person is under the age of 17 or

-check box 2 (for box 10b) if this person is age 17 or over; and

f)check the box if you did not claim this person on your federal return due to educational credits.

NOTE: If you did not claim a dependent who is a student on

your federal return in order to allow the student to claim a

federal education credit on the student’s federal return, you

may still claim the dependent on your Arizona return. For more information, see the department’s ruling, ITR 05-2,

Will Arizona Allow a Dependent Exemption When a Taxpayer

Does Not Claim Federal Exemption in Order to Claim the Education Credit?

You may lose the dependent tax credit if you do not furnish this information. Enter the total number of dependents in box 10a and 10b.

Reporting Your Residency Status

Check the appropriate box (11 through 13). Check only one box.

Box 11 - Nonresident

Check box 11, if you were not an Arizona resident during 2020, and were not on active military duty in Arizona.

Box 12 - Nonresident Active Military

Check box 12, if you were a nonresident on active duty military assignment in Arizona during 2020.

Box 13 - Composite Return

Check box 13, if this is a composite return filed by a Partnership on behalf of its nonresident partners or an S corporation on behalf of its nonresident shareholders.

For a list of qualifications and additional information on filing an Arizona composite nonresident income tax return, see the department’s ruling, ITR 16-2, Composite Individual Income Tax Returns.

IMPORTANT – SPECIAL INSTRUCTIONS FOR

COMPOSITE RETURNS: Go to page 26 to complete a composite nonresident personal income tax return.

Determining Arizona Income

Line 14 - Spouse of Active Duty Military Member Check the box on line 14 if married and you are the spouse of an active duty military member and you qualify for relief under the Military Spouses Residency Relief Act. For information about who qualifies for relief, see the department’s publication, Pub. 705, Spouses of Active Duty Military Members.

Use lines 15 through 27 to determine what portion of your total income is taxable by Arizona.

NOTE: If you are unable to determine the proper line to use, please call one of the numbers listed on page 1.

FEDERAL Column

Enter the actual amounts shown on your 2020 federal income tax return in the FEDERAL column. Complete lines 15 through

25.Line 25 should equal the federal adjusted gross income shown on your 2020 federal Form 1040 or Form 1040NR.

ARIZONA Column

Enter that portion of your federal income received from Arizona sources in the ARIZONA column. Such income includes wages earned in Arizona, Arizona rental and business income, and gains on the sale of Arizona property.

NOTE: If you are filing a joint return with your full year

resident spouse, you must enter your Arizona source income in

the ARIZONA column and your spouse must enter all income

from all sources in the ARIZONA column. For details, see the department’s ruling, ITR 14-1, Filing a Joint Tax Return When

a Resident Spouse is Married to a Part-Year Resident or Nonresident

The Tax Reform Act of 1986 limits the amount of losses that you may deduct from passive activities. A passive activity is one that involves the conduct of any trade or business in which the taxpayer does not materially participate.

As a nonresident, your Arizona gross income may include some of these losses. You may consider only those passive losses that arose from Arizona sources. Your 2020 Arizona gross income can include only Arizona source losses you used on your 2020 federal return.

Lines 15 through 24 – Arizona column

The following line-by-line instructions apply to the ARIZONA column.

Line 15 - Wages, Salaries, Tips, etc.

Enter all amounts received for services performed in Arizona.

Income earned by a qualifying out-of-state employee, from performing qualified disaster recovery work during a disaster period, is exempt from Arizona income tax. Exclude this income from line 15 in the Arizona column.

For the purpose of this exemption, a qualifying out-of-state employee is an Arizona nonresident individual who is temporarily in Arizona to solely perform qualified disaster recovery work during a disaster period. For more information, see the department’s publication, Pub. 720.

NOTE: Active Duty Military Members - Do not include

active duty military pay unless the active duty military member

is an Arizona resident filing a joint return with his or her

Arizona nonresident spouse on Form 140NR. If you are an

Arizona resident active duty military member including military

pay on line 15 in the “ARIZONA” column, also include that

amount in the amount entered as an “Other Subtraction From Income” on page 2, line 45.

NOTE: Spouses of Active Duty Military Members If you are

the spouse of an active duty military and you qualify for relief

under the Military Spouses Residency Relief Act, do not enter

any wages, salaries or tips you earned during the taxable year for services performed in Arizona.

Line 16 - Interest

If you have an Arizona business, enter only interest (including U.S. Government interest) you earned on accounts pledged as collateral. Also, enter your distributive share of interest from a partnership doing business in Arizona or an S corporation doing business in Arizona. Do not include any other interest income, even if it was earned in Arizona banks.

Line 17 - Dividends

If you have an Arizona business, enter only those dividends earned on stocks pledged as collateral, including dividends from small business corporations. Also, enter your distributive share of dividend income from a partnership doing business in Arizona or an S corporation doing business in Arizona. Do not include any other dividend income.

Line 18 - Arizona Income Tax Refunds

Enter the amount of Arizona income tax refunds received in 2020 that you included in your federal adjusted gross income.

Line 19 - Business Income or (Loss)

Enter income or (loss) from Arizona businesses.

Income earned by a nonresident, who is a sole owner of a qualifying out-of-state business, from performing qualified disaster recovery work during a disaster period, is exempt from Arizona income tax. Exclude this income from line 19 in the Arizona column.

For the purpose of this exemption, a qualifying out-of-state business is a business that is temporarily in Arizona to solely perform qualified disaster recovery work during a disaster period. For more information, see the department’s publication, Pub. 720, Disaster Recovery Tax Relief.

Line 20 - Gains or (Losses)

Enter gains or (losses) on sales of Arizona sourced property. Enter the total Arizona sourced net capital gain or (loss) used to determine the amount reported on the Capital Gain or (Loss) line on page 1 of your federal return. This amount should be reported in your federal adjusted gross income.

NOTE: If you reported the maximum allowable net capital

(loss) for the current taxable year on your federal return, enter

the total amount of Arizona sourced loss used to compute the net capital loss claimed on your federal return.

For example: A single taxpayer has a $3,000 capital gain from property in State XYZ and a ($7,000) capital (loss) from property in Arizona resulting in a ($4,000) net federal capital loss. [$3,000 gain – ($7,000 loss) = ($4,000 net loss)]

Because taxpayer is limited to claiming a loss in the amount of ($3,000) on the federal tax return, the taxpayer must carryforward the remaining amount of the loss ($1,000), for federal purposes. [($4,000 actual loss) – $3,000 limit = ($1,000 loss carryforward)]

•For the current tax year: the Arizona nonresident taxpayer would enter the loss actually used, ($6,000), on line 20 of the Arizona column. [($7,000) – ($1,000 carryforward) = ($6,000)].

•In the year the carryforward amount is used for federal purposes, assuming taxpayer has no other gains or (losses), the taxpayer would enter the remaining Arizona sourced capital loss ($1,000) on line 20, of the Arizona column.

Line 21 - Rents, etc.

Enter the following income on line 21.

•Rent or royalty income earned on Arizona properties.

•Income from Form 141AZ Schedule K-1(NR), line 2, from estates or trusts.

•Income or (loss) from Schedule(s) K-1(NR) from Arizona partnerships (Arizona Form 165), or small business corporations (Arizona Form 120S).

Line 22 - Other Income Reported on Your Federal Return

Enter other income from sources within Arizona. Do not include pension income or social security taxed by the federal government. Include your own schedule with the tax return.

Line 23 - Total Income

Add lines 15 through 22 and enter the total.

Line 24 - Other Federal Adjustments

Include, on line 24, any other federal adjustments included in your federal adjusted gross income that are attributable to the Arizona source income reported on your 2020 Arizona nonresident return.

Line 25 - Federal Adjusted Gross Income

Subtract line 24 from line 23 in the FEDERAL column.

Line 26 - Arizona Gross Income

Subtract line 24 from line 23 in the ARIZONA column.

Line 27 - Arizona Income Ratio

Divide line 26 by line 25 and enter the result on line 27. You must round your answer to three decimal places. Do not enter more than 1.000. Do not include the percent sign (%) with the amount entered on line 27.

This is your Arizona income ratio of your total income.

•If Arizona gross income and federal adjusted gross income are both positive and Arizona’s gross income is greater than the federal adjusted gross income, enter 1.000 on line 27.

•If Arizona gross income is positive (greater than zero), and federal adjusted gross income is equal to or less than zero (negative), enter 1.000 on line 27.

•If Arizona gross income is equal to or less than zero (negative), and federal adjusted gross income is more than zero, enter 0.000 on line 27.

•If Arizona gross income and federal adjusted gross income are both zero, enter 1.000 on line 27.

•If Arizona gross income is zero, and federal adjusted gross income is negative, enter 0.000 on line 27.

•If Arizona gross income and federal adjusted gross income are both negative, divide the Arizona amount by the federal amount and enter the result on line 27. The result cannot be more than 1.000.

Additions to Income

Line 28 - Total Depreciation Included in Arizona Gross Income

Enter the amount of depreciation deducted on the federal return that is included in Arizona gross income. If you make an entry here, you should also take a subtraction on line 40 for allowable depreciation attributable to assets used in your Arizona business. See the instructions for line 40.

Line 29 - Partnership Income Adjustment (Positive)

Depending on your situation, you may either add (line 29) or subtract (line 41) this amount.

Use this adjustment if line 17, column (c) of your Arizona Form 165 Schedule K-1(NR), shows a difference between federal and state distributable income.

If the difference reported on line 17, column (c) of your Arizona Form 165 Schedule K-1(NR) is a positive number, enter that

portion of the difference that is allocable to partnership income taxable by Arizona as an addition on line 29.

NOTE: If the difference reported on line 17, column (c) of your

Arizona Form 165 Schedule K-1(NR), is a negative number,

enter that portion of the difference that is allocable to

partnership income taxable by Arizona as a subtraction on line 41.

Line 30 - Net Capital (Loss) from the Exchange of one kind of Legal Tender for another kind of Legal Tender

To determine if you are required to make this addition to income, you must net all gains and (losses) from all exchanges of one kind of legal tender for another kind of legal tender including amounts shown on Form 165 Schedule K-1(NR), Form 120S Schedule K-1(NR), and Form 141AZ, Schedule K- 1(NR).

For taxable years beginning from and after December 31, 2017, enter the amount of any net capital loss from Arizona sources and included in Arizona gross income for the taxable year that is derived from the exchange of one kind of legal tender for another kind of legal tender.

NOTE: If the amount from all sources results in a net capital

gain from the exchange of one kind of tender for another kind of tender, enter that amount on line 39.

For the purposes of this paragraph:

(a)"Legal tender" means a medium of exchange, including specie that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.

(b)"Specie" means coins having precious metal content.

Line 31 - Other Additions to Income

Use line 31 if any of the special circumstances below apply.

NOTE: If you are reporting any adjustment on line 31 or line

45, complete page 5 of your tax return, Adjustments to Arizona

Gross Income, and include it with your return. If are not

reporting any adjustment on line 31 or line 45, do not include page 5 with your return.

A. Fiduciary Adjustment - Form 141AZ Schedule K-1(NR)

A fiduciary uses Form 141AZ Schedule K-1(NR), to report to you your share of the fiduciary adjustment from the trust or estate. Line 5 of Form 141AZ Schedule K-1(NR), shows your share of the fiduciary adjustment from the estate or trust.

Depending on your situation, you may either add (line 31) or subtract (line 45) this amount.

If the amount reported on line 5 of your Arizona Form 141AZ, Schedule K-1(NR), is a positive number, include that amount as an addition on line 31.

NOTE: If the amount reported on line 5 of your Arizona Form

141AZ Schedule K-1(NR), is a negative number, include that amount as a “Subtraction from Income” on line 45.

B. Items Previously Deducted for Arizona Purposes

Arizona statutes prohibit a taxpayer from deducting items more than once. If your Arizona taxable income includes items previously deducted for Arizona purposes, you must add back such amounts to your Arizona gross income.

C. Claim of Right Adjustment for Amounts Repaid in 2020

You must make an entry here if all of the following apply:

1.During 2020, you were required to repay amounts held under a claim of right.

2.The amount required to be repaid was subject to Arizona income tax in the year included in income.

3.The amount required to be repaid during 2020 was more than $3,000.

4.You took a deduction for the amount repaid on your 2020 federal income tax return.

5.The deduction taken on your federal income tax return is reflected in your Arizona taxable income.

If the above apply, include the amount deducted on your federal income tax return which is reflected in your Arizona taxable income. For more information see the department’s procedure, ITP 16-1, Procedure for Individuals Who Restore Substantial Amounts Held Under a Claim of Right.

D.Claim of Right Adjustment for Amounts Repaid in Prior Taxable Years

You must make an entry here if all of the following apply:

1.During a year prior to 2020, you were required to repay income held under a claim of right.

2.You computed your tax for that prior year under Arizona’s claim of right provisions.

3.A net operating loss or capital loss was established due to the repayment made in the prior year.

4.You are entitled to take that net operating loss or capital loss carryover into account when computing your 2020 Arizona taxable income.

5.The amount of the loss carryover included in your Arizona gross income is more than the amount allowed to be taken into account for Arizona purposes.

Include the amount by which the loss carryover included in your Arizona gross income is more than the amount allowed for the taxable year under Arizona law.

E. Addition to S Corporation Income Due to Credits Claimed

Shareholders of an S corporation who claim a credit passed through from an S corporation must make an addition to income for the amount of expenses disallowed by reason of claiming the credit.

An S corporation that passes the following credits through to its shareholders must notify each shareholder of his or her pro rata share of the adjustment. Shareholders must include an amount on this line when claiming any of the following credits:

•Agricultural Water Conservation System Credit (Form 312)

•Pollution Control Credit (Form 315)

•Credit for employment of TANF Recipients (Form 320)

F. Wage Expense for Employers of TANF Recipients

If you claim a credit for employing TANF recipients (Form 320), you cannot deduct any wage expense for which you claim the credit. If you claim this credit, include the amount of such expenses that you deducted on your federal return.

G.Adjusted Basis in Property for Which You Have Claimed a Credit for Investment in Qualified Small Businesses

If you claim a credit for an investment in a qualified small business on Form 338, you must adjust your basis in the investment by the amount of the credit claimed. You must report this difference in basis on the Arizona return that you file for the taxable year in which you sell or otherwise dispose of the investment. If you sold or otherwise disposed of the investment during the 2020 taxable year, include the amount by which the adjusted basis computed under the Internal Revenue Code (IRC) with respect to that property exceeds the adjusted basis of the property computed under A.R.S. § 43-1074.02.

H.Sole Proprietorship Loss of an Arizona Nonprofit Medical Marijuana Dispensary Included in Federal Adjusted Gross Income

If you are registered as an Arizona sole proprietorship with the Arizona Department of Health Services to operate in this state as a nonprofit medical marijuana dispensary, you are required to add the amount of the loss from the dispensary that is included in the computation of your federal adjusted gross income. Include the amount of the loss on line 31.

NOTE: If the Arizona nonprofit medical marijuana dispensary

is registered with the Arizona Department of Health Services as

anything other than a sole proprietorship, this addition does not apply.

I. Americans with Disabilities Act Access Expenditures

If a subtraction is taken on line 45, Other Subtractions from Income, for the full amount of eligible access expenditures paid or incurred during the taxable year for Arizona properties to comply with the requirements of the Americans with disabilities act of 1990 or title 41, chapter 9, article 8, any amount of eligible access expenditures that is recognized under the internal revenue code, including any amount that is amortized according to federal amortization schedules, and that is included in computing taxable income for the current taxable year must be added to Arizona gross income.

(A.R.S. § 43-1021)

J. Amortization or Depreciation for Childcare Facility

You elected to amortize cost of a childcare facility under Arizona law in effect before 1990, and you are still deducting amortization or depreciation for that facility on your federal income tax return.

K. Other Adjustments related to Tax Credits

Call one of the numbers listed on page 1 of these instructions if you claimed the Pollution Control Credit. (Form 315)

L. Other Adjustments

Other adjustments may be necessary. For example, you must add-back expenses related to income that Arizona does not tax. If you have more than one Other Adjustment, add the amounts together and enter the total.

M. Total Other Additions to Arizona Gross Income.

Add all amounts from page 5, Part A, and enter the total and enter the total on line 31.

Line 32 - Subtotal

Add lines 26, 28, 29, 30 and 31 and enter the total on line 32.

Subtractions from Income

You may only subtract those items for which statutory authority exists. Without such authority, you cannot take a subtraction. If you have any questions concerning subtractions from income, call one of the numbers listed on page 1 of these instructions.

NOTE: You may not subtract any amount which is allocable to income excluded from your Arizona income.

Lines 33 through 38 - Net Capital Gain or (loss)

NOTE: If you reported a net capital gain or (loss) on your

federal tax return, from federal Schedule D, you must enter the

amount of the net gain or (loss) from Arizona sources on

line 33. See the instructions for line 33.

If you enter an amount on line 37, you must also complete lines

35 and 36. If you do not complete these lines, you cannot take

the subtraction on line 37.

If you do not have any net capital gain or (loss) to report, enter “0” on lines 33-35

As a nonresident, you may take the allowable subtraction for only those qualified net long-term capital gains that are from Arizona sources. You may subtract 25% (.25) of any qualifying net long-term capital gain included in your federal adjusted gross income that is derived from an investment in an asset acquired after December 31, 2011.

Use the worksheet, Worksheet for Net Long-Term Capital Gain Subtraction for Assets Acquired after December 31, 2011, at the end of these instructions to determine the allowable subtraction. Keep the worksheet for your records.

Line 33 - Total Arizona Sourced Net Capital Gain or (Loss)

Enter the amount shown on line 20, of the Arizona column.

Line 34 - Total Arizona Sourced Net Short-Term Capital Gain or (Loss)

Enter the total Arizona sourced net short-term capital gain reported on line 33.

NOTE: If you are not required to report dividend distributions

and/or short-term capital gains from mutual funds on federal

Form Schedule D, do not include the short-term capital gain distributed by the mutual fund on line 34.

Line 35 - Total Arizona Sourced Net Long-Term Capital Gain or (Loss)

Enter the amount of total Arizona sourced long-term net capital gain or (loss) included in line 33.

NOTE: If your long-term net capital gain or (loss) was limited

to an amount shown on federal Form 1099-DIV, and you were

not required to complete Schedule D, enter the amount shown on your Form 1099-DIV, from Arizona sources, on line 35.

Line 36 – Arizona Sourced Net Long-Term Capital Gain from Assets Acquired After December 31, 2011

Enter the Arizona sourced net long-term capital gain from assets acquired after December 31, 2011.

If you did not complete the worksheet at the end of these instructions and you have no net long-term capital gains from assets acquired after December 31, 2011, enter “0”.

If you completed the worksheet, enter the amount from the worksheet, line 7.

Only include net long-term capital gains on this line if it can be verified that the asset was acquired after December 31, 2011. For purposes of this line, an asset acquired by gift or inheritance is considered acquired on the date it was acquired by the gift-giver or the deceased individual.

Line 37 – Arizona Sourced Net Long-Term Capital Gain Subtraction from Income for Assets Acquired After December 31, 2011

Multiply the amount on line 36 by 25% (.25) and enter the result.

CAUTION: If you take a subtraction on line 38 or line 39 that

includes any long-term capital gain from an investment made

after December 31, 2011, you cannot include that portion of

the net capital gain in your computation of the allowable

subtraction for any net long-term capital gain from assets

acquired after December 31, 2011, and included in federal adjusted gross income (line 25).

Line 38 - Net Capital Gain from Investment in a Qualified Small Business

To take the subtraction for a net capital gain from investment in an Arizona qualified small business, you must net all gains and (losses) from investments in Arizona qualified small businesses including amounts shown on Forms 165 Schedule K-1, 120S Schedule K-1, and/or 141AZ, Schedule K-1.

You may subtract the amount of any net capital gain included in federal adjusted gross income for the taxable year derived from investment in a qualified small business as determined by the Arizona Commerce Authority (ACA) pursuant to A.R.S. § 41-1518.

To qualify for this subtraction, your investment in the qualified small business must have been made after the ACA certified the company as a qualified small business and before the company’s certification expiration date. An investment made prior to certification or after the expiration of certification does not qualify for this subtraction.

See the ACA’s website, Small Business Incentives: Angel Investment, for a list of certified businesses and their certification dates.

On line 38, enter the amount of the allowable subtraction.

Line 39 – Capital Gain from the Exchange of one kind of Legal Tender for another kind of Legal Tender

To take this subtraction, you must net all gains and (losses) from all exchanges of one kind of legal tender for another kind of legal tender including amounts shown on Forms 165 Schedule K-1(NR), 120S Schedule K-1(NR) , and/or 141AZ, Schedule K-1(NR).

Enter the amount of any net capital gain from Arizona sources included in Arizona gross income for the taxable year that is derived from the exchange of one kind of legal tender for another kind of legal tender.

NOTE: If the amount from all sources results in a net capital

(loss) from the exchange of one kind of tender for another kind of tender, enter that amount on line 30.

For the purposes of this paragraph:

(a)"Legal tender" means a medium of exchange, including specie that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.

(b)"Specie" means coins having precious metal content.

Line 40 - Recalculated Arizona Depreciation

As a nonresident, you may take the allowable subtraction that is only related to income sourced to Arizona.

NOTE: For more information and examples of how to calculate Arizona bonus depreciation, see the department’s

procedure, ITP 16-2, Procedure for Individuals who Claim Federal and/or Arizona Bonus Depreciation.

For assets placed in service in taxable years beginning before December 31, 2012, enter the total amount of depreciation attributable to assets used in your Arizona business allowable pursuant to IRC § 167(a) for the taxable year calculated as if you had elected not to claim bonus depreciation for eligible properties for federal purposes.

For assets placed in service during taxable years beginning from

and after December 31, 2012 through December 31, 2013, the amount of the subtraction depends on the method used to compute the depreciation for these assets.

For assets placed in service in taxable years beginning from and after December 31, 2013 through December 31, 2015, enter the total amount of depreciation attributable to assets used in your Arizona business allowable pursuant to IRC § 167(a) for the taxable year calculated as if the bonus depreciation is 10% of the amount of federal bonus depreciation pursuant to IRC § 168(k).

For assets placed in service in taxable years beginning from and after December 31, 2015 through December 31, 2016, enter the total amount of depreciation attributable to assets used in your Arizona business allowable pursuant to IRC § 167(a) for the taxable year calculated as if the bonus depreciation is 55%

of the amount of federal bonus depreciation pursuant to IRC § 168(k).

For assets placed in service in taxable years beginning from and after December 31, 2016, enter the total amount of depreciation attributable to assets used in your Arizona business allowable pursuant to IRC § 167(a) for the taxable year calculated as if the bonus depreciation is the full amount of federal bonus depreciation pursuant to IRC § 168(k).

Add all amounts together and enter the total on line 38.

Line 41 - Partnership Income Adjustment

Use this adjustment if Form 165 Schedule K-1(NR), line 17, column (c) shows a difference between federal and state distributable income.

If the difference reported on line 17, column (c), is a negative number, enter that portion of the difference that is allocable to partnership income taxable by Arizona as a subtraction on line 41. Do not include a minus sign or use parenthesis.

NOTE: If the difference reported on line 17, column (c) of your

Arizona Form 165 Schedule K-1(NR), is a positive number,

enter that portion of the difference that is allocable to

partnership income taxable by Arizona as an addition on line 29.

Line 42 -

Subtract lines 37 through 41 from line 32 and enter the difference.

Line 43 - Interest on U.S. Obligations

Enter the amount of interest income from U.S. Government obligations included as income on line 16 in the ARIZONA column. U.S. Government obligations include obligations such as savings bonds and treasury bills. You must reduce this subtraction by any interest or other related expenses incurred to purchase or carry the obligation. Reduce the subtraction only by the amount of such expenses included in your Arizona gross income.

Line 44 - Agricultural Crops Given to Arizona Charitable Organizations

Arizona law allows a subtraction for qualified crop gifts made during 2020 to one or more charitable organizations. To take this subtraction, all of the following must apply:

1.You must be engaged in the business of farming or processing agricultural crops.

2.The crop must be grown in Arizona.

3.You made your gift to a charitable organization located in Arizona that is exempt from Arizona income tax.

The subtraction is the greater of the wholesale market price or the most recent sale price for the contributed crop.

The amount of subtraction cannot include any amount deducted pursuant to IRC § 170 with respect to crop contribution that exceeds the cost of producing the contributed crop. To determine if your crop gift qualifies for this subtraction, see the department’s procedure, ITP 12-1, Establishing an Income Tax Subtraction for Agricultural Crops Contributed to Charitable Organizations.

DO NOT STAPLE ANY ITEMS TO THE RETURN.

Place any required federal and AZ schedules or other documents after Form 140NR.