According to Alabama Form 40 Instructions, "Individual taxpayers who are residents of Alabama are subject to tax on their entire income whether earned within or outside of Alabama. This is true regardless of their physical presence within Alabama at any time during the taxable year".
Filing Requirements are based off of Residency, filing status and gross income:
Full Year Residents:
- Single, $4,500
- Head of Household, $8,200
- MFJ, $11,500
- MFS, $5,750
Part Year Residents: (while an Alabama resident)
- Single, $4,500
- Head of Household, $8,200
- MFJ, $11,500
- MFS, $5,750
Nonresidents:
Nonresidents must file if their gross income was over the allowable prorated exemption.
Special Rules for Joint and Separate Returns
Alabama will allow you to file separately on your state return and jointly on your federal return. You can file separate returns if both you and your spouse had income, or if only one of you had income. If you file a separate return, report only your own income, exemptions, deductions, and credits. You are responsible only for the tax due on your return.
Married Filing Joint Returns: If you are a resident of Alabama and your spouse is a nonresident, you cannot file a Joint Alabama return. You will have to file as Married Filing Separately on your Alabama return. If you file a joint return, you may not amend the return and change the filing status to married filing separate after the due date of the return.
Married Filing Separate Returns: Each spouse will have to claim the same deduction, unless the spouse lived apart from each other for the entire year. If this is the case, each spouse can claim either deduction. However, neither spouse can claim a deduction that the other spouse paid for.
Head of Family: You may be considered "Head of Family" only if you are not married at the end of the tax year, you are not a surviving spouse and your qualifying dependent is not a foster child. You must also meet either of the following two tests:
- You paid more than half the cost of keeping up a home for the entire year provided that home was the main home of your parent (whom you can claim as a dependent).
- You paid more than half the cost of keeping up a home in which both you and either your unmarried child, grandchild, great-grandchild (does not have to be your dependent) lived or your unmarried child, grandchild, great-grandchild (does need to be your dependent) lived.
Part Year Resident Rules:
Part Year residents can ONLY claim the itemized deductions that were paid while a resident of Alabama.
MFJ and MFS Part Year Residents: According to the Form 40 Instructions "If a married couple elects to file a joint federal return and separate Alabama returns, the federal income tax liability must be determined by a ratio of each spouse’s federal adjusted gross income to total joint federal adjusted gross income, or if filing as a part year resident, the ratio of Alabama adjusted gross income to federal adjusted gross income. This calculation is required regardless of the method used in claiming other deductions."
If you are filing a separate Alabama state return, but paid joint estimated taxes, both of you may either claim the entire amount paid or claim part of it.