If you are New Mexico resident and you pay taxes on income to another state that is also taxable in New Mexico, you may qualify for this credit.
IMPORTANT: This credit is for tax that another state imposes on any portion of income that by law is included in New Mexico net income. When calculating the allowable credit, do not include tax withheld. If the specific item of income is not subject to taxation in both states, no credit is available.
The credit may not be more than:
- The New Mexico tax liability due on your PIT-1,
- The tax you paid to the other state, and
- The amount of New Mexico income tax liability calculated on the part of income taxes in both states.
The program will automatically calculate this credit for your New Mexico Resident return if you have a Nonresident return created in your account.
If you have a Part-Year New Mexico return, you will need to manually enter the information asked within the New Mexico state program.
You can enter this credit on your New Mexico return by following the steps below:
- State Section
- Credit for Taxes Paid to Another State