How do I claim the Arizona credit for taxes paid to another state?

The Credit for Taxes Paid to Another State or Country (Form 309) may be available if the same income was taxed by both Arizona and another state or foreign country during the same tax year.

For most Arizona resident returns, the credit is automatically calculated when you create both:

• An Arizona resident return, and
• A corresponding nonresident return for the other state.

Arizona may request a copy of the other state's return, proof of tax paid, or other supporting documentation before processing the credit.

For additional information, see the Arizona Department of Revenue's Credit for Taxes Paid to Another State or Country page.

Part-Year Residents

If you are filing an Arizona Part-Year Resident return, you may need to manually enter information to calculate the credit.

When completing the credit section, use the information from the filed tax return for the other state, including:

• Adjusted Gross Income (AGI), and
• Tax liability paid to the other state.

To obtain this information in the program:

1. Select Review
2. Select Summary
3. Select View/Print PDF

If you do not see the PDF option, exit the state return and return to the main menu.

Important: Do not enter withholding amounts from Form W-2. The credit is based on the income tax actually imposed by the other state, not state tax withholding reported on your W-2.

States That Do Not Qualify

You may be eligible to claim a credit on the other state's return for taxes paid to Arizona instead.

Note: The District of Columbia generally does not qualify, except in certain limited situations involving the District of Columbia's Unincorporated Business Franchise Tax.

Additional Important Information

• A separate Form 309 is required for each state or country for which a credit is claimed.
• The credit applies only to net income taxes paid to another state or country.
• The credit cannot be claimed for city taxes, county taxes, penalties, or interest.
• Any unused credit cannot be carried forward or carried back to another tax year.
• Taxpayers claiming this credit must also complete Form 301, Nonrefundable Individual Tax Credits and Recapture.

Program Entry (Manual)

If you need to manually enter this credit:

1. State
2. Arizona State Return
3. Edit State Return
4. Credits
5. Credit for Taxes Paid to Another State or Country (Form 309)