The credit for taxes paid to another state is automatically calculated in your account when you add a nonresident return after you have already created resident Arkansas return if you pay taxes on the same income to both Arkansas and another state.
- This credit is available to full-year residents and part-year residents.
- Nonresidents of Arkansas are not allowed this credit.
- The amount withheld on your W2 form for the other state is not the amount of credit you can take.
- This credit cannot exceed the Arkansas income tax on the same income and cannot exceed the total tax you owe Arkansas.
If you are completing a Part-year Resident return for the other state, the allowable credit will need to be figured manually. The adjusted gross income for the other state must be manually entered. You can get this number from the PDF of the other state return. You will also be asked for the tax on the other state return. Again, this can be found on the other state return. Do not enter the amounts form your W-2 as these may not be the correct amounts. You can view the PDF to get the numbers required by going to the Summary/Print screen and clicking on View/Print PDF.
Residents and Part-year residents who claim a credit for taxes paid to another state for income earned while a resident must include a copy of the tax return filed for the other state with a copy of their Arkansas return. If the other state return is not included, the credit may be disallowed. This credit is not allowed for income taxes paid to foreign countries. The credit for taxes paid to another state is a nonrefundable credit against your tax liability.
Program Entry (manual)
If you need to manually enter this credit within your account, follow the steps below:
- State Section
- Edit Arkansas Return
- Credits
- Credit for Taxes Paid to Another State
NOTE: The State of Mississippi enacted a special tax that applies exclusively to gambling winnings. This tax is separate and distinct from Mississippi’s income tax. As such, an Arkansas taxpayer cannot claim a credit against their Arkansas income tax liability for payment of the gambling winnings tax to the State of Mississippi.
Arkansas requires a signed copy of the other state tax return you filed before processing your Arkansas return.