Arizona Nonresident Personal Income Tax Package

Nonresident Personal Income Tax Package
Arizona Form 140NR
2 22

Arizona Form

140NR

Nonresident Personal
Income Tax Booklet

This Booklet Contains:
• Form 140NR –
Nonresident Personal Income Tax
Return

Who must use
Arizona Form 140NR?

• Schedule A(NR) –
Itemized Deduction

File a Form 140NR if you were not
an Arizona resident but earned
income from an Arizona
source in 2022.

• Form 204 –
Extension Request

Where’s my Refund?
Check your refund status at

www.AZTaxes.gov



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CAUTION
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, 2022. If you use the
amounts from your 2022 federal tax return to complete your Arizona return and the
Legislature does not adopt the 2022 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 2022 conformity.

Notice
As a rule, the starting point for your Arizona return is your federal adjusted gross income. To take
itemized deductions, you must start with the amount shown on the federal Schedule A. This is the
case for 2022, except for changes Congress made to the federal tax code during 2022 if either of
the following apply:
1. The changes affect how you figure your federal adjusted gross income
OR
2. The changes affect how you figure your itemized deductions.
When federal changes are made, Arizona legislature must adopt those changes if the Arizona
starting points are to be kept the same. The legislature will address this issue when it is in session
during 2023. We must publish these forms before this issue will be addressed by the
legislature. When we went to print, Arizona had not yet adopted any federal tax law changes
enacted after January 1, 2022.
What does this mean to you? It means that if any of the federal law changes made in 2022
apply to your 2022 return, you can opt to file your 2022 return using one of the following
methods:
1. You can wait and file your 2022 return after this issue has been addressed.
To do this, you may need to ask for a filing extension. You must pay 90% of the tax due by the
due date of the return before any extension.
2. You can file your 2022 return assuming that the federal law changes will be adopted. The 2022
tax forms make this assumption.
If you opt for method 2, one of the following will apply:
• If Arizona adopts the federal changes, you do not have to do anything more.
•

If Arizona does not adopt all those changes, you may need to amend your 2022 Arizona
return. Your amended return will have to show the difference between the Arizona law and
the federal law. If this happens, we will post more details on our conformity webpage at
https://azdor.gov/legal/conformity-irc.

•

Generally, no penalties or interest will be assessed on these amended returns, if you
follow the Department’s instructions and pay any tax due when you file your original
2022 return and you file and pay the required amended return by the extended due date
of your 2023 return.

3. You can file your 2022 return assuming that we will not adopt the federal law changes. If you
opt for this method, you will have to do all of the following.
•
•
•

You will have to research all of the federal changes made after January 1, 2022.
You will have to figure out if any of those changes apply to you.
You will have figure out how to make adjustments for those changes on your return.

If you opt for method 3, one of the following will apply:
• If Arizona does not adopt those changes, you do not have to do anything more.
•

If Arizona adopts those changes, you may need to amend your 2022 Arizona return. Your
amended return will have to show the difference between what you reported and what you
should have reported. If this happens, we will post more details on our conformity webpage
at https://azdor.gov/legal/conformity-irc.

Individual Income Tax - Highlights

2022

Due date for Calendar Year Filers

Deduction Increase. (Arizona Form 140, Form 140PY or
Form 140NR)

Your 2022 individual income tax return is due by midnight
on April 15, 2023. Because April 15, 2023 falls on a
weekend, and April 17, 2023 falls on a federal holiday,
you have until Tuesday, April 18, 2023 to timely file
your 2022 tax return. If you file under a valid extension,
your extended due date to file your income tax return is
October 15, 2023. Because October 15, 2023 falls on a
weekend, you have until Monday, October 16, 2023 to
timely file your 2022 tax return.

2022 Individual Income Tax Rates
For 2022, Tax Tables X & Y were adjusted for inflation.
Taxpayers with taxable income more than $50,000 must
use Tax Tables X and Y to compute their tax liability. Partyear residents and nonresidents must also use
Tax Tables X and Y to compute their 2022 tax liability
regardless of their taxable income.
The 2022 Optional Tax Table (for Arizona resident
taxpayers with taxable income less than $50,000) was also
adjusted for inflation. To determine your tax liability, see
the Optional Tax Table.

2022 Changes to Income Tax Forms
Due to modifications to the 2022 Forms 140, 140NR and
140PY certain additions and subtractions (adjustments to
Arizona Gross Income) have been moved from pages 1 and
2 to pages 5 (additions) and page 6 (subtractions).

2022 Arizona Small Business Income (SBI)
Tax

2022 Individual Filing Threshold

The tax rate applicable to small business taxable income
reported on Forms 140-SBI, 140PY-SBI or Form 140NRSBI was reduced from 3.5% in 2021 to 3.0% for 2022.

The filing threshold used to determine if a taxpayer must
file an Arizona individual income tax return was adjusted
for inflation.

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

The filing threshold is based on a taxpayer’s filing status
and federal gross income excluding certain income that
Arizona does not tax. A taxpayer must file if they are:

The allowable current year credit for contributions to
private school tuition organizations was adjusted for
inflation purposes. For 2022, the maximum current year
credit is:
• $623 for single or head of household taxpayers;
• $1.245 for married taxpayers filing a joint return; and
• $623 for married taxpayers filing a separate return.

Single and gross income is more than $12,950;
Married filing joint and gross income is more than
$25,900;
• Married filing separate and gross income is more than
$12,950; and
• Head of Household and gross income is more than
$19,400.
For more information and income that is excluded, see the
table, Arizona Filing Requirements, provided on page 1 of
the instructions for the income tax form you are filing
•
•

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 2022, the maximum current year
credit is:
• $620 for single and head of household taxpayers;
• $1,238 for married taxpayers filing a joint return; and
• $620 for married taxpayers filing a separate return.

2022 Arizona Standard Deduction Amounts
Adjusted
The 2022 Arizona standard deduction amounts are:

•
•
•

$12,950 for a single taxpayer or a married taxpayer
filing a separate return;
$25,900 for a married couple filing a joint return; and
$19,400 for individuals filing a head of household
return.

Repealed Individual Tax Credits
Beginning with tax year 2022, the following income tax
credits have been repealed. Taxpayers who claimed either
of these credits and established unused carryover amounts
from prior tax years, may still claim the carryover amounts
for the remaining 5-year carryover period allowed by the
credit.

Change to Standard Deduction Increase for
Charitable Contributions Computation
For taxpayers who do not itemized deductions on their
2022 Arizona income tax return and elect to take the
standard deduction, the allowable Standard Deduction
Increase was modified. For tax year 2022, the allowable
portion of your charitable contributions used to compute
your Standard Deduction Increased was increased from
25% to 27% of the qualified charitable contributions made
during the tax year. Taxpayers must complete page 3 of
their personal income tax form to claim the Standard

•
•

Pollution Control Credit (Form 315)
Employment by a Healthy Forest Enterprise Credit
(Form 332)

New Individual Tax Credits
Affordable Housing Tax Credit (Form 354)

Beginning with tax year 2022, Arizona allows an individual
taxpayer to claim a nonrefundable tax credit for projects in
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Individual Income Tax - Highlights

2022

this state that qualify for the federal low-income housing
tax credit under section 42 of the Internal Revenue Code
(IRC) that are placed in service from and after June 30,
2022 in an amount equal to at least fifty-percent (50%) of
the amount of the federal credit allowed in each taxable
during the federal credit. Arizona Revised Statute § 43-1074
The tax credit may claimed on either the individual’s
personal income tax return (Form 140, 140NR or 140PY)
or the Small Business Income tax return, if filing. (Form
140-SBI, 140NR-SBI or 140PY-SBI)
For more information, see Credit Form 354 and instructions.

Pass-Through Entity (PTE) Tax (Credit Form
355)
Beginning with tax year 2022, Arizona allows an individual
partner or an individual shareholder of a partnership/S
Corporation a nonrefundable tax credit for the taxes paid by
the PTE on the individual’s behalf for their share of the
income distributed to the partner/shareholder. If the
allowable credit exceeds the taxes otherwise due on the
claimants income, or if the there are no taxes due, the
amount of the claim not used to offset taxes may be carried
for not more than five consecutive taxable years as a credit
against subsequent years’ income tax liability. Arizona
Revised Statute § 43-1077
For more information, see Credit Form 355, Credit for
Entity-Level Tax, and instructions.
An individual taxpayer who claims the allowable PTE tax
credit, must also adjust their Arizona gross income by
adding the amount of the tax payment made by the PTE for
which the tax credit is claimed.
A taxpayer who is claiming this credit on their personal
income tax return, the add-back adjustment is reported on
page 5, “Other Additions to Arizona Gross Income” and
included in the total amount reported on the income tax
return. Arizona Revised Statute § 43-1021.

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4

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 when you file your
state and federal taxes.

Tax Year 2022 Federal Earned Income Tax Credit Eligibility Table

Number of
Qualifying Children
0*
1
2
3 or more

*your age 25 - 64

Earned Income
(less than)
$16,480 ($22,610 if MFJ)
$43,492 ($49,622 if MFJ)
$49,399 ($55,529 if MFJ)
$53,057 ($59,187 if MFJ)

Maximum Credit
$560
$3,733
$6,164
$6,935

MFJ = Married Filed Jointly

Tax Year 2022 Federal Child Tax Credit Eligibility Table
Qualifications

Maximum Credit Amount Per
Qualifying Child

Children under the age of 17 years at the end of the 2022 tax year

$2,000 per child

Parents and children must have Social Security Number or ITIN (Individual Taxpayer Identification Number) to claim credit.

Do you qualify for the Arizona Family Tax Credit and/or
Dependent Tax Credit?
To determine if you qualify to claim the Arizona Family Tax Credit and/or the Dependent Tax Credit,
see the instructions for Forms 140, 140A, 140EZ and 140PY. Nonresidents filing Form 140NR cannot
claim the Arizona Family Tax Credit but you may still qualify to claim the Dependent Tax Credit.

Arizona Increased Excise Tax Credit Eligibility Table
Qualifications
Eligibility depends on Arizona residency and filing status

Income
$25,000 or less per year

To Qualify!

You must file your state and federal taxes

How To File!

Get your taxes prepared FREE at one of the community tax
assistance sites. The sites will also e-file your taxes; that means
a FREE FAST REFUND.

Where To File!

For locations call ......................................2-1-1 within Arizona
From anywhere .............................................. (877) 211-8661
TDD/TTY AZ Relay ............................. 7-1-1 or (800) 367-8939
Website: www.211arizona.org

Earn it! Keep it! Save it!

 Save for a House
 Save for a Car
 Save for a College Education

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Arizona Form
140NR

2022 Nonresident Personal Income Tax Return
For information or help, call one of the numbers listed:
Phoenix
(602) 255-3381
From area codes 520 and 928, toll-free
(800) 352-4090
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 select Reports, Statistics and Legal
Research from the main menu 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 select Reports, Statistics and Legal Research from the
main menu then click on Publications in the left-had column.

Leave the Paper Behind - e-file!

•
•
•
•

Quicker Refunds
Accurate
Proof of Acceptance
Free **
No more paper, math errors, or mailing delays when you e-file!
Get your refund quicker with direct deposit.
E-file today, pay by April 18, 2023, to avoid penalties and
interest.
E-file through an Authorized IRS/DOR e-file provider or by using
your personal computer and the Internet.
Visit our website at www.azdor.gov for a listing of approved efile providers and on-line filing sources.
** For free e-file requirements, check out our website at
www.azdor.gov.
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 29, 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 the last page of these instructions 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 2022, 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.
You must file if you are:

and your gross income is
more than:

• Single
$12,950
• Married filing joint
$25,900
• Married filing separate
$12,950
• Head of Household
$19,400
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 federal adjusted gross income that
represents your Arizona 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 that Arizona
law does not tax. Income that 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 RRB1099-R, railroad unemployment benefits and railroad
sickness payments paid by the Railroad Retirement
Board;
• pay received for active service as a member of the
Reserves, National Guard, or the U.S. Armed Forces; or
• benefits, annuities and pensions as retired or retainer pay
of the uniformed services of the United States
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.

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Arizona Form 140NR

Determining Residency Status

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.

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.

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:
•
•
•

Residents

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.

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 Arizona tax on all income no
matter where the resident earns the income.

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?

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

Part-Year Residents

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.

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
2022:
• 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.

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 you
are 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.

Nonresidents

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

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

If you are a nonresident (including nonresident aliens), 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 2022, 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.

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

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

If your spouse died in 2022 and you did not remarry in 2022 or
if your spouse died in 2023 before filing a return for 2022, you
may file a joint return. If your spouse died in 2022, the joint
return should show your spouse's 2022 income before death and
your income for all of 2022. If your spouse died in 2023, before
filing the 2022 return, the joint return should show all of your
income and all of your spouse's income for 2022. 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.

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. The child should not file an Arizona return. The parent
must include that same income in their Arizona taxable income.
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8

Arizona Form 140NR

Are any Other Returns Required?

When Should You File if You Are a Nonresident
Alien?

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.

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, 2023, even though your federal return is due on
June 15, 2023. Because April 15, 2023 falls on a weekend,
and April 17, 2023 falls on a federal holiday, you have until
Tuesday, April 18, 2023 to timely file your 2022 tax return.
If you want to file your Arizona return after April 18, 2023, you
must ask for a filing extension. You must file this request by
April 18, 2023. Arizona will allow up to a 6-month extension.
This will allow you to file your return by October 15, 2023. See
Form 204 for extension filing details. Because October 15,
2023 falls on a weekend, you have until Monday, October
16, 2023 to timely file your 2022 tax return. See Form 204
for extension filing details.

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.
If you are claiming a refund on Form 140NR-SBI for a deceased
taxpayer, you must also complete Arizona Form 131-SBI,
Claim for Refund on Behalf of Deceased Taxpayer. Place both
forms on top, when mailing the returns.

What are the Filing Dates and Penalties?
NOTE: If the due date for an income tax or related payment
falls on a weekend and/or legal holiday, the filing or payment
is considered timely if filed or paid on the next business day and
that business day is a day other than Saturday, Sunday or a
legal holiday.

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
16, 2023, even though your federal return will not be due until
December 15, 2023. If you file your 2022 Arizona calendar
year return after October 16, 2023, your return will be late.

When Should You File?
Your 2022 calendar year tax return is due no later than
midnight, April 15, 2023. File your return as soon as you can
after January 1, 2023, but no later than April 15, 2023. Because
April 15, 2023 falls on a weekend, and April 17, 2023 falls
on a federal holiday, you have until Tuesday, April 18, 2023
to timely file your 2022 tax return.

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.

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 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
2022 calendar year return by April 18, 2023, 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.

What if You Cannot File on Time?
You may request an extension if you know you will not be able
to file on time. If you request an extension to file your 2022
calendar year tax return, your due date is October 15, 2023.
Because October 15, 2023 falls on a weekend, you have until
Monday, October 16, 2023 to timely file your 2022 tax
return.

Late Filing Penalty

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

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.

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 18, 2023. 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.

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.

• 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.

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
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9

Arizona Form 140NR
each 30-day period or a 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).

Do You Need to Make Arizona Estimated
Payments in 2023?
You must make Arizona estimated income tax payments
during 2023 if:
AND
AND
your Arizona your Arizona
Your filing status is:
gross income gross income
for 2022 was
for 2023 is
greater than:
greater than:
Single
$ 75,000
$ 75,000
Married filing joint
$150,000
$150,000
Married filing separate
$ 75,000
$ 75,000
Head of Household
$ 75,000
$ 75,000

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.

If you met the income threshold for 2022, you must make
estimated payments during 2023 unless you are sure you will
not meet the threshold for 2023. 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 2022 Form 140NR.

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.

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.

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

What if You Make Your Estimated Payments
Late?

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.

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?

Option 1

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.

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.

Line-by-Line Instructions

Option 2

Tips for Preparing Your Return

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.
2.

•
•

Request that the department recompute your tax.
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

•
•
•

4

10

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 the last page of these
instructions for the assembly order.
Make sure you include your daytime telephone number.
If filing a fiscal year return, fill in the period covered.

Arizona Form 140NR

Entering Your Name, Address, and SSN

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

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.

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.

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 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 filing separately, enter your name and SSN
on the first line 1. Enter your spouse’s name and SSN on the
second line 1.

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, 2022. 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.

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.

You may file a joint return if your spouse died during 2022 and
you did not remarry in 2022. See page 2 of these instructions
for details.

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.

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: 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.

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 PartYear Resident or Nonresident.

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

Box 4a - Injured Spouse Protection of Joint
Overpayment

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

Foreign Addresses

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
for back child support, court fees, and fees to counties, cities or
educational institutions. The taxpayer (spouse) requesting
injured spouse protection must have Arizona income with
taxes withheld and reported on their own Form W-2 or
Form 1099.

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 in the last 4 years, enter any other last
name(s) that you or your spouse used when filing your return
during that period.

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

Identification Numbers for Paid Preparers

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.

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.

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:
5

11

Arizona Form 140NR
•
•

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, 2022, 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.

Box 9 - Blind

If you or your spouse were partially blind as of
December 31, 2022, you must get a statement certified by
your eye doctor or registered optometrist that either:
• You cannot see better than 20/200 in your better eye with
glasses or contact lenses, or
• Your field of vision is 20 degrees or less.

NOTE: In some cases, you may treat community income as
separate income. For more information on when you may treat
community income as separate income, see the department’s
ruling, ITR 93-22, When Community Income May Be Treated
as Separate Income.

If your eye condition is not likely to improve beyond the
conditions listed above, you can get a statement certified by
your eye doctor or registered optometrist to that effect instead.
You must keep the statement for your records.
• If you are single or filing as head of household, enter "1"
in box 9 if you are totally or partially blind.
• If you are married filing a joint return, enter "1" in box 9 if
you or your spouse is totally or partially blind. Enter "2"
in box 9 if both you and your spouse are totally or partially
blind.

Box 7 - Single Return
If you are filing as single, check box 7.
Use this filing status if you were single on December 31, 2022.
You are single if any of the following apply to you:
•
•
•

If you are single or filing as head of household, enter "1"
in box 8 if you were 65 or older in 2022 and not claimed as
a dependent by another taxpayer.
If you are married filing a joint return, enter "1" in box 8 if
you were 65 or older and not claimed as a dependent by
another taxpayer or your spouse was 65 or older in 2022
and not claimed as a dependent by another taxpayer. Enter
"2" in box 8 if both you and your spouse were 65 or older
in 2022 and neither of you are claimed as a dependent by
another taxpayer.
If you are married and filing a separate return, enter "1" in
box 8 if you were 65 or older and not claimed by another
taxpayer. You cannot take an exemption for your spouse.
Your spouse, if 65 or older and not claimed by another
taxpayer, may take this exemption on his/her own separate
return.

You have never been married.
You are legally separated under a decree of divorce or of
separate maintenance.
You were widowed before January 1, 2022, you did not
remarry in 2022, and you do not qualify to file as a
qualifying widow or widower with dependent children on
your federal return.

•

NOTE: If you got divorced during the year, see the
department’s ruling, ITR 14-2, Reporting Income, Deductions,
Exemptions, and Withholding for Divorced Individuals for the
Year of Divorce; and publication, Pub. 200, Income Tax Issues
Affecting Married and Divorced Taxpayers.

If you are married and filing a separate return, you may
take an exemption for yourself if you are totally or partially
blind. You may only claim an exemption for your spouse
if your spouse (1) is totally or partially blind, (2) has no
Arizona adjusted gross income for calendar year, and (3) is
not the dependent of another taxpayer.
Enter "1" in box 9 if you are totally or partially blind or
your spouse is totally or partially blind and your spouse
meets the above criteria.
Enter “2” in box 9 if you are totally or partially blind and
your spouse is totally or partially blind and your spouse
meets the above criteria, and your spouse meets the above
criteria.

Exemptions - Boxes 8 and 9
Enter the number of exemptions you are claiming in boxes 8
and 9. Do not put a check mark or “X”. You may lose the
exemption if you put a checkmark or “X” in these boxes.

Dependents - Boxes 10a and 10b

Box 8 - Age 65 or Over

Boxes 10a and 10b

NOTE: If a taxpayer’s 65th birthday was January 1, 2023
(born 1/1/58), that person is considered to be age 65 at the end
of 2022 for federal income tax purposes and likewise for
Arizona income tax purposes.

Boxes 10a and 10b identify the number of your qualifying
dependents that are either under the age of 17 (box 10a) or age
17 and over (box 10b). This information is used to compute the
allowable Dependent Tax Credit.
Include only those
6

12

Arizona Form 140NR
Box 13 - Composite Return

dependents in box 10a or 10b that you are using to compute the
allowable Dependent Tax Credit on line 59.

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.

Lines 10c through 10f
You must complete the dependent information section (lines
10c through 10f on page 1 (and Part 1 on page 4, if more space
is needed), for each person counted in either box 10a or 10b.
Be sure to check the box on page 1 indicating you are
completing page 4.

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.

You may claim only those individuals that qualify as your
dependent for federal purposes. For each qualifying individual,
enter the following information:
a) first and last name;
b) SSN;
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.

IMPORTANT – SPECIAL INSTRUCTIONS FOR
COMPOSITE RETURNS: Go to page 29 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 you are married and 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 2022 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 2022 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 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?

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.

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

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.

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

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 2022 Arizona gross
income can include only Arizona source losses you used on
your 2022 federal return.

Check box 11 if you were not an Arizona resident during 2022,
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 2022.

7

13

Arizona Form 140NR
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)

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.

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.

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: 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.

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.

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 the 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)]

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.

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 the 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 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 22 - Other Income Reported on Your Federal
Return

Line 18 - Arizona Income Tax Refunds
Enter the amount of Arizona income tax refunds received in
2022 that you included in your federal adjusted gross income.

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 19 - Business Income or (Loss)

Line 23 - Total Income
Add lines 15 through 22 and enter the total.

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.

Line 24 - Other Federal Adjustments
On line 24, include any other federal adjustments included in
your federal adjusted gross income that are attributable to the
Arizona source income reported on your 2022 Arizona
nonresident return.
8

14

•

Arizona Form 140NR
included on Schedule D). For more information, see Form
140NR-SBI and instructions.
Additional information and guidance can be found in the
department’s Publication 712, Summary of Arizona Small
Business Income and Taxation.

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

How do I elect to report small business income
on Arizona Form 140NR-SBI?

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.

Taxpayers make the election by simply completing Form
140NR-SBI reporting their small business income and
including the completed form with their Form 140NR tax
return, when filed.

This is your Arizona income ratio of your total income.
Examples:
Arizona
Gross Income
from line 26

$ 17,516

$ 25,650

Federal
Adjusted Gross
Income from
line 25
$ 32,000

$ 92,100

17,516/32,000 = .547375
enter on line 27:

.

$ 9,000

•

•

•
•
•

4

7

Line 28 - Small Business Income

2

7

If you elect to report your small business income on Arizona
Form 140NR-SBI, check the box on line 28 and enter the
amount of small business income reported on Form
140NR-SBI, line 10.

9

10,000/9,000 = 1.11111
enter on line 27:

1
•

5

Modified Arizona Gross Income

25,650/92,100 = .278501
enter on line 27:

.
$ 10,000

NOTE: You must include Form 140NR-SBI with your Form
140NR, when filed. If you do not include Form 140NR-SBI with
your Form 140NR, processing of your return may be delayed
or your subtraction on line 28 may be denied. See the Mailing
instructions for the correct address when mailing both Form
140NR and Form 140NR-SBI.

Arizona income ratio

.

0

0

If you are not making this election, enter “0” on line 28.
Line 29 – Modified Federal Adjusted Gross Income

0

Subtract line 28 from line 26.

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
NOTE:
•

If you are electing to report your Arizona sourced small
business income on Form 140NR-SBI and if any of the
following additions are directly related to the small
business income, report that addition on Form 140NRSBI. If the addition is not directly related to small business
income, make the addition on Form 140NR.

•

If you are not filing Form 140NR-SBI, make that addition
on Form 140NR.

As a nonresident, include only those additions listed below that
are related to Arizona source income reported on Form 140NR.
Line 30 - Total Depreciation Included in Arizona Gross
Income
If you are making the small business election and this addition
is directly related to small business income reported on Form
140NR-SBI, do not report the addition on Form 140NR, enter
the addition on Form 140NR-SBI.
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.

Arizona Small Business Tax Return
Individuals may elect to report their small business income on
Arizona Form 140NR-SBI, Small Business Income, for the
small business income amount included in their federal adjusted
gross income.
An individual’s small business income is reported on federal
Schedules B, C, D, E, F and Form 4797 (for amounts not
9

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Arizona Form 140NR
Line 31 - Partnership Income Adjustment (Positive)

C. Claim of Right Adjustment for Amounts Repaid in 2022

If you are making the small business election and this addition
is directly related to small business income reported on Form
140NR-SBI, do not report the addition on Form 140NR, enter
the addition on Form 140NR-SBI.

NOTE: For items C and D; taxpayers that made the election
to file an Arizona Small Business Income Tax Return in 2022,
if the income required to be paid back under the claim of right
is the type of income that would be included in lines 4 through
9 of the 140NR-SBI return if the income were reported in 2022,
the adjustment should be made in the 140NR-SBI return. All
other claim of right adjustments should be made on the regular
140NR return.

Depending on your situation, you may either add (line 31) 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 31.

You must make an entry here if all of the following apply:
1.

During 2022, 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 2022 was more
than $3,000.
4. You took a deduction for the amount repaid on your 2022
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.

NOTE: If the difference reported on line 17, column (c) of your
Arizona Form 165 Schedule K-1(NR) is a negative number,
enter the portion of the difference that is allocable to
partnership income taxable by Arizona as a subtraction on
line 41.
Line 32 - Other Additions to Arizona Gross Income
Use line 32 if any of the special circumstances below apply.
NOTE: If you are reporting any adjustment on line 32,
complete the schedule on page 5 of your tax return, Other
Additions to Arizona Gross Income, and include it with your
return. If you are not reporting any adjustment on line 32, do
not include page 5 with your return.

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 2022, 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 2022
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.

A. Fiduciary Adjustment - Form 141AZ Schedule K-1(NR)
If you are making the small business election and this addition
is directly related to small business income reported on Form
140NR-SBI, do not report the addition on Form 140NR, enter
the addition on Form 140NR-SBI.
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 32) 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 32.
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.

E(a) Addition Due to Claiming the Agricultural Water
Conservation System (Credit 312)
You must make an addition to income for the amount of
expenses disallowed by reason of claiming the credit. See the
instructions for completing Credit Form 312.

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.

E(b). Addition to S Corporation Income Due to Claiming
Pass-Through Credit for Agricultural Water Conservation
system (Credit 312)
If you are making the small business election and this
addition is directly related to small business income
10

16

Arizona Form 140NR
reported on Form 140NR-SBI, do not report the addition on
Form 140NR, enter the addition on Form 140NR-SBI.

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 subtraction does
not apply.

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

If you are making the small business election and this addition
is directly related to small business income reported on Form
140NR-SBI, do not report the addition on Form 140NR, enter
the addition on Form 140NR-SBI.

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 (Form 312-S, line 1). Shareholders
must include an amount on this line when claiming the
Agricultural Water Conservation System Credit (Form 312). See
the instructions for completing Credit Form 312.

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 may subtract
the amount of the income from the dispensary that is included
in the computation of your federal adjusted gross income.

F(a) Adjusted Basis in Property for Which You Have
Claimed a Credit for Investment in Qualified Small
Businesses (Credit 338)

In addition, a sole proprietorship of an Arizona dual licensee
that has not elected to operate on a for-profit basis may
subtract the portion of income included in federal adjusted gross
income that is from the medical marijuana portion of the
business.

If you are making the small business election and this addition
is directly related to small business income reported on Form
140NR-SBI, do not report the addition on Form 140NR, enter
the addition on Form 140NR-SBI.
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 2022 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. §