Support CenterHow do I exclude Income Earned from another state with no income taxes? - Taxpayer earned income in a state with no state income tax (such as Nevada, Florida) but is also reporting taxes to another state with state income taxes (like Arizona, California). How to exclude taxes over income earned from
🔍 How do I exclude Income Earned from another state with no income taxes?
Taxpayer earned income in a state with no state income tax (such as Nevada, Florida) but is also reporting taxes to another state with state income taxes (like Arizona, California). This guide explains how to handle taxes over income earned from another state when that other state has no income tax.
⚠️ Before You Begin
Before you start, identify:
- Home state (the state where the taxpayer is a resident)
- Work state (the state where the income was earned)
- Whether the taxpayer is a resident or nonresident of the home state
📊 Step-by-Step Guide
Step 1: Understand how resident taxation works
If AZ (for example) is the home state, taxpayer will pay taxes on all income earned regardless of where the work was performed.
Residents pay tax on all of the income (from all sources) they received during the calendar year. Residents get a tax credit for taxes paid to any other states.
Step 2: Check whether the work state withholds income tax
Since Nevada does not collect an income tax on individuals, you are not required to file a NV State Income Tax Return.
However, since a state like NV does not withhold any taxes, there will not be any credit for taxes paid to another state, so taxpayer must pay taxes on all income to the home state.
Step 3: If the taxpayer is a nonresident, enter the correct AZ income
If taxpayer is non resident of AZ, add the AZ 140NR form and use the RES/NR Worksheet under Misc Form to indicate the income that should be taxed in AZ.
❌ Common Errors
Common mistake: assuming you can exclude income earned in a no-income-tax state (like Nevada) from the home state return. If the taxpayer is a resident of the home state, they generally pay tax on all income (and may only receive a credit for taxes actually paid to another state).
📞 Still Need Help?
If you are having trouble, contact our support team:
Phone: 1-800-516-9442
Tags: state,form