Need Arizona Advice

[thomtax]

In the past two days, I have two different clients with same problem. They are Arkansas residents and have been for almost two years. They received retirement income either from the state of Arizona or the city of Tucson. At the place for the state entry for the 1099, they have entered AZ and a state number. This, of course, causes the program to generate NR Arizona return.

Since, by federal law, the state of Arizona is not supposed to tax this income, what is the best way to handle this. If they try to go the route of getting corrected 1099s, the time may be lenghty, if the state employees will even do the correct thing.

I could just leave the entry out of the software, for the state. That would make it calculate correctly, but will I just be creating a big problem for the future with Arizone?

LT

[thomtax]

Just bringing back to top of list.

[veritas]

I have had to file tax returns

for a refund of state taxes witheld for the wrong state. I just filed a non-resident return with no source income and claimed a credit for the tax witheld.

It would be good for your clients to advise the payors to stop the state witholding.

[S T]

State tax on Retirement

As Gkaiseril posted on a previous thread

Recent Federal law provisions prohibit states from taxing the retirement income of nonresidents and includes a prohibition on taxing retirement income paid by a partnership to a nonresident retired partner under any written plan, program, or arrangement in effect immediately before retirement begins. This is applicable to amounts received after December 31, 1995.

So the Az pension would not be taxable to AZ if the t/p is a non resident. It would only be taxable to his state of residency.
Just enter the residency state code and it will carry to that state and not generate a non resident return.

What address is Az using for the mailing address on the 1099R? If still using an AZ address then you might have to change that or still showing as an Arizona account because of a direct deposit (I had that issue in Calif). But if using Arkansas address then all should be fine.

Sandy