1. Arizona Form
2001 Nonresident Personal Income Tax Return 140NR
Leave the Paper Behind…e-File! To find out more, see Arizona Department of Revenue
• Income Tax Ruling ITR 96-4.
Quick Refunds
• Do You Have to File if you Are a Non-Indian
Accurate
• Proof of Acceptance or Non-Enrolled Indian Married to an
American Indian?
No more paper, math errors, or mailing delays; when you e-File!
You must file if you meet the Arizona filing
e-File is a cooperative tax filing program which makes it
possible for you to file both your Federal and Arizona requirements. For details on how to figure what income
Personal Income Tax Returns electronically at the same time. to report, see Arizona Department of Revenue Income
Tax Ruling ITR 96-4.
Reap the benefits of e-File even if you owe taxes.
Do You Have to File if You Are in The
e-File today, pay by April 15, 2002 to avoid penalties and interest.
Military?
e-File your returns through an Authorized IRS/DOR e-file
Provider or by using your Personal Computer and the Internet. You must file if you meet the Arizona filing requirements.
Visit our web site at www.revenue.state.az.us for a listing of
If you are an Arizona resident, you must report all of your
approved e-file providers and on-line filing sources.
income, no matter where stationed. You must include your
Are You Subject to Tax in Arizona? military pay. If you were an Arizona resident when you
entered the service, you remain an Arizona resident, no
You are subject to Arizona income tax on all income derived
matter where stationed, until you establish a new domicile.
from Arizona sources. If you are in this state for a temporary
or transitory purpose or did not live in Arizona but received If you are not an Arizona resident, but stationed in Arizona,
income from sources within Arizona during 2001, you are the following applies to you.
subject to Arizona tax. Income from Arizona sources
• You are not subject to Arizona income tax on your
includes wages, rental income, business income, the sale of
military pay.
Arizona real estate, interest and dividends having a taxable
•
or business situs in this state, or any other income from an You must report any other income you earn in Arizona.
Arizona source. Use Form 140NR, Nonresident Personal Income Tax
Return, to report this income.
Do You Have to File?
To find out more, see Arizona Department of Revenue
Arizona Filing Requirements
brochure, Pub 704, Taxpayers in the Military.
These rules apply to all Arizona taxpayers.
You must file if AND your gross OR your If You Included Your Child's Unearned
you are: income is at Arizona adjusted
Income on Your Federal Return, Does Your
least: gross income is
Child Have to File an Arizona Return?
at least:
• Single $15,000 $5,500 In this case, the child should not file an Arizona return. The
• Married $15,000 $11,000 parent must include that same income in his or her Arizona
filing jointly
taxable income.
• Married $15,000 $5,500
filing Residency Status
separately
• Head of $15,000 $5,500 If you are not sure if you are an Arizona resident for state
household income tax purposes, you should get Arizona Department of
If you are a nonresident, you must report income derived Revenue Income Tax Procedure ITP 92-1.
from Arizona sources.
Residents
To see if you have to file, figure your gross income the
same as you would figure your gross income for federal You are a resident of Arizona if your domicile is in Arizona.
income tax purposes. Then you should exclude income Domicile is the place where you have your permanent home. It
Arizona law does not tax. is where you intend to return if you are living or working
You can find your Arizona adjusted gross income on temporarily in another state or country. If you leave Arizona for
line 19 of Arizona Form 140NR. a temporary period, you are still an Arizona resident while gone.
A resident is subject to tax on all income no matter where the
NOTE: Even if you do not have to file, you must still file a
resident earns the income.
return to get a refund of any Arizona income tax withheld.
If you are a full year resident, you must file Form 140, Form
Do You Have to File if You Are an American 140A, or Form 140EZ.
Indian?
Part-Year Residents
You must file if you meet the Arizona filing requirements
If you are a part-year resident, you must file Form 140PY,
unless all the following apply to you.
Part-Year Resident Personal Income Tax Return.
• You are an enrolled member of an Indian tribe.
• You live on the reservation established for that tribe. You are a part-year resident if you did either of the following
• You earned all of your income on that reservation. during 2001.

2. Form 140NR
• You moved into Arizona with the intent of becoming a NOTE: An extension does not extend the time to pay your
income tax. For details, see the instructions for Arizona
resident.
Form 204.
• You moved out of Arizona with the intent of giving up
To get a filing extension, you can either:
your Arizona residency.
Nonresidents 1. Apply for a state extension (Form 204). To apply for a
state extension, file Arizona Form 204 by April 15. See
If you are a nonresident, you must file Form 140NR,
Form 204 for details. You must attach a copy of the
Nonresident Personal Income Tax Return.
Arizona extension to the back of your return when you
What if a Taxpayer Died? file. Also make sure that you check either box 82D or 82F
on page 1 of the return. If you must make a payment, use
If a taxpayer died before filing a return for 2001, the
Arizona Form 204.
taxpayer's spouse or personal representative may have to file
2. You may use your federal extension (federal Form 4868
and sign a return for that taxpayer. If the deceased taxpayer
or 2688). File your Arizona return by the same due
did not have to file a return but had tax withheld, a return
date. If you are filing under a federal extension, you do
must be filed to get a refund.
not have to attach a copy of your federal extension to
The person who files the return should use the form the
your return, but make sure that you check either box
taxpayer would have used. If the department mailed the
82D or 82F on page 1 of the return.
taxpayer a booklet, do not use the label. The person who
When Should You File if You Are a
files the return should print the word quot;deceasedquot; after the
Nonresident Alien?
decedent's name in the address section of the form. Also
enter the date of death after the decedent's name.
You must file your Arizona tax return by April 15, even
If your spouse died in 2001 and you did not remarry in 2001, though your federal income tax return is due on June 15. If
or if your spouse died in 2002 before filing a return for 2001, you want to file your Arizona return when you file your
you may file a joint return. If your spouse died in 2001, the federal return, you may ask for an extension. See Form 204
joint return should show your spouse's 2001 income before for extension filing details.
death, and your income for all of 2001. If your spouse died
What if You File or Pay Late?
in 2002, before filing the 2001 return, the joint return should
show all of your income and all of your spouse's income for If you file or pay late, the department can charge you interest
and penalties on the amount you owe. If the U.S. Post Office
2001. Print quot;Filing as surviving spousequot; in the area where
postmarks your 2001 calendar year return by April 15, 2002,
you sign the return. If someone else is the personal
your return will not be late. You may also use certain private
representative, he or she must also sign the return.
delivery services designated by the IRS to meet the “timely
Are Any Other Returns Required? mailing as timely filed” rule.
Late Filing Penalty
You may also have to file fiduciary income tax or estate tax
returns. For details about filing a fiduciary income tax return,
If you file late, the department can charge you a late filing
call the department at (602) 255-3381. For details about
penalty. This penalty is 4½ percent of the tax required to be
filing an estate tax return, call the department at (602) 542-
shown on the return for each month or fraction of a month
4643.
the return is late. This penalty cannot exceed 25 percent of
Claiming a Refund For a Deceased the tax found to be remaining due.
Taxpayer Late Payment Penalty
If you are claiming a refund, you must complete Form 131, If you pay your tax late, the department can charge you a late
Claim for Refund on Behalf of Deceased Taxpayer. Attach payment penalty. This penalty is ½ of 1 percent (.005) of the
this form to the front of the return. amount shown as tax for each month or fraction of a month
for which the failure continues. This penalty cannot exceed
What Are the Filing Dates And Penalties? a total of 10 percent.
When Should You File? Extension Underpayment Penalty
Your 2001 calendar year tax return is due no later than If you file your return under an extension, you must pay 90
midnight, April 15, 2002. File your return as soon as you can percent of the tax shown on your return by the return's
after January 1, but no later than April 15, 2002. original due date. If you do not pay this amount, the
department can charge you a penalty. The department can
If you are a fiscal year filer, your return is due on the 15th
also charge you this penalty if you do not attach a copy of
day of the fourth month following the close of your fiscal
the Arizona extension to your return when you file. This
year.
penalty is one-half of one percent (.005) of the tax not paid
What If You Cannot File On Time? for each 30 day period or fraction of a 30 day period. The
department charges this penalty from the original due date of
You may request an extension if you know you will not be
the return until the date you pay the tax. This penalty cannot
able to file on time.
exceed 25 percent of the unpaid tax.
2

3. Form 140NR
As a nonresident, your Arizona gross income is that part of
NOTE: If you are subject to two or more of the above
your federal adjusted gross income derived from Arizona
penalties, the total cannot exceed 25 percent.
sources.
Interest
See Form 140ES to figure how much your payments should be.
The department charges interest on any tax not paid by the
What if You Make Your Estimated Payments
due date. The department will charge you interest even if
Late?
you have an extension. If you have an extension, the
department will charge you interest from the original due The department will charge you a penalty if you fail to make
date until the date you pay the tax. The Arizona rate of any required payments. The department will charge you a
interest is the same as the federal rate. penalty if you make any of your required payments late.
When Should You Amend a Return? For details, see Arizona Form 221.
If you need to make changes to your return once you have
Can You Make Estimated Payments if You
filed, you should file Form 140X, Individual Amended
Do Not Have to?
Return. Do not file a new return for the year you are
correcting. Generally, you have four years to amend a return If you do not have to make Arizona estimated income tax
to claim a refund.
payments, you may still choose to make them.
If you amend your federal return for any year, you must also
For details, see Arizona Form 140ES.
file an Arizona Form 140X for that year. You must file the
Form 140X within 90 days of amending your federal return.
Line-by-Line Instructions
If the IRS makes a change to your federal taxable income for
Tips for Preparing Your Return:
any year, you must report that change to Arizona. You may
use one of the following two options to report this change.
• Make sure that you write your social security number on
Option 1 your return.
You may file a Form 140X for that year. If you choose this • Complete your return using black ink.
option, you must amend your Arizona return within 90 days
• You must round dollar amounts to the nearest whole
of the change. Attach a complete copy of the federal notice
dollar. If 50 cents or more, round up to the next dollar.
to your Form 140X.
If less than 50 cents, round down.
Option 2
• When asked to provide your own schedule, attach a
You may file a copy of the final federal notice with the
separate sheet with your name and SSN at the top.
department within 90 days. If you choose this option, you
Attach your own schedules to the back of your return.
must include a statement in which you must:
•
1. Request that the department recompute your tax; and You must complete your federal return before you can
2. Indicate if you agree or disagree with the federal notice. start your Arizona return.
If you do not agree with the federal notice, you must also • Make sure you include your home telephone number. If
include any documents that show why you do not agree.
your daytime number is not the same as your home
If you choose option 2, mail the federal notice and any other number, make sure you include a daytime number.
documents to:
• If filing a fiscal year return, fill in the period covered in
Arizona Department of Revenue
the space provided at the top of the form.
PO Box 29210
Phoenix, AZ 85038-9210
Entering Your Name, Address, and Social
Do You Need To Make Estimated Security Number (SSN)
Payments in 2002?
Lines 1, 2, and 3 -
You must make Arizona estimated income tax payments
NOTE: Make sure that you write your social security
during 2002 if:
Your filing status is: AND AND number on the appropriate line.
Your Arizona gross Your Arizona gross
If your booklet has a peel-off label, use that label if all the
income for 2001 income for 2002
information is correct. If any of the information on the
was greater than: exceeds:
label is incorrect, do not use the label. Attach the label
Married Filing Joint $150,000 $150,000
after you finish your return. If you do not have a peel-off
Single $75,000 $75,000
label, print or type your name, address, and SSN in the space
Head of Household $75,000 $75,000
provided. If you are a nonresident of the United States or a
Married Filing $75,000 $75,000 resident alien who does not have an SSN use the
Separately identification number (ITIN) the IRS issued to you.
If you met the income threshold for 2001, you must make
If you are filing a joint return, enter your SSNs in the same
estimated payments during 2002 unless you are sure you will
order as your names. If your name appears first on the
not meet the threshold for 2002.
return, make sure your SSN is the first number listed.
3

4. Form 140NR
If you are filing a separate return, check the line 6 box and
For a deceased taxpayer, see page 2 of these instructions.
enter your spouse's name in the space provided. Also enter
Use your current home address. The department will send your spouse's SSN in the space provided.
your refund or correspond with you at that address.
If you are filing a separate return and your spouse is an
NOTE: Make sure your SSN is correct. If you are filing a Arizona resident, you must figure how much income to
joint return, also make sure you list your SSNs in the same report using community property laws. Under these laws, a
order every year. separate return must reflect one-half of the community
income taxable to Arizona plus any separate income taxable
Make sure that every return, statement, or document that you
to Arizona. For details, see Arizona Department of Revenue
file with the department has your SSN. Make sure that all
Income Tax Ruling ITR 93-20.
SSNs are clear and correct. You may be subject to a penalty if
you fail to include your SSN. It may take longer to process NOTE: If you can treat community income as separate
your return if SSNs are missing, incorrect, or unclear. income on your federal return, you may also treat that
community income as separate on your Arizona return. See
Identification Numbers for Paid Preparers
Arizona Department of Revenue Ruling ITR 93-22.
If you pay someone else to prepare your return, that person
Line 7 Box - Single
must also include an identification number where requested.
Use this filing status if you were single on December 31,
A paid preparer may use any of the following.
2001. You are single if any of the following apply to you.
• his or her SSN
• You have never been married.
• his or her PTIN
• You are legally separated under a decree of divorce or
• the federal employer identification number for the of separate maintenance.
business
• You were widowed before January 1, 2001, and you did
A paid preparer who fails to include the proper numbers may not remarry in 2001, and you do not qualify to file as a
also be subject to a penalty. qualifying widow or widower with dependent children
on your federal return.
Determining Your Filing Status
Exemptions
The filing status that you use on your Arizona return may be
different from that used on your federal return. Write the number of exemptions you are claiming in boxes 8, 9,
and 10. Do not put a checkmark. You may lose the exemption if
Use this section to determine your filing status. Check the
you put a checkmark in these boxes. You may lose the
correct box (4 through 7) on the front of Form 140NR.
dependent exemption if you do not complete Part A on page 2.
Line 4 Box - Married Filing a Joint Return
Line 8 Box - Age 65 or Over
You may use this filing status if married as of December 31,
2001. It does not matter whether or not you were living with Write quot;1quot; in box 8 if you or your spouse were 65 or older in
your spouse. You may elect to file a joint return, even if you 2001. Write quot;2quot; in box 8 if both you and your spouse were
65 or older in 2001.
and your spouse filed separate federal returns.
You may use this filing status if your spouse died during Line 9 Box - Blind
2001 and you did not remarry in 2001. See page 2 of these
Write quot;1quot; in box 9 if you or your spouse are totally or partially
instructions for details.
blind. Write quot;2quot; in box 9 if both you and your spouse are totally
If you are married to an Arizona full year resident, you may or partially blind.
file a joint return using the 140NR. For more information,
If you or your spouse were partially blind as of December
see Arizona Department of Revenue Income Tax Ruling ITR
31, 2001, you must get a statement certified by your eye
95-2.
doctor or registered optometrist that:
Line 5 Box - Head of Household 1. You cannot see better than 20/200 in your better eye with
glasses or contact lenses or
You may file as head of household on your Arizona return,
2. Your field of vision is 20 degrees or less.
only if one of the following applies.
• If your eye condition is not likely to improve beyond the
You qualify to file as head of household on your federal
conditions listed above, you can get a statement certified by your
return.
eye doctor or registered optometrist to that effect instead.
• You qualify to file as a qualifying widow or widower on
You must keep the statement for your records.
your federal return.
Line 10 Box - Dependents
Line 6 Box - Married Filing Separately
You may use this filing status if married as of December 31, You must complete Part A on page 2 of your return before
2001, and you elect to file a separate Arizona return. You you can total your dependent exemptions.
may elect to file a separate return, even if you and your
You may claim only the following as a dependent.
spouse filed a joint federal return.
4

5. Form 140NR
• A person that qualifies as your dependent on your Determining Arizona Income
federal return.
Now complete Parts B, C, and D on page 2 of the return.
• A person who is age 65 or over (related to you or not)
that does not qualify as your dependent on your federal Use Part B to determine what portion of your total income is
return, but one of the following applies. taxable by Arizona.
1. In 2001, you paid more than one-fourth of the cost of NOTE: If you are unable to determine the proper line to
keeping this person in an Arizona nursing care use, please contact one of the help numbers listed on the
institution, an Arizona residential care institution, or an back cover.
Arizona assisted living facility. Your cost must be more
FEDERAL Column
than $800.
2. In 2001, you paid more than $800 for either Arizona Enter the actual amounts shown on your 2001 federal income
home health care or other medical costs for the person. tax return in the FEDERAL column. Complete lines B4
through B14. Line B14 should equal the federal adjusted
Completing Line(s) A1
gross income shown on your 2001 federal return Form 1040,
Enter the following on line(s) A1. Form 1040A, or Form 1040EZ.
1. The dependent's name.
ARIZONA Column
2. The dependent's social security number.
Enter that portion of your federal income received from
3. The dependent's relationship to you.
Arizona sources in the ARIZONA column. Such income
4. The number of months the dependent lived in your home
includes wages earned in Arizona, Arizona rental and
during 2001.
business income, and gains on the sale of Arizona property.
You may lose the exemption if you do not furnish this
NOTE: If you are filing a joint return with your full year
information.
resident spouse, you must enter your Arizona source income
Line A2 - Total Dependents in the ARIZONA column and your spouse must enter all
income from all sources in the ARIZONA column. For
Enter the total number of persons listed on line(s) A1. Enter
details, see Arizona Department of Revenue Income Tax
the same number on the front of the return in box 10.
Ruling ITR 95-2.
Line A3 - Persons You Cannot Take as
The Tax Reform Act of 1986 limits the amount of losses that
Dependents on Your Federal Return
you may deduct from passive activities. A passive activity is
Enter the names of any dependents age 65 or over listed on one that involves the conduct of any trade or business in
line(s) A1 that you cannot take as a dependent on your which the taxpayer does not materially participate.
federal return.
As a nonresident, your Arizona gross income may include
some of these losses. You may consider only those passive
Reporting Your Residency Status
losses that arose from Arizona sources. Your 2001 Arizona
Check the appropriate box (11 through 13). Check only one box. gross income can include only Arizona source losses you
used on your 2001 federal return.
Line 11 Box - Nonresident
The following line-by-line instructions apply to the
Check box 11 if you were not an Arizona resident during
ARIZONA column.
2001 and were not on active military duty in Arizona.
Line B4 - Wages, Salaries, Tips, etc.
Line 12 Box - Nonresident Active Military
Enter all amounts received for services performed in
Check box 12 if you were a nonresident on active duty
Arizona.
military assignment in Arizona in 2001.
Line 13 Box - Composite Return NOTE: Do not include active duty military pay unless the
active duty military member is an Arizona resident filing a
Check box 13 if this is a composite return being filed by one joint return with his or her Arizona nonresident spouse on
of the following. Form 140NR.
1. A partnership filing on behalf of its nonresident
Line B5 - Interest
partners.
2. An S corporation filing on behalf of its nonresident If you have an Arizona business, enter only interest
shareholders. (including U.S. Government interest) you earned on accounts
pledged as collateral. Also enter your distributive share of
For information on filing an Arizona nonresident composite
interest from a partnership doing business in Arizona or an S
income tax return, see Arizona Department of Revenue
corporation doing business in Arizona. Do not include any
Income Tax Ruling ITR 97-1.
other interest income even if it was earned in Arizona banks.
5

6. Form 140NR
Line B6 - Dividends Line B13 - Other Federal Adjustments
If you have an Arizona business, enter only those dividends Include on line B13 any other federal adjustments included
earned on stocks pledged as collateral, including dividends in your federal adjusted gross income that are attributable to
from small business corporations. Also enter your the Arizona source income reported on your 2001 Arizona
distributive share of dividend income from a partnership nonresident return.
doing business in Arizona or an S corporation doing business
Line B15 - Arizona Income
in Arizona. Do not include any other dividend income.
Complete line B15 as instructed on the form.
Line B7 - Arizona Income Tax Refunds
Line B16 - Arizona Percentage
Enter the amount of Arizona income tax refunds received in
2001 that you included in your federal adjusted gross income. Divide line B15 by line B14 and enter the result. (Do not
enter more than 100 percent.) This is the Arizona
Line B8 - Business Income or (Loss)
percentage of your total income.
Enter income or (loss) from Arizona businesses.
Example:
Line B9 - Gains or (Losses) Arizona Federal Arizona percentage
Gross Adjusted
Enter gains or (losses) on sales of Arizona property.
Income from Gross
Line B10 - Rents, etc. line B15 Income from
line B14
Enter rent or royalty income earned on Arizona properties. $ 7,500 $ 30,000 $7,500/30,000 = 25%
Enter income from Schedule K-1(NR) from estates or trusts
Determining Additions to Income
(Form 141). Also enter income or (loss) from Schedule(s)
K-1(NR) from Arizona partnerships (Form 165), or small
Line C17 - Early Withdrawal of Arizona,
business corporations (Form 120S).
County, City, or School Retirement System
Line B11 - Other Income Reported on Your Contributions
Federal Return
If you meet all the following, you must enter an amount here.
Enter other income from sources within Arizona. Do not
1. You left your job with the State of Arizona or an
include pension income or social security taxed by the
Arizona county, city, or school district for reasons other
federal government.
than retirement.
Net Operating Losses 2. When you left, you took out the contributions you had
Arizona does not have specific net operating loss provisions made to the retirement system while employed.
for individual taxpayers. Arizona conforms to the federal net
3. You deducted these contributions on your Arizona
operating loss provisions, including the carryback
income tax returns that you filed in prior years.
provisions.
4. You did not include these contributions in your federal
As an Arizona nonresident, you may have had a loss from adjusted gross income this year.
prior year Arizona business operations. However, the loss
If you meet all these tests, you must report as income those
cannot offset this year’s income unless the loss is a net
contributions previously deducted on your prior year
operating loss for federal purposes. You can include the loss
Arizona tax returns.
deduction in your Arizona gross income only to the extent
included in your federal adjusted gross income. You cannot For more information, see Arizona Department of Revenue
include any amount of that net operating loss that has already Income Tax Ruling ITR 93-7.
been deducted for Arizona purposes.
Line C18 - Other Additions to Income
Enter the amount of net operating loss deduction included in
Use line C18 if any of the special circumstances below
your federal adjusted gross income that was derived from
applies. Attach your own schedule to the back of your return,
Arizona sources. Do not include any amount of the loss that
explaining any amounts entered on line C18.
has already been deducted for Arizona purposes. Also, do
not include any loss for which you took a separate A. Trust and Estate Deductions
subtraction on an amended return filed for a prior tax year
You must add the following estate or trust deductions to your
under the special net operating loss transition rule.
Arizona gross income.
For information on deducting a net operating loss carryback,
1. Your share of the estate’s or trust’s deductions allowed
see Arizona Department of Revenue Income Tax Procedure
under the Internal Revenue Code.
ITP 99-1.
2. Your share of the excess deductions and loss carryovers
Line B12 - Total Income
allowed under the Internal Revenue Code as deductions
Add lines B4 through B11 and enter the total. to the beneficiary on termination of an estate or trust.
6

7. Form 140NR
You must add the above deductions and loss carryovers to loss carryover into account when computing your 2001
Arizona gross income only to the extent you included these Arizona taxable income.
items in computing your Arizona taxable income.
5. The amount of the loss carryover included in your
Arizona gross income is more than the amount allowed
B. Agricultural Water Conservation System Expenses
to be taken into account for Arizona purposes.
If you take this credit, you cannot deduct any expenses for which
Enter the amount by which the loss carryover included in
you claim the credit. If you take this credit, enter the amount of
your Arizona gross income is more than the amount allowed
such expenses that you deducted on your federal return.
for the taxable year under Arizona law.
C. Items Previously Deducted for Arizona Purposes
F. Addition to S Corporation Income Due to Credits
Arizona statutes prohibit a taxpayer from deducting items
Claimed
more than once. However, under the operation of former
Arizona law (1989 and prior), you could deduct certain items Shareholders of an S corporation who claim a credit passed
in greater amounts for Arizona purposes than federal purposes. through from an S corporation must make an addition to
Investment interest and passive activity losses were such items. income for the amount of expenses disallowed by reason of
In some cases, you could have deducted such amounts in their claiming the credit.
entirety on the Arizona return. For federal purposes, the
An S corporation that passes the following credits through to
deduction for these items was limited, with the unused portions
its shareholders must notify each shareholder of his or her
being carried forward and deducted in future years. Your
pro rata share of the adjustment. You must enter an amount
Arizona return may include these previously deducted items
on this line when claiming any of the following credits.
because of the difference between the federal and former
• Agricultural water conservation system credit
Arizona treatment. If your Arizona taxable income includes
• Defense contracting credit
items previously deducted for Arizona purposes, you must add
• Environmental technology facility credit
such amounts to your Arizona gross income.
• Pollution control credit
D. Claim of Right Adjustment for Amounts Repaid • Recycling equipment credit
in 2001 • Credit for solar hot water heater plumbing stub outs and
electric vehicle recharge outlets
You must make an entry here if all of the following apply.
• Credit for employment of TANF recipients
1. During 2001, you were required to repay amounts held • Credit for agricultural pollution control equipment
under a claim of right. • Credit for taxpayers participating in agricultural
preservation district
2. The amount required to be repaid was subject to
Arizona income tax in the year included in income. G. Solar Hot Water Heater Plumbing Stub Out And
Electric Vehicle Recharge Outlet Expenses
3. The amount required to be repaid during 2001 was more
than $3,000. If you take a credit for installing solar hot water heater
plumbing stub outs or electric vehicle recharge outlets in a
4. You took a deduction for the amount repaid on your
dwelling you constructed, you cannot deduct any expenses
2001 federal income tax return.
for which you claim the credit. If you take this credit, enter
5. The deduction taken on your federal income tax return is
the amount of such expenses that you deducted on your
reflected in your Arizona taxable income.
federal return.
If the above apply, enter the amount deducted on your
H. Wage Expense for Employers of TANF Recipients
federal income tax return which is reflected in your Arizona
If you take a credit for employing TANF recipients, you
taxable income.
cannot deduct any wage expense for which you claim the
For more information on the Arizona claim of right
credit. If you take this credit, enter the amount of such
provisions, see Arizona Department of Revenue Individual
expenses that you deducted on your federal return.
Income Tax Procedure ITP 95-1.
I. Amounts Deducted for Conveying Ownership or
E. Claim of Right Adjustment for Amounts Repaid Development Rights of Property to an Agricultural
in Prior Taxable Years Preservation District
You must make an entry here if all of the following apply. If you take a credit for taxpayers participating in agricultural
preservation district, you cannot deduct any amounts for
1. During a year prior to 2001 you were required to repay
conveying ownership or development rights of property to an
income held under a claim of right.
agricultural district. If you take this credit, enter the amount
2. You computed your tax for that prior year under of such deductions for which you claim a credit.
Arizona’s claim of right provisions.
J. Medical Savings Account (MSA) Distributions
3. A net operating loss or capital loss was established due
For information on Arizona's MSA provisions, see the
to the repayment made in the prior year.
department's MSA brochure, Pub 542.
4. You are entitled to take that net operating loss or capital
7

8. Form 140NR
holder's high deductible health coverage was provided
You must add amounts received from an MSA here if any of
by his or her Arizona employer. If the account holder
the following apply.
was self employed, the account holder's high deductible
1 - You Withdrew Funds From Your MSA For Other
health coverage was provided by his or her Arizona
Than Qualified Expenses
business.
You must make an entry here if all of the following apply.
4. There is no named MSA beneficiary.
1. You have an MSA that qualifies as an MSA under
5. This is the decedent's final return.
Arizona law.
2. If you are an employee, your high deductible health 6. The value of the MSA did not have to be included on
coverage is provided by your Arizona employer. If you the decedent's final federal income tax return.
are self employed, your high deductible health coverage
In this case, the MSA ceases to be an MSA. Enter the fair
is provided by your Arizona business.
market value of the MSA as of the date of death. This rule
3. You withdrew money from your MSA during 2001. applies in all cases in which there is no named beneficiary,
even if the surviving spouse ultimately obtains the right to
4. You did not use the amount withdrawn to pay qualified
the MSA assets.
medical expenses.
NOTE: The following are not withdrawals. Do not enter
5. You did not have to include the withdrawal as income
any of the following:
on your federal income tax return.
• Amounts from the MSA used to pay qualified medical
Enter the amount withdrawn.
expenses
2 - Deceased Account Holder Where The Named • A qualified return of excess contributions
Beneficiary is Not the Decedent's Surviving Spouse • A qualified rollover
• The fair market value of an MSA received by a
You must make an entry here if all of the following apply:
surviving spouse who was the deceased account
1. The account holder died during the year. holder's named beneficiary
2. The account holder's MSA qualified as an MSA under For more information about the above items, see the
Arizona law. department's MSA brochure, Pub 542.
3. If the account holder was an employee, the account K. Other Adjustments
holder's high deductible health coverage was provided
Other special adjustments may be necessary. You may need
by his or her Arizona employer. If the account holder
to make an addition for depreciation or amortization. You
was self employed, the account holder's high deductible
may also need to make an addition if you claimed certain tax
health coverage was provided by his or her Arizona
credits. Call one of the numbers listed on the back cover if
business.
any of the following apply.
4. You are the named beneficiary of the decedent's MSA.
• You are a qualified defense contractor that elected to
5. You are not the decedent's surviving spouse. amortize under Arizona Revised Statutes section 43-1024.
•
6. You did not have to include the value of the MSA as You sold or disposed of property that was held for the
income on your federal income tax return. production of income and your basis was computed
under the Arizona Income Tax Act of 1954.
In this case, the MSA ceased to be an MSA. Enter the fair
• You are still depreciating or amortizing a child care
market value of the MSA as of the date of death, less the
facility for which you claimed a state credit.
amount of MSA funds used within one year of the date of
•
death, to pay the decedent's qualified medical expenses. If You claimed the environmental technology facility
the MSA has not paid all of the decedent's medical expenses credit.
•
by the time you file this return, reduce the fair market value You claimed the pollution control credit.
by only those expenses the MSA paid. If the MSA pays • You claimed the recycling equipment credit.
additional expenses for the decedent after you file, you may
• You claimed the credit for agricultural pollution control
file an amended return to further reduce the fair market value equipment.
of the MSA.
• You elected to amortize the basis of a pollution control
3 - Decedent's Final Return and no Named MSA device or the cost of a child care facility under Arizona
Beneficiary law in effect before 1990. You are still deducting
amortization or depreciation for that device or facility
Make an entry here if all of the following apply. on your federal income tax return.
1. The account holder died during the year.
Line C19 - Total Additions
2. The account holder's MSA qualified as an MSA under
Add lines C17 and C18. Enter the total on line C19 and on
Arizona law.
the front of your return, line 16.
3. If the account holder was an employee, the account
8

9. Form 140NR
To take this subtraction, you must be engaged in the business
Determining Subtractions From Income
of farming or processing agricultural crops. The crop must
be grown in Arizona. You must make your gift to a
You may only subtract those items for which statutory
charitable organization located in Arizona that is exempt
authority exists. Without such authority you cannot take a
from Arizona tax.
subtraction. If you have any questions concerning
subtractions from income, call one of the numbers listed on The subtraction is the greater of 80 percent of the wholesale
the back cover. market price or 80 percent of the most recent sale price for
the contributed crop.
NOTE: You may not subtract any amount which is allocable
to income excluded from your Arizona income. To determine if your crop gift qualifies for this subtraction, see
Arizona Department of Revenue Income Tax Procedure ITP 93-2.
D20 - Exemption: Age 65 or Over
Line D28 - Other Subtractions
Multiply the number in box 8 on the front of your return by
Use line D28 if any of the following special circumstances
$2,100 and enter the result.
apply. Attach your own schedule to the back of the return,
Line D21 - Exemption: Blind explaining any amounts entered here.
Multiply the number in box 9 on the front of your return by A. Certain Wages of American Indians
$1,500 and enter the result.
Enrolled members of American Indian tribes may subtract
Line D22 - Exemption: Dependents wages earned while living and working on their tribe’s
reservation. You can subtract only those amounts that you
Multiply the number in box 10 on the front of your return by
included on line B4, ARIZONA column. The federal
$2,300 and enter the result.
government must recognize these tribes.
Line D23 - Total For more information, see Arizona Department of Revenue
Add lines D20 through D22 and enter the total. Income Tax Ruling ITR 96-4.
Line D24 - Prorated Exemptions B. Adoption Expenses
Multiply the amount on line D23 by your Arizona percentage You may take this subtraction only in the year the final
from line B16 and enter the result. adoption order is granted.
Enter the lesser of the total of the following adoption
NOTE Active Duty Military Personnel Only: If you were
expenses or $3,000.
on active duty in Arizona during 2001, but you were a
resident of another state, you must prorate these exemptions. When figuring your subtraction, you may include expenses
incurred in prior years.
Line D25 - Interest on U.S. Obligations
The following expenses are qualified adoption expenses.
Enter the amount of interest income from U.S. Government
obligations included as income on line B5 in the ARIZONA 1. Nonreimbursed medical and hospital costs.
column. U.S. Government obligations include obligations
2. Adoption counseling.
such as savings bonds and treasury bills. You must reduce
this subtraction by any interest or other related expenses 3. Legal and agency fees.
incurred to purchase or carry the obligation. Reduce the
4. Other nonrecurring costs of adoption.
subtraction only by the amount of such expenses included in
your Arizona gross income. If filing separately, you may take the entire subtraction, or
you may divide the subtraction with your spouse. However,
Line D26 - Arizona Lottery Winnings the total subtraction taken by both you and your spouse
You may subtract all winnings received in 2001 related to an cannot exceed $3,000.
Arizona lottery prize won before March 22, 1983. You may
C. Qualified Wood Stove, Wood Fireplace, or Gas
subtract up to $5,000 of winnings received in 2001 for
Fired Fireplace
Arizona lottery prizes won after March 21, 1983. Only
subtract those Arizona lottery winnings that you included on Arizona law provides a subtraction for converting an
line B11 in the ARIZONA column and reported on your existing fireplace to a qualified wood stove, qualified wood
federal income tax return. fireplace, or gas fired fireplace and non-optional equipment
directly related to its operation. You may subtract up to
If you subtract Arizona lottery winnings here, you may have
$500 of the costs incurred for converting an existing
to adjust the amount of gambling losses claimed as an
fireplace to a qualified wood stove, qualified wood fireplace,
itemized deduction.
or gas fired fireplace on your property located in Arizona.
Line D27 - Agricultural Crops Given to When you figure your subtraction, do not include taxes,
Arizona Charitable Organizations interest, or other finance charges.
Arizona law allows a subtraction for qualified crop gifts A qualified wood stove or a qualified wood fireplace is a
made during 2001 to one or more charitable organizations. residential wood heater that was manufactured on or after
9

10. Form 140NR
July 1, 1990, or sold at retail on or after July 1, 1992. The under Arizona law. You can subtract these contributions
residential wood heater must also meet the U.S. only to the extent not deductible for federal income tax
Environmental Protection Agency’s July 1990 particulate purposes. You can subtract these contributions only to the
emissions standards. extent included in your Arizona gross income. Enter these
contributions here.
A qualified gas fired fireplace is any device that burns
natural or liquefied petroleum gas as its fuel through a burner G. Certain Expenses Not Allowed for Federal
system that is permanently installed in the fireplace. The Purposes
conversion of an existing wood burning fireplace to
You may subtract some expenses that you cannot deduct on
noncombustible gas logs that are permanently installed in the
your federal return when you claim certain federal tax
fireplace also qualifies as a gas fired fireplace.
credits. These federal tax credits are:
D. Claim of Right Adjustment for Amounts Repaid
• the federal work opportunity credit;
in Prior Taxable Years
• the empowerment zone employment credit;
•
You must make an entry here if all of the following apply. the credit for employer-paid social security taxes on
employee cash tips;
1. During a year prior to 2001 you were required to repay
• the Indian employment credit
income held under a claim of right.
If you received any of the above federal tax credits for 2001,
2. The amount required to be repaid was subject to
enter the portion of wages or salaries attributable to Arizona
Arizona income tax in the year included in income.
source income that you paid or incurred during the taxable
3. You computed your tax for that prior year under year that is equal to the amount of those federal tax credits
Arizona’s claim of right provisions. you received.
4. A net operating loss or capital loss was established due H. Other Adjustments
to the repayment made in the prior year.
Other special adjustments may be necessary. Call one of
5. You are entitled to take that net operating loss or capital the numbers listed on back cover if any of the following
loss carryover into account when computing your 2001 apply.
Arizona taxable income.
• You are a qualified defense contractor that elected
6. The amount of the loss carryover allowed to be taken to amortize under Arizona Revised Statutes section
into account for Arizona purposes is more than the 43-1024.
amount included in your Arizona gross income.
• You sold or disposed of property that was held for the
Enter the amount by which the loss carryover allowed for the production of income subject to Arizona tax and your
taxable year under Arizona law is more than the amount basis was computed under the Arizona Income Tax Act
included in your Arizona gross income. of 1954.
•
For more information on the Arizona claim of right You deferred exploration expenses determined under
provisions, see Arizona Department of Revenue Individual Internal Revenue Code section 617 in a taxable year
Income Tax Procedure ITP 95-1. ending before January 1, 1990, and you have not
previously taken a subtraction for those expenses.
E. Deposits Made Into Your MSA
Line D29 - Total Subtractions
If you have an MSA, you may be able to subtract deposits
made into that MSA. Make an entry here if all of the Add lines D24 through D28. Enter the total here and on the
following apply. front of your return on line 18.
1. You have an MSA that qualifies as an MSA under Different Last Names
Arizona law, but not federal law.
If you filed an Arizona tax return within the past four years
2. If you are an employee, your high deductible health
with a different last name, enter your prior last name(s), in
coverage is provided by your Arizona employer. If you
Part E.
are self employed, your high deductible health coverage
is provided by your Arizona business.
Totaling Your Income
3. Either you or your employer made deposits into that
Line 14 - Federal Adjusted Gross Income
MSA during the tax year.
4. You had to include the deposits in income on your You must complete your federal return before completing
federal income tax return. your Arizona return. You must complete a 2001 federal
return to determine your federal adjusted gross income even
You can subtract these deposits only to the extent included in
if not filing a federal return.
your Arizona gross income. Enter these contributions here.
Arizona uses federal adjusted gross income as a starting
F. Employer Contributions Made to Employee MSAs
point to determine Arizona taxable income. Enter your
If you are an employer, you may subtract the amount federal adjusted gross income from page 2, line B14.
contributed to your employees' MSAs that are established
10

11. Form 140NR
Line 15 - Arizona Income Personal Exemption Chart
If you checked filing status: Personal
Enter your Arizona income from page 2, line B15, of your
Exemption
return.
before
Line 16 - Additions to Income proration:
• Single (Box 7) $2,100
Enter the amount from page 2, line C19, of your return.
•
Line 18 - Subtractions From Income Married filing joint return (Box 4) $4,200
and claiming no dependents (Box
Enter the amount from page 2, line D29, of your return.
10)
• Married filing joint return (Box 4) $6,300
Figuring Your Arizona Tax
and claiming at least one dependent
Line 20 - Itemized or Standard Deductions (Box 10 excluding persons listed on
Page 2, line A3)
You must decide whether to take the standard deduction or
• Head of household and you are $4,200
to itemize your deductions. Your Arizona income tax will be
not married (Box 5)
less if you take the larger of your standard deduction or your
• Head of household and you are a $3,150
itemized deduction.
married person who qualifies to Or
file as head of household (Box 5) Complete
Your Standard Deduction
Form 202
Personal
Tax Tip: The standard deduction is not prorated.
Exemption
If you take the standard deduction, check box 20S. Allocation
Election.
If your filing status is: Your standard
• Married filing separately (Box 6) $2,100
deduction is:
with neither spouse claiming any Or
• Single $ 4,050
dependents (Box 10) Complete
• Married filing separately $ 4,050
Form 202
• Married filing jointly $ 8,100
Personal
• Head of household $ 8,100
Exemption
Allocation
Your Itemized Deduction
Election.
• Married filing separately (Box 6) $3,150
You may itemize deductions on your Arizona return even if
with one spouse claiming at least Or
you do not itemize deductions on your federal return. The
one dependent (Box 10 excluding Complete
itemized deductions allowed for Arizona purposes are those
persons listed on Page 2, line A3) Form 202
itemized deductions that are allowable under the Internal
Personal
Revenue Code. As an Arizona nonresident, you must prorate
Exemption
these deductions by the percentage which your Arizona gross Allocation
income is of your federal adjusted gross income. Election.
To determine your Arizona itemized deductions, complete a
Personal Exemption Worksheet
federal Form 1040, Schedule A. Then complete the Arizona
1. Amount from personal exemption
Form 140NR, Schedule A. If you itemize deductions, check
chart. If you were an active duty
box 20I.
military member during 2001,
skip lines 2 and 3 and enter this
NOTE: If you itemize, you must attach a copy of your
amount on Form 140NR, page 1,
federal Schedule A and your Arizona Schedule A(NR) to
line 21. All other taxpayers
your Arizona return.
$
complete lines 2 and 3.
Line 21 - Personal Exemptions 2. Enter your Arizona percentage
from Form 140NR, page 2, line
Your personal exemption depends on your filing status. See
B16. %
Personal Exemption Chart. Then complete the Personal
3. Multiply line 1 by the percent on
Exemption Worksheet.
line 2. Enter the result here and
NOTE For Active Duty Military Personnel Only: If you on Form 140NR, page 1, line 21. $
were on active duty in Arizona during 2001, but were a
A married couple who does not claim any dependents may
resident of another state, do not prorate your personal
take one personal exemption of $4,200 (prior to prorating).
exemption. You are allowed a 100 percent deduction for the
If the husband and wife file separate returns, either spouse
personal exemption (to include spouse).
may (prior to prorating) take the entire $4,200 exemption, or
the spouses may divide the $4,200 (prior to prorating)
11

12. Form 140NR
between them. You and your spouse must complete Form If you checked box 261 and the amount on Form 140NR,
202 if either you or your spouse claim a personal exemption page 1, line 25 is $10 or more, enter $5 on line 27. If the
of more than $2,100 (prior to prorating). If you and your amount on line 25 is less than $10, complete the worksheet
spouse do not complete Form 202, you may (prior to below.
prorating) take an exemption of only $2,100 (one-half of the
Married Taxpayers Filing a Joint Return With Both
total $4,200).
Spouses Making a Designation
A married couple who claims at least one dependent may
If both spouses want to make this designation, one spouse
take one personal exemption of $6,300 (prior to prorating).
should check box 261, and the other spouse should check box
If the husband and wife file separate returns, either spouse
262.
may (prior to prorating) take the entire $6,300 exemption, or
If you checked both box 261 and box 262 and the amount on
the spouses may divide the $6,300 between them. You and
Form 140NR, page 1, line 25 is $20 or more, enter $10 on
your spouse must complete Form 202 if either you or your
line 27. If the amount on line 25 is less than $20, complete
spouse claim a personal exemption of more than $3,150
the worksheet below.
(prior to prorating). If you and your spouse do not complete
Form 202, you may (prior to prorating) take an exemption of
Clean Elections Fund Tax Reduction Worksheet
only $3,150 (one-half of the total $6,300).
1. Enter the amount of tax from Form
If you are a married person who qualifies to file as a head of 140NR, page 1, line 25.
household, you may take the entire $6,300 (prior to 2. If you checked box 261, enter $5. If a
prorating) personal exemption or you may divide the joint return and your spouse also checked
exemption with your spouse. You and your spouse must box 262, enter $10.
complete Form 202 if either you or your spouse claim a 3. Balance of tax eligible for tax reduction.
personal exemption of more than $3,150 (prior to prorating). Subtract line 2 from line 1. If less than
If you and your spouse do not complete Form 202 you may zero, enter zero “0”.
take an exemption of only $3,150 (prior to prorating) (one-
4. If you checked box 261, enter $5. If a joint
half of the total $6,300).
return and your spouse also checked box
The spouse who claims more than one-half of the total 26 2, enter $10.
personal exemption (prior to prorating) must attach the 5. Tax reduction. Enter the lesser of line 3
original Form 202 to his or her return. The spouse who or line 4. Also enter this amount on Form
claims less than one-half of the total personal exemption 140NR, page 1, line 27.
(prior to prorating) must attach a copy of the completed
Line 28 - Reduced Tax
Form 202 to his or her return.
Subtract line 27 from line 25. Enter the result.
Line 22 - Taxable Income
Line 29 - Nonrefundable Credits From
Subtract lines 20 and 21 from line 19 and enter the result.
Arizona Form 301 or Forms 321, 322. and
Use this amount to calculate your tax using Tax Rate Table
323 if Form 301 is not Required
X or Y.
Line 23 - Tax Amount Complete line 29 if you can take any of the following credits.
Also make sure that you attach the Arizona Form 301 if you
Enter the tax from Tax Rate Table X or Y. are required to complete Form 301 and the appropriate credit
Line 24 - Tax From Recapture of Credits form or forms to your return.
From Arizona Form 301 1. Defense Contracting Credit. You may qualify for this
credit if you are an Arizona Department of Commerce
Enter the amount of tax due from recapture of credits from
Form 301, Part II, line 33. certified defense contractor who has qualified increases in
employment. This tax credit also includes a provision for a
Line 25 - Subtotal of Tax property tax credit. Use Form 302 to figure this credit.
Add lines 23 and 24.
2. Enterprise Zone Credit. You may qualify for this credit
Lines 26 and 27 - Clean Elections Fund if your business in an Arizona enterprise zone had net
increases in qualified employment positions. Use Form 304
Tax Reduction
to figure this credit.
You may designate $5 of your tax go to the Clean Elections
3. Environmental Technology Facility Credit. You may
Fund and may also reduce your tax by up to $5. If you are
qualify for this credit if your business incurred expenses in
married filing a joint return, both you and your spouse may
constructing a qualified environmental technology
make this designation and also reduce your tax by up to $10.
manufacturing facility. Use Form 305 to figure this credit.
Single Taxpayers, Heads of Household, and Married
4. Military Reuse Zone Credit. You may qualify for this
Taxpayers Filing a Joint Return With Only One Spouse
credit if you have qualifying net increases in full-time
Making a Designation
employment within a military reuse zone. Use Form 306 to
To make this designation, Check box 261 marked yourself. figure this credit.
12