1. Arizona Form
1999 Nonresident Personal Income Tax 140NR
Are You Subject to Tax in Arizona? Do You Have to File if You Are in The
Military?
You are subject to Arizona income tax on all income derived
from Arizona sources. If you are in this state for a temporary You must file if you meet the Arizona filing requirements.
or transitory purpose or did not live in Arizona but received
If you are an Arizona resident, you must report all of your
income from sources within Arizona during 1999, you are
income, no matter where stationed. You must include your
subject to Arizona tax. Income from Arizona sources
military pay. If you were an Arizona resident when you
includes wages, rental income, business income, the sale of
entered the service, you remain an Arizona resident, no
Arizona real estate, interest and dividends having a taxable
matter where stationed, until you establish a new domicile.
or business situs in this state, or any other income from an
Arizona source. If you are not an Arizona resident, but stationed in Arizona,
the following applies to you.
Do You Have to File?
• You are not subject to Arizona income tax on your
Arizona Filing Requirements military pay.
These rules apply to all Arizona taxpayers.
• You must report any other income you earn in Arizona.
You must file if AND your gross OR your
Use Form 140NR, Nonresident Personal Income Tax
you are: income is at Arizona adjusted
Return, to report this income.
least: gross income is
at least: To find out more, see Arizona Department of Revenue
• Single $15,000 $5,500 brochure, Pub 704, Taxpayers in the Military.
• Married $15,000 $11,000
If You Included Your Child's Unearned
filing jointly
Income on Your Federal Return, Does
• Married $15,000 $5,500
Your Child Have to File an Arizona
filing
Return?
separately
• Head of $15,000 $5,500 In this case, the child should not file an Arizona return. The
household parent must include that same income in his or her Arizona
If you are a nonresident, you must report income derived taxable income.
from Arizona sources.
Residency Status
To see if you have to file, figure your gross income the
same as you would figure your gross income for federal
If you are not sure if you are an Arizona resident for state
income tax purposes. Then you should exclude income
income tax purposes, you should get Arizona Department of
Arizona law does not tax.
Revenue Income Tax Procedure ITP 92-1.
You can find your Arizona adjusted gross income on
line 20 of Arizona Form 140NR. Residents
NOTE: Even if you do not have to file, you must still file a You are a resident of Arizona if your domicile is in Arizona.
return to get a refund of any Arizona income tax withheld. Domicile is the place where you have your permanent home.
It is where you intend to return if you are living or working
Do You Have to File if You Are an temporarily in another state or country. If you leave Arizona
American Indian? for a temporary period, you are still an Arizona resident
while gone. A resident is subject to tax on all income no
You must file if you meet the Arizona filing requirements
matter where the resident earns the income.
unless all the following apply to you.
• If you are a full year resident, you must file Form 140, Form
You are an enrolled member of an Indian tribe.
140A, or Form 140EZ.
• You live on the reservation established for that tribe.
Part-Year Residents
• You earned all of your income on that reservation.
If you are a part-year resident, you must file Form 140PY,
To find out more, see Arizona Department of Revenue
Part-Year Resident Personal Income Tax Return.
Income Tax Ruling ITR 96-4.
You are a part-year resident if you did either of the following
Do You Have to File if you Are a Non- during 1999.
Indian or Non-Enrolled Indian Married to
• You moved into Arizona with the intent of becoming a
an American Indian?
resident.
You must file if you meet the Arizona filing requirements.
• You moved out of Arizona with the intent of giving up
For details on how to figure what income to report, see
your Arizona residency.
Arizona Department of Revenue Income Tax Ruling ITR 96-
4. Nonresidents
If you are a nonresident, you must file Form 140NR,
Nonresident Personal Income Tax Return.

2. Form 140NR
What if a Taxpayer Died? Arizona extension to the front of your return when you
file. If you must make a payment, use Arizona Form
If a taxpayer died before filing a return for 1999, the
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 D
taxpayer would have used. If the department mailed the
or F 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 17, even
If your spouse died in 1999 and you did not remarry in 1999, though your federal income tax return is due on June 15. If
or if your spouse died in 2000 before filing a return for 1999, you want to file your Arizona return when you file your
you may file a joint return. If your spouse died in 1999, the federal return, you may ask for an extension. See Form 204
joint return should show your spouse's 1999 income before for extension filing details.
death, and your income for all of 1999. If your spouse died
What if You File or Pay Late?
in 2000, before filing the 1999 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
1999. Print quot;Filing as surviving spousequot; in the area where interest and penalties on the amount you owe. If the U.S.
you sign the return. If someone else is the personal Post Office postmarks your 1999 calendar year return by
representative, he or she must also sign the return. April 17, 2000, your return will not be late. You may also
use certain private delivery services designated by the IRS to
Are Any Other Returns Required?
meet the “timely mailing as timely filed” rule.
You may also have to file fiduciary income tax or estate tax
Late Filing Penalty
returns. For details about filing a fiduciary income tax
return, call the department at (602) 255-3381. For details If you file late, the department can charge you a late filing
about filing an estate tax return, call the department at (602) penalty. This penalty is 5 percent of the tax found to be
542-4643. remaining due for each month or fraction of a month the
return is late. This penalty cannot exceed 25 percent of the
Claiming a Refund For a Deceased
tax found to be remaining due.
Taxpayer
Late Payment Penalty
If you are claiming a refund, you must complete Form 131,
Claim for Refund on Behalf of Deceased Taxpayer. Attach If you pay your tax late, the department can charge you a late
this form to the front of the return. payment penalty. This penalty is 10 percent of the tax not
paid on time.
What Are the Filing Dates And Penalties?
Extension Underpayment Penalty
When Should You File? If you file your return under an extension, you must pay 90
April 15, 2000 falls on a Saturday. Therefore, your 1999 percent of the tax shown on your return by the return's
calendar year tax return is due no later than midnight, April original due date. If you do not pay this amount, the
17, 2000. File your return as soon as you can after January 1, department can charge you a penalty. The department can
but no later than April 17, 2000. also charge you this penalty if you do not attach a copy of
the Arizona extension to your return when you file. This
If you are a fiscal year filer, your return is due on the 15th
penalty is one-half of one percent (.005) of the tax not paid
day of the fourth month following the close of your fiscal
for each 30 day period or fraction of a 30 day period. The
year.
department charges this penalty from the original due date of
What If You Cannot File On Time? the return until the date you pay the tax. This penalty cannot
exceed 25 percent of the unpaid tax.
You may request an extension if you know you will not be
able to file on time. NOTE: If you are subject to two or more of the above
penalties, the total cannot exceed 25 percent.
NOTE: An extension does not extend the time to pay your
income tax. For details, see the instructions for Arizona Interest
Form 204.
The department charges interest on any tax not paid by the
To get a filing extension, you can either: due date. The department will charge you interest even if
you have an extension. If you have an extension, the
1. Apply for a state extension (Form 204). To apply for a
department will charge you interest from the original due
state extension, file Arizona Form 204 by April 17. See
Form 204 for details. You must attach a copy of the
2

3. Form 140NR
•
date until the date you pay the tax. The Arizona rate of Complete your return using black ink.
interest is the same as the federal rate.
• You must round dollar amounts to the nearest whole
When Should You Amend a Return? dollar. If 50 cents or more, round up to the next dollar.
If less than 50 cents, round down.
If you need to make changes to your return once you have
• When asked to provide your own schedule, attach a
filed, you should file Form 140X, Individual Amended
separate sheet with your name and SSN at the top.
Return. Do not file a new return for the year you are
Attach your own schedules to the back of your return.
correcting. Generally, you have four years to amend a return
to claim a refund.
• You must complete your federal return before you can
If the Internal Revenue Service makes a change to your start your Arizona return.
federal taxable income for any year, you must file a Form
• Make sure you include your home telephone number. If
140X for that year. In this case, you must amend your
your daytime number is not the same as your home
Arizona return within 90 days of the change. Attach a
number, make sure you include a daytime number.
complete copy of the federal notice to your Form 140X.
• If filing a fiscal year return, fill in the period covered in
If you amend your federal return for any year, you must also
the space provided at the top of the form.
file an Arizona Form 140X for that year. You must file the
Form 140X within 90 days of amending your federal return.
Entering Your Name, Address, and Social
Do You Need to Make Estimated Payments Security Number (SSN)
in 2000?
Lines 1, 2, and 3 -
You must make Arizona estimated income tax payments
during 2000 if either of the following apply. NOTE: Your social security number is no longer on the
label, so make sure that you write in your social security
1. You reasonably expect your Arizona gross income will
number on the appropriate line.
exceed $75,000 in 2000.
If your booklet has a peel-off label, use that label if all the
2. Your Arizona gross income in 1999 was greater than
information is correct. If any of the information on the
$75,000.
label is incorrect, do not use the label. Attach the label
As a nonresident, your Arizona gross income is that part of after you finish your return. If you do not have a peel-off
your federal adjusted gross income derived from Arizona label, print or type your name, address, and SSN in the space
sources. provided. If you are a nonresident of the United States or a
resident alien who does not have an SSN use the
Make sure you use ordinary business care and prudence
identification number (ITIN) the IRS issued to you.
when you project your income for 2000.
If you are filing a joint return, enter your SSNs in the same
NOTE: Arizona's community property laws may have an
order as your names. If your name appears first on the
effect on whether you have to make estimated payments.
return, make sure your SSN is the first number listed.
For details, see Arizona Department of Revenue Income Tax
Ruling ITR 92-1.
NOTE: If you and your spouse have different last names,
do not use the label. Write your last names on the lines
What if You Make Your Estimated
provided. The department will now issue refunds under both
Payments Late?
last names listed on the return.
The department will charge you a penalty if you fail to make
For a deceased taxpayer, see page 2 of these instructions.
any required payments. The department will charge you a
penalty if you make any of your required payments late. The
Use your current home address. The department will send
department will also charge you interest on any late or
your refund or correspond with you at that address.
underpaid estimated tax payment.
NOTE: Make sure your SSN is correct. If you are filing a
For details, see Arizona Form 221.
joint return, also make sure you list your SSNs in the same
Can You Make Estimated Payments if You order every year.
Do Not Have to? Make sure that every return, statement, or document that you
file with the department has your SSN. Make sure that all
If you do not have to make Arizona estimated income tax
SSNs are clear and correct. You may be subject to a penalty
payments, you may still choose to make them.
if you fail to include your SSN. It may take longer to
For details, see Arizona Forms 140ES and 221. process your return if SSNs are missing, incorrect, or
unclear.
Line-by-Line Instructions
Identification Numbers for Paid Preparers
Tips for Preparing Your Return:
If you pay someone else to prepare your return, that person
• Make sure that you write your social security number on must also include an identification number where requested.
your return.
3

4. Form 140NR
Line 7 Box - Single
A paid preparer may use any of the following.
• his or her SSN Use this filing status if you were single on December 31,
• 1999. You are single if any of the following apply to you.
his or her PTIN
• •
the federal employer identification number for the You have never been married.
business
• You are legally separated under a decree of divorce or
A paid preparer who fails to include the proper numbers may of separate maintenance.
also be subject to a penalty.
• You were widowed before January 1, 1999, and you did
Determining Your Filing Status not remarry in 1999, and you do not qualify to file as a
qualifying widow or widower with dependent children
The filing status that you use on your Arizona return may be on your federal return.
different from that used on your federal return.
Exemptions
Use this section to determine your filing status. Check the
correct box (4 through 7) on the front of Form 140NR.
Write the number of exemptions you are claiming in boxes 8,
Line 4 Box - Married Filing a Joint Return 9, and 10. Do not put a checkmark. You may lose the
exemption if you put a checkmark in these boxes. You may
You may use this filing status if married as of December 31,
lose the dependent exemption if you do not complete Part A
1999. It does not matter whether or not you were living with
on page 2.
your spouse. You may elect to file a joint return, even if you
Line 8 Box - Age 65 or Over
and your spouse filed separate federal returns.
You may use this filing status if your spouse died during Write quot;1quot; in box 8 if you or your spouse were 65 or older in
1999 and you did not remarry in 1999. See page 2 of these 1999. Write quot;2quot; in box 8 if both you and your spouse were
instructions for details. 65 or older in 1999.
If you are married to an Arizona full year resident, you may Line 9 Box - Blind
file a joint return using the 140NR. For more information,
Write quot;1quot; in box 9 if you or your spouse are totally or legally
see Arizona Department of Revenue Income Tax Ruling ITR
blind. Write quot;2quot; in box 9 if both you and your spouse are
95-2.
totally or legally blind. To qualify as legally blind, you must
Line 5 Box - Head of Household attach a physician's letter stating one of the following.
You may file as head of household on your Arizona return,
1. Your vision is 20/200 or poorer with corrective lenses.
only if one of the following applies.
2. Your field of vision is 20 degrees or less.
• You qualify to file as head of household on your federal
return. Line 10 Box - Dependents
• You qualify to file as a qualifying widow or widower on You must complete Part A on page 2 of your return before
your federal return. you can total your dependent exemptions.
Line 6 Box - Married Filing Separately You may claim only the following as a dependent.
You may use this filing status if married as of December 31, • A person that qualifies as your dependent on your
1999, and you elect to file a separate Arizona return. You federal return.
may elect to file a separate return, even if you and your
• A person who is age 65 or over (related to you or not)
spouse filed a joint federal return.
that does not qualify as your dependent on your federal
If you are filing a separate return, check the line 6 box and
return, but one of the following applies.
enter your spouse's name in the space provided. Also enter
1. In 1999, you paid more than one-fourth of the cost of
your spouse's SSN in the space provided.
keeping this person in an Arizona nursing care
If you are filing a separate return and your spouse is an institution, an Arizona residential care institution, or an
Arizona resident, you must figure how much income to Arizona assisted living facility. Your cost must be more
report using community property laws. Under these laws, a than $800.
separate return must reflect one-half of the community
2. In 1999, you paid more than $800 for either Arizona
income taxable to Arizona plus any separate income taxable
home health care or other medical costs for the person.
to Arizona. For details, see Arizona Department of Revenue
Income Tax Ruling ITR 93-20. Completing Line(s) A1
NOTE: If you can treat community income as separate Enter the following on line(s) A1.
income on your federal return, you may also treat that
1. The dependent's name.
community income as separate on your Arizona return. See
Arizona Department of Revenue Ruling ITR 93-22. 2. The dependent's social security number.
4

5. Form 140NR
3. The dependent's relationship to you. ARIZONA Column
4. The number of months the dependent lived in your home
Enter that portion of your federal income received from
during 1999.
Arizona sources in the ARIZONA column. Such income
includes wages earned in Arizona, Arizona rental and
You may lose the exemption if you do not furnish this
business income, and gains on the sale of Arizona property.
information.
Line A2 - Total Dependents NOTE: If you are filing a joint return with your full year
resident spouse, you must enter your Arizona source income
Enter the total number of persons listed on line(s) A1. Enter
in the ARIZONA column and your spouse must enter all
the same number onto the front of the return in box 10.
income from all sources in the ARIZONA column. For
Line A3 - Persons You Cannot Take as details, see Arizona Department of Revenue Income Tax
Ruling ITR 95-2.
Dependents on Your Federal Return
The Tax Reform Act of 1986 limits the amount of losses that
Enter the names of any dependents age 65 or over listed on
you may deduct from passive activities. A passive activity is
line(s) A1 that you cannot take as a dependent on your
one that involves the conduct of any trade or business in
federal return.
which the taxpayer does not materially participate.
Reporting Your Residency Status
As a nonresident, your Arizona gross income may include
some of these losses. You may consider only those passive
Check the appropriate box (11 through 13). Check only one
losses that arose from Arizona sources. Your 1999 Arizona
box.
gross income can include only Arizona source losses you
Line 11 Box - Nonresident used on your 1999 federal return.
Check box 11 if you were not an Arizona resident during The following line-by-line instructions apply to the
1999 and were not on active military duty in Arizona. ARIZONA column.
Line 12 Box - Nonresident Active Military Line B4 - Wages, Salaries, Tips, etc.
Check box 12 if you were a nonresident on active duty Enter all amounts received for services performed in
military assignment in Arizona in 1999. Arizona.
Line 13 Box - Composite Return NOTE: Do not include active military pay.
Check box 13 if this is a composite return being filed by one Line B5 - Interest
of the following.
If you have an Arizona business, enter only interest
1. A partnership filing on behalf of its nonresident
(including U.S. Government interest) you earned on accounts
partners.
pledged as collateral. Also enter your distributive share of
interest from a partnership doing business in Arizona or an S
2. An S corporation filing on behalf of its nonresident
corporation doing business in Arizona. Do not include any
shareholders.
other interest income even if it was earned in Arizona banks.
For information on filing an Arizona nonresident composite
Line B6 - Dividends
income tax return, see Arizona Department of Revenue
Income Tax Ruling ITR 97-1.
If you have an Arizona business, enter only those dividends
earned on stocks pledged as collateral, including dividends
Determining Arizona Income
from small business corporations. Also enter your
distributive share of dividend income from a partnership
Now complete Parts B, C, and D on page 2 of the return.
doing business in Arizona or an S corporation doing business
Use Part B to determine what portion of your total income is in Arizona. Do not include any other dividend income.
taxable by Arizona.
Line B7 - Arizona Income Tax Refunds
NOTE: If you are unable to determine the proper line to
Enter the amount of Arizona income tax refunds received in
use, please contact one of the help numbers listed on the
1999 that you included in your federal adjusted gross
back cover.
income.
FEDERAL Column Line B8 - Business Income or (Loss)
Enter the actual amounts shown on your 1999 federal income Enter income or (loss) from Arizona businesses.
tax return in the FEDERAL column. Complete lines B4
Line B9 - Gains or (Losses)
through B14. Line B14 should equal the federal adjusted
gross income shown on your 1999 federal return Form 1040,
Enter gains or (losses) on sales of Arizona property.
Form 1040A, or Form 1040EZ.
5

6. Form 140NR
Line B10 - Rents, etc. Example:
Arizona Federal Arizona percentage
Enter rent or royalty income earned on Arizona properties.
Gross Adjusted
Enter income from Schedule K-1(NR) from estates or trusts
Income from Gross
(Form 141). Also enter income or (loss) from Schedule(s)
line B15 Income from
K-1(NR) from Arizona partnerships (Form 165), or small
line B14
business corporations (Form 120S).
$ 7,500 $ 30,000 $7,500/30,000= 25%
Line B11 - Other Income Reported on Your
Determining Additions to Income
Federal Return
Line C17 - Early Withdrawal of Arizona,
Enter other income from sources within Arizona. Do not
County, City, or School Retirement System
include pension income or social security taxed by the
Contributions
federal government.
Net Operating Losses If you meet all the following, you must enter an amount here.
1. You left your job with the State of Arizona or an
Arizona does not have specific net operating loss provisions
Arizona county, city, or school district for reasons other
for individual taxpayers. Arizona conforms to the federal net
than retirement.
operating loss provisions, including the carryback
provisions. 2. When you left, you took out the contributions you had
made to the retirement system while employed.
As an Arizona nonresident, you may have had a loss from
prior year Arizona business operations. However, the loss 3. You deducted these contributions on your Arizona
cannot offset this year’s income unless the loss is a net income tax returns that you filed in prior years.
operating loss for federal purposes. You can include the loss
4. You did not include these contributions in your federal
deduction in your Arizona gross income only to the extent
adjusted gross income this year.
included in your federal adjusted gross income. You cannot
include any amount of that net operating loss that has already If you meet all these tests, you must report as income those
been deducted for Arizona purposes. contributions previously deducted on your prior year
Arizona tax returns.
Enter the amount of net operating loss deduction included in
your federal adjusted gross income that was derived from For more information, see Arizona Department of Revenue
Arizona sources. Do not include any amount of the loss that Income Tax Ruling ITR 93-7.
has already been deducted for Arizona purposes. Also, do
Line C18 - Other Additions to Income
not include any loss for which you took a separate
subtraction on an amended return filed for a prior tax year Use line C18 if any of the special circumstances below
under the special net operating loss transition rule. applies. Attach your own schedule to the back of your return,
explaining any amounts entered on line C18.
For information on deducting a net operating loss carryback,
A. Trust and Estate Deductions
see Arizona Department of Revenue Income Tax Procedure
ITP 99-1.
You must add the following estate or trust deductions to your
Line B12 - Total Income Arizona gross income.
1. Your share of the estate’s or trust’s deductions allowed
Add lines B4 through B11 and enter the total.
under the Internal Revenue Code.
Line B13 - Other Federal Adjustments
2. Your share of the excess deductions and loss carryovers
Include on line B13 any other federal adjustments included allowed under the Internal Revenue Code as deductions
in your federal adjusted gross income that are attributable to to the beneficiary on termination of an estate or trust.
the Arizona source income reported on your 1999 Arizona
You must add the above deductions and loss carryovers to
nonresident return.
Arizona gross income only to the extent you included these
Line B15 - Arizona Income items in computing your Arizona taxable income.
B. Agricultural Water Conservation Expenses
Complete line B15 as instructed on the form.
If you take this credit, you cannot deduct any expenses for
Line B16 - Arizona Percentage
which you claim the credit. If you take this credit, enter the
Divide line B15 by line B14 and enter the result. (Do not amount of such expenses that you deducted on your federal
enter more than 100 percent.) This is the Arizona return.
percentage of your total income.
C. Items Previously Deducted for Arizona Purposes
Arizona statutes prohibit a taxpayer from deducting items
more than once. However, under the operation of former
Arizona law (1989 and prior), you could deduct certain items
6

7. Form 140NR
in greater amounts for Arizona purposes than federal F. Addition to S Corporation Income Due to Credits
purposes. Investment interest and passive activity losses Claimed
were such items. In some cases, you could have deducted
Shareholders of an S corporation who claim a credit passed
such amounts in their entirety on the Arizona return. For
through from an S corporation must make an addition to
federal purposes, the deduction for these items was limited,
income for the amount of expenses disallowed by reason of
with the unused portions being carried forward and deducted
claiming the credit.
in future years. Your Arizona return may include these
previously deducted items because of the difference between An S corporation that passes the following credits through to
the federal and former Arizona treatment. If your Arizona its shareholders must notify each shareholder of his or her
taxable income includes items previously deducted for pro rata share of the adjustment. You must enter an amount
Arizona purposes, you must add such amounts to your on this line when claiming any of the following credits.
Arizona gross income.
• Agricultural water conservation credit
•
D. Claim of Right Adjustment for Amounts Repaid Defense contracting credit
• Environmental technology facility credit
in 1999
• Pollution control credit
You must make an entry here if all of the following apply.
• Recycling equipment credit
•
1. During 1999, you were required to repay amounts held Credit for solar hot water heater plumbing stub outs and
under a claim of right. electric vehicle recharge outlets
• Credit for employment of TANF recipients
2. The amount required to be repaid was subject to
• Credit for agricultural pollution control equipment
Arizona income tax in the year included in income.
G. Solar Hot Water Heater Plumbing Stub Out And
3. The amount required to be repaid during 1999 was more Electric Vehicle Recharge Outlet Expenses
than $3,000.
If you take a credit for installing solar hot water heater
4. You took a deduction for the amount repaid on your plumbing stub outs or electric vehicle recharge outlets in a
1999 federal income tax return. dwelling you constructed, you cannot deduct any expenses
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
federal income tax return which is reflected in your Arizona
Recipients
taxable income.
If you take a credit for employing TANF recipients, you
For more information on the Arizona claim of right
cannot deduct any wage expense for which you claim the
provisions, see Arizona Department of Revenue Individual
credit. If you take this credit, enter the amount of such
Income Tax Procedure ITP 95-1.
expenses that you deducted on your federal return.
E. Claim of Right Adjustment for Amounts Repaid
I. Medical Savings Account (MSA) Distributions
in Prior Taxable Years
For information on Arizona's MSA provisions, see the
You must make an entry here if all of the following apply. department's MSA brochure, Pub 542.
1. During a year prior to 1999 you were required to repay You must add amounts received from an MSA here if any of
income held under a claim of right. the following apply.
2. You computed your tax for that prior year under 1 - You Withdrew Funds From Your MSA For Other
Arizona’s claim of right provisions. Than Qualified Expenses
3. A net operating loss or capital loss was established due You must make an entry here if all of the following apply.
to the repayment made in the prior year.
1. You have an MSA that qualifies as an MSA under
4. You are entitled to take that net operating loss or capital Arizona law.
loss carryover into account when computing your 1999
2. If you are an employee, your high deductible health
Arizona taxable income.
coverage is provided by your Arizona employer. If you
5. The amount of the loss carryover included in your are self employed, your high deductible health coverage
Arizona gross income is more than the amount allowed is provided by your Arizona business.
to be taken into account for Arizona purposes.
3. You withdrew money from your MSA during 1999.
Enter the amount by which the loss carryover included in
4. You did not use the amount withdrawn to pay qualified
your Arizona gross income is more than the amount allowed
medical expenses.
for the taxable year under Arizona law.
5. You did not have to include the withdrawal as income
on your federal income tax return.
Enter the amount withdrawn.
7

8. Form 140NR
2 - Deceased Account Holder Where The Named NOTE: The following are not withdrawals. Do not enter
Beneficiary is Not the Decedent's Surviving Spouse any of the following:
• Amounts from the MSA used to pay qualified medical
You must make an entry here if all of the following apply:
expenses
1. The account holder died during the year. • A qualified return of excess contributions
• A qualified rollover
2. The account holder's MSA qualified as an MSA under
• The fair market value of an MSA received by a
Arizona law.
surviving spouse who was the deceased account
3. If the account holder was an employee, the account holder's named beneficiary
holder's high deductible health coverage was provided
For more information about the above items, see the
by his or her Arizona employer. If the account holder
department's MSA brochure, Pub 542.
was self employed, the account holder's high deductible
health coverage was provided by his or her Arizona
J. Other Adjustments
business.
Other special adjustments may be necessary. You may need
4. You are the named beneficiary of the decedent's MSA.
to make an addition for depreciation or amortization. You
5. You are not the decedent's surviving spouse. may also need to make an addition if you claimed certain tax
credits. Call one of the numbers listed back cover if any of
6. You did not have to include the value of the MSA as
the following apply.
income on your federal income tax return.
• You are a qualified defense contractor that elected to
In this case, the MSA ceased to be an MSA. Enter the fair
amortize under Arizona Revised Statutes section 43-
market value of the MSA as of the date of death, less the
1024.
amount of MSA funds used within one year of the date of
•
death, to pay the decedent's qualified medical expenses. If You sold or disposed of property that was held for the
the MSA has not paid all of the decedent's medical expenses production of income and your basis was computed
by the time you file this return, reduce the fair market value under the Arizona Income Tax Act of 1954.
by only those expenses the MSA paid. If the MSA pays
• You are still depreciating or amortizing a child care
additional expenses for the decedent after you file, you may
facility for which you claimed a state credit.
file an amended return to further reduce the fair market value
•
of the MSA. You claimed the environmental technology facility
credit.
3 - Decedent's Final Return and no Named MSA
•
Beneficiary You claimed the pollution control credit.
•
Make an entry here if all of the following apply. You claimed the recycling equipment credit.
•
1. The account holder died during the year. You claimed the credit for agricultural pollution control
equipment.
2. The account holder's MSA qualified as an MSA under
•
Arizona law. You elected to amortize the basis of a pollution control
device or the cost of a child care facility under Arizona
3. If the account holder was an employee, the account
law in effect before 1990. You are still deducting
holder's high deductible health coverage was provided
amortization or depreciation for that device or facility
by his or her Arizona employer. If the account holder
on your federal income tax return.
was self employed, the account holder's high deductible
Line C19 - Total Additions
health coverage was provided by his or her Arizona
business.
Add lines C17 and C18. Enter the total on line C19 and on
4. There is no named MSA beneficiary. the front of your return, line 16.
5. This is the decedent's final return. Determining Subtractions From Income
6. The value of the MSA did not have to be included on
You may only subtract those items for which statutory
the decedent's final federal income tax return.
authority exists. Without such authority you cannot take a
In this case, the MSA ceases to be an MSA. Enter the fair subtraction. If you have any questions concerning
market value of the MSA as of the date of death. This rule subtractions from income call one of the numbers listed on
applies in all cases in which there is no named beneficiary, the back cover.
even if the surviving spouse ultimately obtains the right to
NOTE: You may not subtract any amount which is allocable
the MSA assets.
to income excluded from your Arizona income.
8

9. Form 140NR
D20 - Exemption: Age 65 or Over Line D28 - Agricultural Crops Given to
Arizona Charitable Organizations
Multiply the number in box 8 on the front of your return by
$2,100 and enter the result. Arizona law allows a subtraction for qualified crop gifts
made during 1999 to one or more charitable organizations.
Line D21 - Exemption: Blind To take this subtraction, you must be engaged in the business
of farming or processing agricultural crops. The crop must
Multiply the number in box 9 on the front of your return by
be grown in Arizona. You must make your gift to a
$1,500 and enter the result.
charitable organization located in Arizona that is exempt
Line D22 - Exemption: Dependents from Arizona tax.
Multiply the number in box 10 on the front of your return by The subtraction is the greater of 80 percent of the wholesale
$2,300 and enter the result. market price or 80 percent of the most recent sale price for
the contributed crop.
Line D23 - Total
To determine if your crop gift qualifies for this subtraction,
Add lines D20 through D22 and enter the total.
see Arizona Department of Revenue Income Tax Procedure
Line D24 - Prorated Exemptions ITP 93-2.
Multiply the amount on line D23 by your Arizona percentage Line D29 - Other Subtractions
from line B16 and enter the result.
Use line D29 if any of the following special circumstances
NOTE Active Duty Military Personnel Only: If you were apply. Attach your own schedule to the back of the return,
on active duty in Arizona during 1999, but you were a explaining any amounts entered here.
resident of another state, you must prorate these exemptions.
A. Certain Wages of American Indians
Line D25 - Interest on U.S. Obligations Enrolled members of American Indian tribes may subtract
wages earned while living and working on their tribe’s
Enter the amount of interest income from U.S. Government
reservation. You can subtract only those amounts that you
obligations included as income on line B5 in the ARIZONA
included on line B4, ARIZONA column. The federal
column. U.S. Government obligations include obligations
government must recognize these tribes.
such as savings bonds and treasury bills. You must reduce
this subtraction by any interest or other related expenses For more information, see Arizona Department of Revenue
incurred to purchase or carry the obligation. Reduce the Income Tax Ruling ITR 96-4.
subtraction only by the amount of such expenses included in
B. Adoption Expenses
your Arizona gross income.
Line D26 - Arizona Lottery Winnings You may take this subtraction only in the year the final
adoption order is granted.
You may subtract all winnings received in 1999 related to an
Enter the lesser of the total of the following adoption
Arizona lottery prize won before March 22, 1983. You may
expenses or $3,000.
subtract up to $5,000 of winnings received in 1999 for
Arizona lottery prizes won after March 21, 1983. Only When figuring your subtraction, you may include expenses
subtract those Arizona lottery winnings that you included on incurred in prior years.
line B11 in the ARIZONA column and reported on your
The following expenses are qualified adoption expenses.
federal income tax return.
1. Nonreimbursed medical and hospital costs.
If you subtract Arizona lottery winnings here, you may have
to adjust the amount of gambling losses claimed as an 2. Adoption counseling.
itemized deduction.
3. Legal and agency fees.
Line D27 - Alternative Fuel Vehicles and
4. Other nonrecurring costs of adoption.
Refueling Equipment
If filing separately, you may take the entire subtraction, or
Starting with the 1999 taxable year, the alternative fuel you may divide the subtraction with your spouse. However,
subtraction is repealed. Therefore, you may not take a the total subtraction taken by both you and your spouse
subtraction for alternative fuel vehicles purchased or cannot exceed $3,000.
converted during 1999. You may not take a subtraction for
C. Qualified Wood Stove, Wood Fireplace, or Gas
refueling equipment purchased during 1999. However, if
Fired Fireplace
you were entitled to a subtraction for refueling equipment or
vehicles purchased or converted during 1997 or 1998, you
NOTE: Arizona law no longer provides a subtraction for
may still take one-third of the subtraction from those years
purchasing a qualified wood stove, qualified wood
which is allocable to 1999.
fireplace, or gas fired fireplace.
To figure your subtraction complete Part I of Form 313.
Arizona law still provides a subtraction for converting an
Enter the amount from Form 313, Part I, line 5, here.
existing fireplace to a qualified wood stove, qualified wood
9

10. Form 140NR
fireplace, or gas fired fireplace and non-optional equipment 3. Either you or your employer made deposits into that
directly related to its operation. You may subtract up to MSA during the tax year.
$500 of the costs incurred for converting an existing
4. You had to include the deposits in income on your
fireplace to a qualified wood stove, qualified wood fireplace,
federal income tax return.
or gas fired fireplace on your property located in Arizona.
You can subtract these deposits only to the extent included in
When you figure your subtraction, do not include taxes,
your Arizona gross income. Enter these contributions here.
interest, or other finance charges.
F. Employer Contributions Made to Employee
A qualified wood stove or a qualified wood fireplace is a
residential wood heater that was manufactured on or after MSAs
July 1, 1990, or sold at retail on or after July 1, 1992. The
If you are an employer, you may subtract the amount
residential wood heater must also meet the U.S.
contributed to your employees' MSAs that are established
Environmental Protection Agency’s July 1990 particulate
under Arizona law. You can subtract these contributions
emissions standards.
only to the extent not deductible for federal income tax
A qualified gas fired fireplace is any device that burns purposes. You can subtract these contributions only to the
natural or liquefied petroleum gas as its fuel through a burner extent included in your Arizona gross income. Enter these
system that is permanently installed in the fireplace. The contributions here.
conversion of an existing wood burning fireplace to
G. Certain Expenses Not Allowed for Federal
noncombustible gas logs that are permanently installed in the
Purposes
fireplace also qualifies as a gas fired fireplace.
You may subtract some expenses that you cannot deduct on
D. Claim of Right Adjustment for Amounts Repaid
your federal return when you claim certain federal tax
in Prior Taxable Years
credits. These federal tax credits are:
You must make an entry here if all of the following apply.
• the federal work opportunity credit;
•
1. During a year prior to 1999 you were required to repay the empowerment zone employment credit;
•
income held under a claim of right. the credit for employer-paid social security taxes on
employee cash tips;
2. The amount required to be repaid was subject to
• the Indian employment credit
Arizona income tax in the year included in income.
If you received any of the above federal tax credits for 1999,
3. You computed your tax for that prior year under
enter the portion of wages or salaries attributable to Arizona
Arizona’s claim of right provisions.
source income that you paid or incurred during the taxable
4. A net operating loss or capital loss was established due year that is equal to the amount of those federal tax credits
to the repayment made in the prior year. you received.
5. You are entitled to take that net operating loss or capital H. Other Adjustments
loss carryover into account when computing your 1999
Other special adjustments may be necessary. Call one of the
Arizona taxable income.
numbers listed on back cover if any of the following apply.
6. The amount of the loss carryover allowed to be taken
• You are a qualified defense contractor that elected to
into account for Arizona purposes is more than the
amortize under Arizona Revised Statutes section 43-
amount included in your Arizona gross income.
1024.
Enter the amount by which the loss carryover allowed for the
• You sold or disposed of property that was held for the
taxable year under Arizona law is more than the amount
production of income subject to Arizona tax and your
included in your Arizona gross income.
basis was computed under the Arizona Income Tax Act
For more information on the Arizona claim of right of 1954.
provisions, see Arizona Department of Revenue Individual
• You deferred exploration expenses determined under
Income Tax Procedure ITP 95-1.
Internal Revenue Code section 617 in a taxable year
E. Deposits Made Into Your MSA ending before January 1, 1990, and you have not
previously taken a subtraction for those expenses.
If you have an MSA, you may be able to subtract deposits
Line D30 - Total Subtractions
made into that MSA. Make an entry here if all of the
following apply.
Add lines D24 through D29. Enter the total here and onto the
1. You have an MSA that qualifies as an MSA under front of your return on line 18.
Arizona law, but not federal law.
Different Last Names
2. If you are an employee, your high deductible health
coverage is provided by your Arizona employer. If you If you filed an Arizona tax return within the past four years
are self employed, your high deductible health coverage with a different last name, enter your prior last name(s), in
is provided by your Arizona business. Part E.
10

11. Form 140NR
any time during the years 1995 through 1999, you should
Totaling Your Income
complete this claim form. Submitting this claim form will
Line 14 - Federal Adjusted Gross Income protect your rights to tax relief for the years you were so
employed. If you choose option #2 for 1999, you should
You must complete your federal return before completing
also include 1999 in your claim. Claims for 1995 must be
your Arizona return. You must complete a 1999 federal
postmarked by April 17, 2000, to be valid. If you previously
return to determine your federal adjusted gross income even
filed a protective claim for 1995 through 1998, only include
if not filing a federal return.
1999 on the claim form filed for 1999.
Arizona uses federal adjusted gross income as a starting
Please do not include the protective claim with your 1999
point to determine Arizona taxable income. Enter your
income tax return. Mail the claim form separately to the
federal adjusted gross income from page 2, line B14.
address indicated to ensure proper handling.
Line 15 - Arizona Income
Figuring Your Arizona Tax
Enter your Arizona income from page 2, line B15, of your
Line 21 - Itemized or Standard Deductions
return.
Line 16 - Additions to Income You must decide whether to take the standard deduction or
to itemize your deductions. Your Arizona income tax will be
Enter the amount from page 2, line C19, of your return.
less if you take the larger of your standard deduction or your
Line 18 - Subtractions From Income itemized deduction.
Enter the amount from page 2, line D30, of your return. Your Standard Deduction
Line 19 - Elective Subtraction of Federal Tax Tip: The standard deduction is not prorated.
Retirement Contributions
If you take the standard deduction, check box 21S.
This line applies only to individuals who were civilian
employees of the United States Government during 1999. If your filing status is: Your standard
The Arizona Board of Tax Appeals has ruled that no refunds deduction is:
•
of Arizona income taxes paid on contributions to federal Single $ 3,600
•
retirement plans are due for any years after 1990. The Married filing separately $ 3,600
•
taxpayers have appealed that determination to the Arizona Married filing jointly $ 7,200
•
Tax Court, so the issue is not yet final. Head of household $ 7,200
Line 19 is provided to alert you to a remedy available to you
Your Itemized Deduction
under Arizona law. On your 1999 return, you have two
options if you had contributions made for income earned in You may itemize deductions on your Arizona return even if
Arizona. you do not itemize deductions on your federal return. The
itemized deductions allowed for Arizona purposes are those
Option #1
itemized deductions that are allowable under the Internal
You may subtract the amount of contributions to your
Revenue Code. As an Arizona nonresident, you must prorate
retirement plan that was withheld from your wages paid by
these deductions by the percentage which your Arizona gross
the federal government. Enter on line 19 the amount of such
income is of your federal adjusted gross income.
contributions included in your 1999 Arizona income. If
you choose this option and the courts ultimately decide that To determine your Arizona itemized deductions, complete a
it is legal for the State of Arizona to tax your retirement federal Form 1040, Schedule A. Then complete the Arizona
contributions, you will owe additional tax and accrued Form 140NR, Schedule A. If you telefile your federal Form
interest. (Also, see Protective Claim for Refund below.) 1040, you do not need to complete a federal Form 1040,
Schedule A. Instead, use your telefile worksheet for 1040
Option #2
filers. Then complete the Arizona Form 140NR, Schedule A.
You may choose to ignore line 19. You may instead file the If you itemize deductions, check box 21I.
protective claim form. This form is in this instruction
NOTE: If you itemize, you must attach a copy of your
booklet. Under this option you will pay tax on your
federal Schedule A and your Arizona Schedule A(NR) to
contributions to the federal retirement plan. You will also
your Arizona return. If you telefile your federal Form 1040,
protect your rights to a credit or refund of this tax if the
you must attach a copy of your telefile worksheet for 1040
courts ultimately decide that is appropriate. The state will
filers.
pay interest in this event.
Line 22 - Personal Exemptions
Protective Claim for Refund
You can find this form in this instruction booklet. You can Your personal exemption depends on your filing status. See
find this form at the bottom of the page titled Notice to Personal Exemption Chart. Then complete the Personal
Current and Former Federal Civilian Employees. If you Exemption Worksheet.
were a civilian employee of the United States government at
11

12. Form 140NR
A married couple who does not claim any dependents may
NOTE For Active Duty Military Personnel Only: If you
take one personal exemption of $4,200 (prior to prorating).
were on active duty in Arizona during 1999, but were a
If the husband and wife file separate returns, either spouse
resident of another state, do not prorate your personal
may (prior to prorating) take the entire $4,200 exemption, or
exemption. You are allowed a 100 percent deduction for the
the spouses may divide the $4,200 (prior to prorating)
personal exemption (to include spouse).
between them. You and your spouse must complete Form
Personal Exemption Chart 202 if either you or your spouse claim a personal exemption
of more than $2,100 (prior to prorating). If you and your
If you checked filing status: Personal
spouse do not complete Form 202 you may (prior to
Exemption
prorating) take an exemption of only $2,100 (one-half of the
before
total $4,200).
proration:
• Single (Box 7) $2,100 A married couple who claims at least one dependent may
• take one personal exemption of $6,300 (prior to prorating).
Married filing joint return (Box 4) $4,200
If the husband and wife file separate returns, either spouse
and claiming no dependents (Box
may (prior to prorating) take the entire $6,300 exemption, or
10)
the spouses may divide the $6,300 between them. You and
• Married filing joint return (Box 4) $6,300
your spouse must complete Form 202 if either you or your
and claiming at least one
spouse claim a personal exemption of more than $3,150
dependent (Box 10)
(prior to prorating). If you and your spouse do not complete
• Head of household and you are $4,200
Form 202 you may (prior to prorating) take an exemption of
not married (Box 5)
only $3,150 (one-half of the total $6,300).
• Head of household and you are a $3,150
married person who qualifies to Or If you are a married person who qualifies to file as a head of
file as head of household (Box 5) Complete household, you may take the entire $6,300 (prior to
Form 202 prorating) personal exemption or you may divide the
Personal exemption with your spouse. You and your spouse must
Exemption complete Form 202 if either you or your spouse claim a
Allocation personal exemption of more than $3,150 (prior to prorating).
Election. If you and your spouse do not complete Form 202 you may
• Married filing separately (Box 6) $2,100 take an exemption of only $3,150 (prior to prorating) (one-
with neither spouse claiming any Or half of the total $6,300).
dependents (Box 10) Complete
The spouse who claims more than one-half of the total
Form 202
personal exemption (prior to prorating) must attach the
Personal
original Form 202 to his or her return. The spouse who
Exemption
claims less than one-half of the total personal exemption
Allocation
(prior to prorating) must attach a copy of the completed
Election.
Form 202 to his or her return.
• Married filing separately (Box 6) $3,150
Line 23 - Taxable Income
with one spouse claiming at least Or
one dependent (Box 10) Complete Subtract lines 21 and 22 from line 20 and enter the result.
Form 202 Use this amount to calculate your tax using Tax Rate Table
Personal X or Y.
Exemption
Line 24 - Tax Amount
Allocation
Election. Enter the tax from Tax Rate Table X or Y.
Personal Exemption Worksheet Line 25 - Tax From Recapture of Credits
1. Amount from personal exemption From Arizona Form 301
chart. If you were an active duty
Enter the amount of tax due from recapture of the
military member during 1999,
environmental technology facility credit and/or the recycling
skip lines 2 and 3 and enter this
equipment credit from Form 301, Part II, line 28.
amount on Form 140NR, page 1,
line 22. All other taxpayers Line 26 - Subtotal of Tax
$
complete lines 2 and 3.
Add lines 24 and 25.
2. Enter your Arizona percentage
from Form 140NR, page 2, line Line 27 – Clean Elections Fund Tax
B16. %
Reduction
3. Multiply line 1 by the percent on
line 2. Enter the result here and You may designate $5 of your tax to go to the Citizen's
on Form 140NR, page 1, line 22. $ Clean Election Fund and also reduce your tax liability by $5.
12

13. Form 140NR
If married filing a joint return, both you and your spouse may 5. Recycling Equipment Credit. You may qualify for this
each donate $5 of your tax to go to the Citizen’s Clean credit if your business has installed recycling material
Elections Fund and also reduce your tax liability by $10. equipment. Use Form 307 to figure this credit.
To designate $5 of your tax to go to the Citizen's Clean 6. Credit for Taxes Paid to Another State or Country.
Election Fund, the amount on line 26 must be at least $5. If You may qualify for this credit if you paid tax to Arizona
you are married filing a joint return and you and your spouse and another state or country on the same income. Use Form
each want to designate $5 to go to the Citizen's Clean 309 to figure this credit.
Election Fund, the amount on line 26 must be at least $10.
7. Agricultural Water Conservation System Credit. You
To make this designation, check box 1 marked yourself. In may qualify for this credit if you incurred expenses to
the case of a joint income tax return where both spouses purchase and install an agricultural water conservation
want to make this election, one spouse should check box 1, system in Arizona. Use Form 312 to figure this credit.
and the other spouse should check box 2.
8. Alternative Fuel Vehicle Credit. You may qualify for
Line 28 - this credit if you purchased or leased a new alternative fuel
vehicle. You may also qualify for this credit if you
To also reduce your tax by $5 the amount on line 26 must be
converted your conventional vehicle to operate as an
at least $10 ($20 in the case of a joint return where both
alternative fuel vehicle. Use Form 313 to figure this credit.
spouses designate $5). To figure your tax reduction,
9. Underground Storage Tanks Credit. You may qualify
complete the following worksheet.
for this credit if you incurred expenses correcting a release of
a regulated substance from an underground storage tank. To
Clean Elections Fund Tax Reduction Worksheet
qualify for this credit, you must not have been liable or
1. Enter the subtotal of tax from
responsible for the corrective action as an owner or operator
Form 140NR, line 26.
of the underground storage tank. Use Form 314 to figure this
2. If you checked box 27 1, enter $5.
credit.
If a joint return and your spouse
also checked box 27 2, enter $10. 10. Pollution Control Credit. You may qualify for this
3. Balance of tax eligible for tax credit if you purchased depreciable property used in a trade
reduction. Subtract line 2 from or business to reduce or prevent pollution. Use Form 315 to
line 1. figure this credit.
4. If you checked box 27 1, enter $5.
11. Construction Materials Credit. You may qualify for
If a joint return and your spouse
this credit if you purchased construction materials for a
also checked box 27 2, enter $10.
building used in manufacturing, mining, or research and
5. Tax reduction. Enter the lesser of
development. Your construction costs must have been more
line 3 or line 4. Also enter this
than five million dollars. Use Form 316 to figure this credit.
amount on Form 140NR, line 28.
12. Credit for Solar Hot Water Heater Plumbing Stub
Line 29 – Reduced Tax Outs and Electric Vehicle Recharge Outlets. You may
qualify for this credit if you install solar hot water heater
Subtract line 28 from line 26. Enter the result.
plumbing stub outs or electric vehicle recharge outlets in
Line 30 - Credits From Arizona Form 301 houses or dwelling units you construct. The taxpayer that
constructed the dwelling may also transfer the credit to a
Complete line 30 if you can take any of the following credits.
purchaser. Use Form 319 to figure this credit.
1. Defense Contracting Credit. You may qualify for this
13. Credit for Employment of TANF Recipients. You
credit if you are an Arizona Department of Commerce
may qualify for this credit if you employed TANF recipients
certified defense contractor who has qualified increases in
during the taxable year. Use Form 320 to figure this credit.
employment. This tax credit also includes a provision for a
property tax credit. Use Form 302 to figure this credit. 14. Credit for Contributions to Charities that Provide
Assistance to the Working Poor. You may qualify for this
2. Enterprise Zone Credit. You may qualify for this credit
credit if you made contributions to certain charities that
if your business in an Arizona enterprise zone had net
provide help to the working poor. Use Form 321 to figure
increases in qualified employment positions. Use Form 304
this credit.
to figure this credit.
15. Credit for Fees Paid to Public Schools. You may
3. Environmental Technology Facility Credit. You may
qualify for this credit if you paid certain fees to public
qualify for this credit if your business incurred expenses in
schools in Arizona. Use Form 322 to figure this credit.
constructing a qualified environmental technology
manufacturing facility. Use Form 305 to figure this credit. 16. Credit for Contributions to School Tuition
Organizations. You may qualify for this credit if you made
4. Military Reuse Zone Credit. You may qualify for this
contributions to a school tuition organization that provides
credit if you have qualifying net increases in full-time
scholarships or grants to qualified schools. Use Form 323 to
employment within a military reuse zone. Use Form 306 to
figure this credit.
figure this credit.
13