×
tax forms found in
Tax Form Code
Tax Form Name

Alabama Free Printable 40NR Booklet TY 2023_12-21-23_F.pdf for 2024 Alabama Alabama Individual Nonresident Income Tax Instructions

It appears you don't have a PDF plugin for this browser. Please use the link below to download 2023-alabama-form-40nr-booklet.pdf, and you can print it directly from your computer.

Alabama Individual Nonresident Income Tax Instructions
40NR Booklet TY 2023_12-21-23_F.pdf

Form 40NR Booklet revenue.alabama.gov  Nonresidents Only  Forms and Instructions 2023 myalabamataxes.alabama.gov Index A Address Change … 14 Addresses of Taxpayer Service Centers … 3 Alimony or Separate Maintenance Amount paid … 13 Amount received … 11 Amended Return … 14 Amount You Owe … 10 Annuities … 11 Armed Forces, Members of … 4 B Business income or (Loss) (Federal Schedule C) … 12 Business Use of Home … 19 C Casualty and Theft Losses … 18 Corresponding With Alabama Department of Revenue … 14 G Gains … 12 and 19 General Information … 14 Gifts to Charity … 17 H Head of Family … 6 I Income (Examples) — You Must Report … 7 You Do Not Report … 7 Income Tax Withheld (Alabama) … 8 Income Tax Deduction (Federal) … 8, 13 and 27 Interest Income … 11 and 19 Interest — Late Payment of Tax … 14 Interest — Penalty on Early Withdrawal of Savings … 13 Individual Retirement Arrangement (IRA) … 12 Itemized Deductions … 8 and 15 K Keogh Plan — Deduction For … 12 D Death of Taxpayer … 14 Dependents … 9 Dividend Income … 11 and 19 Domicile … 4 E E-Check … 10 Educational Expenses … 19 Employee Business Expenses … 18 Estates and Trusts … 12 and 20 Estimated Tax … 10 and 15 Extension of Time to file … 15 L Federal Tax Deduction … 8, 13 and 27 Figuring Your Income Tax … 9, 21-26 Filing Requirements — When To File … 5 Where To File … 11 Which Form To File … 5 Who Must File … 4 Filing Status — Which Box To Check … 6 Forms, How To Get … 29 Q Qualified Long-Term Care … 18 R Records — How Long To Keep … 14 Refund, When Should I Receive? … 15 Rents and Royalties … 12 and 20 Requesting a Copy of Your Tax Return … 14 Rounding Off To Whole Dollars … 7 and 8 S Losses … 12 and 19 M Married Persons — Filing Joint or Separate Return … 6 Medical and Dental Expenses … 16 Military Personnel — Residents of Alabama … 4 Nonresidents of Alabama … 4 Moving Expenses … 13 Miscellaneous Itemized Deductions … 18 Mutual Funds … 19 F Farm Income or (Loss) … 12 Credit Card … 10 ACH Debit (E-Check) … 10 Penalty — Criminal Liability … 14 Late Filing … 14 Late Payment of Tax … 14 Other Penalties … 14 Pensions … 11 Personal Exemption … 6 Preparer, Tax Return … 11 N Name and Address … 6 Nonresidents of Alabama — Which Form To File … 5 Who Must File … 4 O S Corporations … 12 and 20 Salaries … 8 Schedules A, B, D, E, no Sch. CR on 40NR … 15-20 Self-employed Health Insurance Premiums … 13 Setoff Debt Collection … 15 Sign Your Return … 11 Single Person … 6 Social Security Number … 6 Standard Deduction … 8 and 9 Steps For Preparing Your Return … 5 Students and Dependents … 5 Substitute Forms … 14 T Tax Assistance for Taxpayers … 3 Tax Tables … 21-26 Other Income … 8 and 12 P W Partnerships … 12 and 20 Payments — Check/Money Order … 10 What’s New … 2 Where to file Form 40NR … 11 What’s New For 2023 Identity Quiz – If you happen to receive a notice to complete an ID Confirmation Quiz, it is not because you are suspected of ID theft. The purpose of the quiz is to protect your identity as the filer and prevent loss of taxpayer dollars to thieves. Credits – Certain tax credits are now required to be pre-approved through My Alabama Taxes (MAT) at www.myalabamataxes.alabama.gov. Please see the credit instructions in this booklet and Schedule OC instructions for more information. Schedule RS – Complete Schedule RS to report fully or partially taxable pensions, annuities, IRA distributions (include SEP, Keogh, 401(k)(2), 403(b) distributions), other distributions and retirement distributions exempt from Alabama Income. Retirement Exemption – Act 2022-294 Effective Jan 1, 2023, exempts the first $6,000 of taxable retirement income for those 65 years of age or older. See Schedule RS Instructions for more information. Volunteer Emergency Responders Tax Credit – Act 2022-298 Effective Jan 1, 2023, provides an income tax credit for volunteer firefighters and paramedics providing proof of 30 hours or more of qualifying training during the tax year. See Schedule OC for more information. Innovate Alabama Tax Credit – Act 2023-33 Effective Jan 1, 2023, authorizes a tax credit to taxpayers making a cash contribution to economic development organizations (EDO) approved by Innovate Alabama. See Schedule OC for more information. Adoption Credit – Act 2022-299 effective Jan 1, 2023, increases the adoption credit to $2,000 provided both the qualifying children and parents are residents of Alabama. Negative numbers – Please enter all negative numbers with negative signs (-). Do not use parenthesis ( ). ★ ★ Huntsville Shoals ★ Gadsden Tuscaloosa ★ Jefferson/ ★ Shelby Auburn/Opelika ★ ★ Montgomery Dothan ★ Mobile ★ Physical Addresses of Taxpayer Service Centers Alabama income tax assistance may be obtained by calling or visiting any of the Alabama Department of Revenue Taxpayer Service Centers listed below. Additional forms and instructions may also be obtained from these centers.  Montgomery Taxpayer Service Center  Huntsville Taxpayer Service Center  Auburn/Opelika Taxpayer Service Center 2545 Taylor Road 4920 Corporate Drive, Suite H 1800 Samford Trace Court, Suite 100 Montgomery, AL 36117 Huntsville, AL 35805 Auburn, AL 36830 Phone – (334) 242-2677 Phone – (256) 837-2319 Phone – (334) 887-9549  Shoals Taxpayer Service Center  Jefferson/Shelby Taxpayer Service Center  Dothan Taxpayer Service Center 201 South Court Street, Suite 200 2020 Valleydale Road, Suite 208 121 Adris Place Florence, AL 35630 Hoover, AL 35244 Dothan, AL 36303 Phone – (256) 383-4631 Phone – (205) 733-2740 Phone – (334) 793-5803  Tuscaloosa Taxpayer Service Center  Mobile Taxpayer Service Center  Gadsden Taxpayer Service Center 1434 22nd Avenue 851 E. I-65 Service Road South, Bel Air Tower, Suite 100 701 Forrest Avenue Tuscaloosa, AL 35401 Mobile, AL 36606 Gadsden, AL 35901 Phone – (205) 759-2571 Phone – (251) 344-4737 Phone – (256) 547-0554 3 Refund Status To check the status of your current year refund, go to our website at www.revenue.alabama.gov, then click on “Where’s My Refund,” or call our 24-hour toll-free Refund Hotline at 1-855-894-7391. How To Use This Instruction Booklet The instructions for Form 40NR are divided into five main sections.  SECTION 1 contains information on who must file, how to choose the correct form, and when to file a return.  SECTION 2 contains useful steps to help you prepare your return.  SECTION 3 contains specific instructions for most of the lines on your return.  SECTION 4 contains general information about such items as amending your tax return, how long to keep records, and when you should receive your refund.  SECTION 5 contains instructions for completing most of the schedules that may be attached to Form 40NR. If you follow the steps in Section 2 and the specific instructions in Section 3, you should be able to fill in your return quickly and accurately. SECTION 1 Filing Information First, be certain you need to file a tax return. Your marital status, filing status, and gross income determine whether you have to file a tax return. Gross income usually means money, goods, and property you received on which you must pay tax. It does not include nontaxable benefits. See page 7 of the instructions to find out which types of income you should include. Other Filing Requirements Refunds. Even if your gross income was less than the amounts shown, you must file a return to get a refund if Alabama income tax was withheld from any amounts paid to you. Domicile. Individuals who are domiciled in (or residents of) Alabama are subject to tax on their entire income whether earned within or without Alabama. This is true regardless of their physical presence within Alabama at any time during the taxable year. Domicile is where one lives, has a permanent home, and has the intention of returning when absent. Domicile may be by birth, choice, or operation of law. Each person has one and only one domicile which, once established, continues until a new one is established coupled with the abandonment of the old. Burden of proof regarding change of domicile is on the taxpayer even though he/she owns no property, earns no income, and has no place of abode in Alabama. If an Alabama resident accepts employment in a foreign country for a definite or indefinite period of time with the intent of returning to the United States, the individual remains an Alabama resident and all income, wherever earned, is subject to Alabama income tax. This is true even if the taxpayer leaves no property in Alabama. If a citizen of a foreign country comes to Alabama to work (no matter how long he stays), buys a home, secures an Alabama driver’s license, does not intend to apply for U.S. Citizenship, and intends to ultimately return to the country of origin, the individual will be considered to have established domicile in Alabama. In other words, a foreign citizen domiciled in Alabama is liable for Alabama income tax on income earned from all sources. Military Personnel (Residents). Military personnel whose legal residence is Alabama are subject to Alabama income tax on all income regardless of the source or where earned unless specifically exempt by Alabama law. Military personnel (Army, Navy, Marine, Air Force, Merchant Marine, and Coast Guard) who were residents of Alabama upon entering military service remain residents of Alabama for income tax purposes regardless of the period of absence or actual place of residence until proof of change in home of record has been made. The burden of proof is on the taxpayer though he owns no property, earns no income, or has no place of abode in Alabama. Under the provisions of the Soldiers’ and Sailors’ Civil Relief Act, military personnel are not deemed to have lost their permanent residence in any state solely because they are absent in compliance with military orders. In addition, persons are not deemed to have acquired permanent residence in another state when they are required to be absent from their home state by virtue of military orders. If the husband and wife are both in military service, each could be a resident of a different state under the Soldiers’ and Sailors’ Civil Relief Act. A spouse not in military service has the same domicile as his/her spouse unless proven otherwise. Military Personnel (Nonresidents). Nonresident military personnel merely having a duty station within Alabama (whose legal residence is not Alabama) are not required to file an Alabama income tax return unless they have earned income from Alabama sources other than military pay. If they have earned income in Alabama other than military pay, they are required to file Alabama Form 40NR. A married nonresident with income earned in Alabama may file either a separate return claiming himself or You Must File A Return If… You were a: Full Year Resident Part Year Resident Nonresident and your marital status at the end of 2023 was: Single (including divorced and legally separated) Married and living with your spouse at the end of 2023 (or on the date your spouse died) Single (including divorced and legally separated) Married and living with your spouse at the end of 2023 (or on the date your spouse died) Single (including divorced and legally separated) Married and living with your spouse at the end of 2023 (or on the date your spouse died) and your filing status is: Single Head of family Married, joint return Married, separate return Single Head of family Married, joint return Married, separate return Single or head of family Married, joint return Married, separate return 4 and your gross income was at least: $ 4,500 $ 8,200 $11,500 $ 5,750 $ 4,500 (while an Alabama resident) $ 8,200 (while an Alabama resident) $11,500 (while an Alabama resident) $ 5,750 (while an Alabama resident) Over the allowable prorated exemption. herself only, or a joint return claiming the total allowable personal exemption. The “Military Spouses Residency Relief Act” (Public Law 111-97) states that the income for services performed by the spouse of a service member shall not be deemed to be income for services performed or from sources within a tax jurisdiction of the United States if the spouse is not a resident of the jurisdiction in which the income is earned because the spouse is in the jurisdiction solely to be with the service member serving in compliance with military orders. Dependent’s and Student’s Income. Dependents who are residents of Alabama must file a return if they meet the requirements under You Must File A Return IF… on page 4. A student’s income is fully taxable to the same extent as other individuals who are required to file a return. If a return is required, the dependent or student can claim a personal exemption of $1,500 and his or her parents may claim a dependent exemption if they provided more than 50% of the total support. See Dependent Exemption on page 9. When To File You should file as soon as you can after January 1, 2024, but no later than the due date of the federal return. If you file late, you may have to pay penalties and interest. (See Penalties and Interest on page 14.) If you know you cannot file your return by the due date, you do not need to file for an extension. You will automatically be granted an extension until October 15, 2024. If you anticipate that you will owe additional tax on your return, you should submit your payment with a payment voucher (Form 40V) with the box “Automatic Extension Payment” checked by the due date of the federal return. Except in cases where taxpayers are abroad, no extension will be granted for more than 6 months. An extension means only that you will not be assessed a penalty for filing your return after the due date. Interest on the additional tax due from the due date of the return and any penalties will be assessed if applicable to your return. Original returns must be filed within two years of the date the taxes are paid to be eligible for a refund. Criminal liability could result from a continued failure to file returns. (Refer to “Criminal Liability” on Page 14.) Which Form To File You MAY Use Form 40A If You Meet ALL The Following Conditions:  You were a resident of Alabama for the entire year,  You do not itemize deductions,  You do not claim any adjustments to income such as an IRA deduction, alimony paid, federal income tax paid for a prior year, etc.,  You do not have income from sources other than salaries and wages, except for interest and div- idend income, which cannot exceed $1,500,  You are not claiming income or a loss from Schedules C, D, E, or F, and  You are not claiming credit for taxes paid to another state. You MUST Use Form 40 If:  You were a full or part-year resident of Alabama and do not meet ALL of the requirements to file Form 40A, and  You are itemizing deductions. You MUST Use Form 40NR If: rectly. Remember, even if your return is prepared incorrectly by someone else, you are still responsible. Itemized Deductions. If you itemize deductions (Forms 40 or 40NR), some of the records you need are:  Medical and dental payment records.  Real estate and personal property tax receipts.  Interest payment records for a home mortgage. Step 2 Obtain any forms or schedules you may need.  You are not a resident of Alabama and you received taxable income from Alabama sources or for performing services within Alabama and your gross income from Alabama sources exceeds the allowable prorated personal exemption, or filing Married Filing Joint under the “Military Spouses Residency Relief Act.” Nonresidents must prorate the personal exemption. If your Alabama gross income exceeds the prorated amount, a return must be filed. The fastest way to obtain forms is to download them from our website www.revenue. alabama.gov. Also see page 29 for more information. You MUST Use Both Form 40 and Form 40NR If: Step 4  You had sufficient income to require the filing of a part-year return and also had income from Alabama sources while a non-resident during the same tax year. In this case, both the total personal exemption and the dependent exemption must be claimed in the part-year resident return. No exemption can be claimed on the nonresident return. The part year resident return should include only income and deductions incurred during the period of residency. The nonresident return should include only income and deductions incurred during the period of non-residency. SECTION 2 Steps for Preparing Your Return By following these five useful steps, and reading the specific instructions that follow, you should be able to prepare your return quickly and accurately. Step 1 Collect all your necessary records. Income Records. These include any Forms W2, W-2G, and 1099 that you have. If you do not receive a Form W-2 by February 1, OR if the one you receive is incorrect, please contact your employer as soon as possible. Only your employer can give you a Form W-2, and only he or she can correct it. If you have someone prepare your return for you, make sure that person has all your income and expense records so he or she can fill in your return cor5 Step 3 Check your return to make sure it is correct. See Common Mistakes on page 11. Sign and date your return. Form 40, 40A, or 40NR is not considered a return unless you sign it. Please sign in black ink only. Your spouse must also sign if it is a joint return. Original signatures are required or the return will not be accepted. Step 5 Attach all necessary forms and schedules. Attach the state copies of all Forms W-2, W-2G, 1099’s and completed copy of your federal form to the front of your return. Attach schedules and forms in sequential order starting with Form 40NR. If you need more space on forms or schedules, attach separate sheets and use the same format as the printed forms, but show your totals on the printed forms. Please use sheets that are the same size as the forms and schedules. Be sure to put your name and social security number on these separate sheets, and attach them at the end of the return. Before mailing your return, check to make sure you have retained an exact copy for your records. If you owe tax, be sure to include payment and Form 40V with your return. Please see page 10 for additional payment options. SECTION 3 Specific Instructions Name and Address Please type or print your name, address, and social security number in the appropriate blocks. If you live in an apartment, please include your apartment number in the address. If the post office delivers mail to your P.O. Box number rather than to your street address, write the P.O. Box number instead of your street address. Social Security Number Each year thousands of taxpayers file returns using an incorrect social security number. Usually this number belongs to another taxpayer. It is very important that you file your return using the correct social security number. Failure to use your correct social security number(s) in the space(s) provided WILL DELAY the processing of your refund. Listed below are a few of the common reasons that a social security number is reported incorrectly:  failure to place number on return,  memorized wrong number,  copied number wrong,  gave an incorrect number to the tax preparer,  gave your employer an incorrect number. IMPORTANT: Check your W-2 forms. Your employer may be reporting an incorrect number for you. If you are married and filing a joint return, write both social security numbers in the blocks provided. If you are married and filing separate Alabama returns, write your spouse's social security number on line 3. If your spouse is a nonresident alien, has no income, does not have a social security number, and you file a separate return, check the "NRA" box and leave the block for your spouse's social security number blank. If you and your spouse file a joint return, your spouse must have a social security number. If you or your spouse do not have a social security number, please get Form SS-5 from a Social Security Administration (SSA) office. File it with your local SSA office early enough to get your number before April 15. IMPORTANT: Notify the Social Security Administration (SSA) immediately in the event you have changed your name because of marriage, divorce, etc., so the name on your tax return is the same as the name the SSA has on record. This helps prevent delays in processing your return. Filing Status and Personal Exemption Lines 1 through 4 ily if, and only if, such individual is not married at the close of their tax year, is not a surviving spouse and their qualifying dependent is not a foster child. You should check only the box that describes your filing status. The personal exemption will be determined by your filing status on the last day of the tax year. You may check the box on line 4 ONLY IF on December 31, 2023, you were unmarried or legally separated and meet either test 1 or test 2 below: Single Consider yourself single if on December 31, you were unmarried or separated from your spouse either by divorce or separate maintenance decree. Test 1. You paid more than half the cost of keeping up a home for the entire year provided that the home was the main home for your parent whom you can claim as a dependent. Your parent did not have to live with you in your home. If you check box 1, multiply $1,500 by the percentage on line 10, and enter the result on line 15. OR Married Joint or Separate Returns? Joint Returns. Most married couples pay less tax if they file a joint return. You must report all income, exemptions, deductions, and credits for you and your spouse. Both of you must sign the return even if only one of you had income. Common law marriages entered into before January 1, 2017, are recognized by the State of Alabama for income tax purposes. You and your spouse can file a joint return if you were living together on December 31, 2023, even if you did not live together for the entire year. Both of you are responsible for any tax due on a joint return, so if one of you does not pay the other may have to. Note: If you file a joint return, you may not, after the due date of the return, choose to file separate returns for that year. If your spouse died in 2023, you can file a joint return for 2023. You can also file a joint return if your spouse died in 2024 before filing a 2023 return. For details on how to file a joint return, see Death of Taxpayer on page 14. If you check box 2, multiply $3,000 by the percentage on line 10, and enter the result on line 15. Separate Returns. You can file separate returns if both you and your spouse had income, or if only one of you had income. If you file a separate return, report only your own income, exemptions, deductions, and credits. You are responsible only for the tax due on your return. Note: Alabama is not a community property state. If you file a separate return, write your spouse’s social security number in the space on line 3. If your spouse does not file, attach a statement explaining why your spouse is not required to file. If you check box 3, multiply $1,500 by the percentage on line 10, and enter the result on line 15. Head of Family An individual shall be considered Head of Fam6 Test 2. You paid more than half the cost of keeping up a home in which you lived and in which one of the following also lived for more than 6 months of the year (temporary absences, such as for vacation or school, are counted as time lived in the home): a. Your unmarried child, grandchild, greatgrandchild, etc., adopted child, or stepchild. This child does not have to be your dependent. b. Your married child, grandchild, great-grandchild, etc., adopted child, or stepchild. This child must be your dependent. However if your child’s other parent claims him or her as a dependent under the federal rules for Children of Divorced or Separated Parents, this child does not have to be your dependent. c. Any relative whom you can claim as a dependent. (See definition of a dependent on page 9.) If the person for whom you kept up a home was born or died during the year, you may still file as Head of Family if the home was that person’s main home for the part of the year he or she was alive. If you check box 4, multiply $3,000 by the percentage on line 10, and enter the result on line 15. Special Rules A nonresident taxpayer who receives income from Alabama sources or for performing services within Alabama and who also had income while a resident of Alabama during the same tax year must file both the Alabama Nonresident Form 40NR and the Alabama part-year Form 40. If you are required to file both returns, the total personal exemption and the dependent exemption must be claimed on the part-year return (Form 40). No personal exemption or dependent exemption can then be claimed on the nonresident return (Form 40NR). Income A nonresident of Alabama is subject to tax on all income received within or for services performed in Alabama and amounts received from the sale of property located in Alabama unless specifically exempt. The term “income” includes, but is not limited to; salaries, wages, commissions, income from business or professions, alimony, rents, royalties, inter- est, dividends, and profits from sales of real estate, stocks, or bonds. Military pay is not taxable for nonresidents of Alabama. Examples of Income You MUST Report The following kinds of income should be reported on Forms 40, 40A, or 40NR and related forms and schedules. You may need some of the forms and schedules listed below:  Wages including salaries, fringe benefits, bonuses, commissions, fees, and tips.  Dividends (Schedule B).  Interest (Schedule B) on: bank deposits, bonds, notes, Federal Income Tax Refunds, mortgages on which you receive payments, accounts with saving and loan associations, mutual savings banks, credit unions, etc.  Original Issue Discount (Schedule B).  Distributions from an Individual Retirement Arrangement (IRA) including SEPs (Simplified Employee Pension) and DECs, if you excluded these amounts in a prior year.  Interest on obligations of the State of Alabama or any county, city, or municipality of Alabama. States.  Director’s fees.  Fees received as an executor or administrator of an estate.  Embezzled or other illegal income.  Refunds of Federal Income tax if previously deducted in a prior year and resulted in a tax benefit.  Payments received as a member of a military service generally are taxable except for combat pay and certain allowances.  Jury duty pay.  Nonqualified Withdrawal from Alabama College Counts 529 Fund. Examples of Income You DO NOT Report Do not include these amounts when deciding if you must file a return.  United States Retirement System benefits.  State of Alabama Teachers’ Retirement System benefits.  Bartering income (fair market value of goods or services you received in return for your services).  State of Alabama Employees’ Retirement System benefits.  Business expense reimbursements you received that are more than you spent for the expenses.  State of Alabama Judicial Retirement System benefits.  Amounts received in place of wages from accident and health plans (including sick pay and disability pensions) if your employer paid for the policy.  Tennessee Valley Authority Pension System benefits.  Alimony or separate maintenance received from and deductible by your spouse or former spouse.  Life insurance proceeds from a policy you cashed in if the proceeds are more than the premium you paid.  Profits from businesses and professions (Federal Schedule C or C-EZ).  Your share of profits from partnerships and S Corporations (Schedule E).  Profits from farming (Federal Schedule F).  Lump-sum distributions.  Gains from the sale or exchange (including barter) of real estate, securities, coins, gold, silver, gems, or other property (Schedule D).  Gains from the sale of your personal residence as reported on your Federal return (Schedule D).  Rents and Royalties (Schedule E).  Your share of estate or trust income (Schedule E).  Prizes and awards (contests, lotteries, and gambling winnings) (W-2G).  Income from sources outside the United  Military retirement pay.  United States Government Retirement Fund benefits.  Payments from a Defined Benefit Retirement Plan in accordance with IRC 414(j). Contact your retirement plan administrator to determine if your plan qualifies.  Federal Railroad Retirement benefits.  Federal Social Security benefits.  State income tax refunds.  Unemployment compensation.  Welfare benefits.  Disability retirement payments (and other benefits) paid by the Veteran’s Administration.  Workman’s compensation benefits, insurance damages, etc., for injury or sickness.  Death benefits received by a designated beneficiary of a peace officer or fireman killed in the line of duty.  Child support.  Gifts, money, or other property you inherit or that was willed to you.  Dividends on veteran’s life insurance.  Life insurance proceeds received because of a person’s death. 7  Interest on obligations of the United States or any of its possessions.  Amounts you received from insurance because you lost the use of your home due to fire or other casualty to the extent the amounts were more than the cost of your normal expenses while living in your home. (You must report as income reimbursements for normal living expenses.)  Military allowances paid to active duty military, National Guard, and active reserves for quarters, subsistence, uniforms, and travel.  Subsistence allowance received by law enforcement and corrections officers of the State of Alabama.  All retirement compensation received by an eligible fire fighter or a designated beneficiary from any Alabama firefighting agency.  All retirement compensation received by an eligible peace officer or a designated beneficiary from any Alabama police retirement system.  Income earned while serving as a foreign missionary after first serving 24 months as a missionary in a foreign country.  Compensation received from the United States for active service as a member of the Armed Forces in a combat zone designated by the President of the United States.  An amount up to $50,000 for Tax Years 2020 and forward and $25,000 for Tax Years 2019 and prior received as severance, unemployment compensation or termination pay, or as income from a supplemental income plan, or both, by an employee who, as a result of administrative downsizing, is terminated, laid-off, fired, or displaced from his or her employment, shall be exempt from state income tax. If the exempt severance pay is included in your state wages, contact your employer for a corrected W-2.  Beginning January 1, 1998, all benefits received from Alabama Prepaid Affordable College Tuition Contracts (PACT).  Qualified withdrawals from an Alabama 529 savings plan.  Beginning January 1, 2016, all income, interest, dividends, gains or benefits of any kind received from an ABLE (Achieving Better Life Experience) savings account.  Effective with tax year 2020, insurance benefits received by a certified firefighter as a result of a cancer diagnosis to any extent the amounts are included in the federal adjusted gross income of the taxpayer and are not exempt under any other law. For more information please see Act 2019-361. Rounding Off To Whole Dollars Round off cents to the nearest whole dollar on your return and schedules. You can drop amounts under 50 cents. Increase amounts from 50 to 99 cents to the next dollar. For example: $1.39 becomes $1.00, and $2.69 becomes $3.00. Line 5 Wages, Salaries, Tips, Etc. Alabama tax withheld information must be reported on Schedule W-2. (See Schedule W-2 instructions for more information.) The amount withheld is shown on the state copy of your Form W-2. This copy should be marked “To Be Filed With Your Alabama Income Tax Return.” Note: Do not change or alter the amount of tax withheld or wages reported on your Form W-2. If any amount is incorrect or illegible, you should contact your employer and request a corrected statement. Do not include these taxes as Alabama income tax:     Federal income tax, FICA tax (Social Security and Medicare), Local, city, or occupational tax, or Taxes paid to another state. In Column A – Alabama tax withheld, enter the total amount from Schedule W-2, Line 18, Column G. Income From ALL Sources. Report income from all sources on Schedule W-2, Column H. See Schedule W-2 instructions for more information. Show the total amount of wages, salaries, fees, commissions, tips, bonuses, and other amounts you were paid before taxes, insurance, etc. were taken out. This includes the income earned in Alabama as well as the income earned outside of Alabama. Even though the income earned outside of Alabama is not taxable to Alabama, it must be included in order to determine the ratio of Alabama income to total income from all sources. This determines the personal exemption, dependent exemption, and itemized deductions or standard deduction you may claim in arriving at the income on which you figure the amount of tax you owe Alabama. In Column B – “All Sources” enter the total income from Schedule W-2, Line 18, Column H. more than the amount taxable for federal purposes. This is due to the fact that amounts deducted from their wages as “Contributions to the Alabama State Retirement System” qualify for deferral on the federal return, but do not qualify for deferral on the Alabama return. ployee, you should show these amounts as other adjustments to income. The amount that needs to be entered on line 11, will come from the total other adjustments on page 2, part 3, line 4 and line 6 of your return. See instructions for page 2, part 3, on page 13 of this booklet for more instructions. Statutory Employees. If you were a statutory employee, the Statutory employee box of your W-2 form should be checked. Statutory employees include full time life insurance salespeople, certain agent or commission drivers and traveling salespeople, and certain homeworkers. Line 12 Please see the Schedule W-2 instructions for information on how to report your “Statutory Employee” wages. Adjusted Gross Income If the amount on Column C, line 12 is less than zero you may have a net operating loss that you can carry to another tax year. If you carry the loss back to earlier years, you should check the amended return box on your Form 40NR and attach Form NOL85 and/or Form NOL-85A. Line 13 Line 6 Itemized or Standard Deduction Other Income All taxable income you received that is not reported on line 5 should be entered on line 6. This includes interest income, dividends, rents, royalties, gains from sale of property, etc. See Examples of Income You DO NOT Report and Examples of Income You MUST Report on page 7 of these instructions for further details on income which should be included on this line. If you have income from other sources, you must complete page 2, Part I and attach the appropriate schedule(s). Line 8 Adjustments to Income If you made payments to an Individual Retirement Arrangement (IRA), Keogh Retirement Plan, Simplified Employee Pension (SEP), paid self-employment health insurance premiums, incurred penalties for the early withdrawal of funds, or incurred deductible moving expenses, then these items should be shown as an adjustment to income. For more information on the above deductions see the instructions on page 12 for page 2, Part II . The adjustments to income from Part II, line 8 should be entered on page 1, line 8. Line 10 Alabama Percentage of Adjusted Total Income You have the option to either itemize your deductions or you may claim the optional standard deduction. You should compute your deduction both ways to determine the option that gives you the larger deduction. If you elect to claim the standard deduction on your return and it later becomes necessary to change to itemized deductions, you may do so by filing an amended return. If married and filing separate returns, both spouses must claim the same deduction unless the spouses have lived apart for the entire year, in which case each spouse may claim either deduction. However, neither spouse may claim a deduction for expenses paid by the other. See the instructions for Schedule A for items that may be claimed as an itemized deduction. Itemized Deductions. If you elect to itemize your deductions, you should check box a on line 13 and complete and attach Schedule A. The amount shown on line 30 of Schedule A should be entered on line 13. Standard Deduction. If you elect to claim the Standard Deduction, you should check box b on line 13, and use the chart on the next page to determine the Standard Deduction allowable on your return. A dependent or student may take the standard deduction even if claimed as a dependent by someone else. The Standard Deduction must be prorated by the percentage on page 1, line 10. Alabama Income. Report all W-2 information on Schedule W-2. See Schedule W-2 instructions for more information. On column C – “Alabama Income”, enter the amount from Schedule W-2, Line 18, Column I. The amount shown in the box headed “State Wages” on your Form W-2 should be included on Schedule W-2. Report all wages, salaries, fees, commissions, tips, bonuses, and other amounts of income that were earned in Alabama even if you do not have a Form W-2. (These amounts should also have been included in Column B.) You must divide the amount on line 9, Column C, by the amount on line 9, Column B, to determine the ratio of Alabama Adjusted total income to the Adjusted total income from all sources. If the amount in Column C is larger than the amount in Column B, you should enter 100% on line 10. If the amount in Column C is a loss (less than 0) enter 0% on line 10. Other Adjustments Line 15 Note: State of Alabama employees will find that the amount taxable for state purposes is, in most cases, If you paid alimony, adoption expenses and/or qualifying health insurance for a small employer em- Personal Exemption Line 11 8 Line 14 Federal Income Tax Deduction A nonresident of Alabama may deduct from Alabama adjusted gross income a portion of the Federal income tax due on the 2023 Federal income tax return. In order to determine the amount deductible, you must complete page 2, Part IV of Form 40NR. The instructions for completing Part IV are on page 13 of this booklet. Enter the personal exemption amount from line 1, 2, 3, or 4 multiplied by the percentage on line 10. A dependent or student may take the personal exemption even if claimed as a dependent by someone else. Line 16 Dependent Exemption A dependent as defined under Alabama law is an individual other than the taxpayer and his or her spouse who received over 50% of his or her support from the taxpayer during the tax year and is also related to the taxpayer in one of the following relationships: Son Stepfather Daughter Mother-in-law Stepson Father-in-law Stepdaughter Brother-in-law Legally adopted child Sister-in-law Parent Son-in-law Grandparent Daughter-in-law Grandchild If related by blood: Brother Uncle Sister Aunt Stepbrother Nephew Stepsister Niece Stepmother Note: You cannot claim a foster child, friend, cousin, yourself, or your spouse as a dependent under Alabama law. Birth or Death of Dependent. You can take an exemption for a dependent who was born or who died during 2023 if he or she met the qualifications for a dependent while alive. Support. You must have provided over 50% of the dependent’s support in 2023. If you file a joint return, the support can be from you or your spouse. You cannot claim credit on an Alabama return for a dependent if you provided less than 50% of the support under Alabama law as you can under federal law in certain conditions. If you are married and filing a separate return, you must consider only the amounts you separately furnished out of your income in determining whether or not you provided over 50% of the dependent’s support. Do not include any amounts your spouse furnished for the support of the dependent. In figuring total support, you must include money the dependent used for his or her own support even if this money was not taxable (for example: gifts, savings, welfare benefits). If your child was a student, do not include amounts he or she received as scholarships. Support includes items such as food, a place to live, clothes, medical and dental care, recreation, and education. In figuring support use the actual cost of these items. However, the cost of a place to live is figured at its fair rental value. In figuring support, do not include items such as income taxes, social security taxes, premiums for life insurance, or funeral expenses. If you qualify to claim your child and/or other individuals as your dependent, you must complete on page 2, Part V. The total credit entered on page 2, Part V, line 4 should be entered on page 1, line 16. Amount on Dependent Col. B, Line 12, Page 1 Exemption 0 - 50,000 50,001 - 100,000 Over 100,000 1,000 500 300 Line 19 Figuring Your Tax You must figure your tax from the Tax Tables on pages 21-26 unless you are claiming a carryover or carryback net operating loss from another year. Indicate the method you are using by checking the appropriate box. If you are claiming a net operating loss from another year, you must complete and attach Form NOL-85A. Line 20 Net Tax Due Alabama If you are using tax credits to reduce your tax liability, Schedule OC must be completed in order to compute your net tax due. You must check the box to indicate you are using Schedule OC to compute your net tax due. If you do not have any tax credits, enter the amount from line 19. Credits - Schedule OC Schedule OC must be completed for a credit claim and Individual taxpayers must register to set up an account in My Alabama Taxes (MAT) at www.myalabamataxes.alabama.gov for approval before claiming certain credits on their tax return. Once logged into MAT, a taxpayer will need to lo- Standard Deduction Married Filing Joint ____________________________ Adjusted Gross Standard Income (Col. B, Line 12) Deduction $ 0 – $25,999 $26,000 – $26,499 $25,500 – $26,999 $27,000 – $27,499 $27,500 – $27,999 $28,000 – $28,499 $28,500 – $28,999 $29,000 – $29,499 $29,500 – $29,999 $30,000 – $30,499 $30,500 – $30,999 $31,000 – $31,499 $31,500 – $31,999 $32,000 – $32,499 $32,500 – $32,999 $33,000 – $33,499 $33,500 – $33,999 $34,000 – $34,499 $34,500 – $34,999 $35,000 – $35,499 $35,500 and above $8,500 $8,325 $8,150 $7,975 $7,800 $7,625 $7,450 $7,275 $7,100 $6,925 $6,750 $6,575 $6,400 $6,225 $6,050 $5,875 $5,700 $5,525 $5,350 $5,175 $5,000 Married Filing Separate ____________________________ Adjusted Gross Standard Income (Col. B, Line 12) Deduction $ 0 – $12,999 $13,000 – $13,249 $13,250 – $13,499 $13,500 – $13,749 $13,750 – $13,999 $14,000 – $14,249 $14,250 – $14,499 $14,500 – $14,749 $14,750 – $14,999 $15,000 – $15,249 $15,250 – $15,499 $15,500 – $15,749 $15,750 – $15,999 $16,000 – $16,249 $16,250 – $16,499 $16,500 – $16,749 $16,750 – $16,999 $17,000 – $17,249 $17,250 – $17,499 $17,500 – $17,749 $17,750 and above Head of Family ____________________________ Adjusted Gross Standard Income (Col. B, Line 12) Deduction $4,250 $4,162 $4,074 $3,986 $3,898 $3,810 $3,722 $3,634 $3,546 $3,458 $3,370 $3,282 $3,194 $3,106 $3,018 $2,930 $2,842 $2,754 $2,666 $2,578 $2,500 $ 0 – $25,999 $26,000 – $26,499 $26,500 – $26,999 $27,000 – $27,499 $27,500 – $27,999 $28,000 – $28,499 $28,500 – $28,999 $29,000 – $29,499 $29,500 – $29,999 $30,000 – $30,499 $30,500 – $30,999 $31,000 – $31,499 $31,500 – $31,999 $32,000 – $32,499 $32,500 – $32,999 $33,000 – $33,499 $33,500 – $33,999 $34,000 – $34,499 $34,500 – $34,999 $35,000 – $35,499 $35,500 and above 9 $5,200 $5,065 $4,930 $4,795 $4,660 $4,525 $4,390 $4,255 $4,120 $3,985 $3,850 $3,715 $3,580 $3,445 $3,310 $3,175 $3,040 $2,905 $2,770 $2,635 $2,500 Single ____________________________ Adjusted Gross Standard Income (Col. B, Line 12) Deduction $ 0 – $25,999 $26,000 – $26,499 $26,500 – $26,999 $27,000 – $27,499 $27,500 – $27,999 $28,000 – $28,499 $28,500 – $28,999 $29,000 – $29,499 $29,500 – $29,999 $30,000 – $30,499 $30,500 – $30,999 $31,000 – $31,499 $31,500 – $31,999 $32,000 – $32,499 $32,500 – $32,999 $33,000 – $33,499 $33,500 – $33,999 $34,000 – $34,499 $34,500 – $34,999 $35,000 – $35,499 $35,500 and above $3,000 $2,975 $2,950 $2,925 $2,900 $2,875 $2,850 $2,825 $2,800 $2,775 $2,750 $2,725 $2,700 $2,675 $2,650 $2,625 $2,600 $2,575 $2,550 $2,525 $2,500 cate the “Individual Income Tax” account type, then select “Submit a Credit Claim” from the “Tax Incentives” section on the right margin of the page and follow a short series of steps to reserve their credit. For individuals who do not have a MAT account or are unable to set up a MAT account, go to the MAT homepage, select “Submit an Individual Credit Claim” from the “Individuals” section on the main page and follow a short series of steps to reserve your credit. If the credit claimed on an individual income tax return is from a Schedule K-1 issued by a pass through entity, the credit claim will be submitted by the entity and no action is required by the individual. Supporting documentation for certain credits is required to be uploaded in MAT. Taxpayers needing assistance with reserving a tax credit may call (334) 353-9770 or (334) 353-0602. While all tax credits are reported on Schedule OC, some require a separate schedule to be completed before entering the results on Schedule OC and some require a MAT account to reserve their credit approval before submission on Schedule OC. Please visit the Department’s website for more information on the Schedule OC and Schedule OC instructions for each of the following tax credits: Alabama Enterprise Zone Credit, Basic Skills Education Credit, Rural Physician Credit, Coal Credit, Full Employment Act of 2011 Credit, Veterans Employment Act – Employers Credit, Veterans Employment Act- Business Start Up Expense Credit, Qualified Irrigation System/Reservoir System tax Credit, Alabama Accountability Tax Credit- School Transfer Credit, Alabama Accountability Act Credit – Scholarship Granting Organization (SGO) credit, Alabama Adoption Credit, 2013 Alabama Historic Rehabilitation Tax Credit, Career Technical Dual Enrollment Credit, Investment Credit – Alabama Jobs Act, Alabama Renewal Act – Port Credit, Alabama Renewal Act – Growing Alabama Credit, Apprenticeship Tax Credit, 2017 Alabama Historic Tax Rehabilitation Credit, Railroad Modernization Act of 2019 Credit, Storm Shelter Credit, Volunteer Emergency Responders Tax Credit, Innovate Alabama Tax Credit, and the Income Tax Capital Credit. For more information on credits see Schedule OC. Line 22 2023 Estimated Tax Payments/ Automatic Extension Payments Enter on this line any payments you made on your estimated Alabama income tax (Form 40ES) for 2023 or automatic extension (Form 40V). Include any overpayments from your 2022 return that you applied to your 2023 estimated tax. (Do not include the balance you paid with your 2022 return in 2023 or any overpayment from 2022 that was refunded to you.) If you and your spouse paid joint estimated tax but are now filing separate Alabama income tax returns, either of you may claim all of the amount paid, OR you can each claim a part of it. Please be sure to show both social security numbers on the separate returns. If you and your spouse paid separate estimated tax but are now filing a joint income tax return, add the amounts you each paid. These instructions also apply if your spouse died during the year. Line 29 Caution: It is very important that the social security numbers be the same on your current return, last year’s return, and all of your estimate vouchers. The department will be unable to allow you proper credit for your payments unless the numbers are the same. If the department is unable to verify the amount claimed, you may be requested to submit copies of all your canceled checks substantiating the amount claimed. This will cause considerable delay in processing your return. (If line 20 is larger than line 28) Name Change. If you changed your name because of marriage, divorce, etc., and you made estimated tax payments using your former name, attach a statement to Form 40NR explaining all the payments you and your spouse made in 2023 and the name(s) and social security number(s) under which you made the payments. Line 23 Composite Tax Payments/Electing PTE Credit If you are reporting income from a partnership or S corporation which filed Alabama Form PTE-C, any payment made on your behalf should be entered on Schedule CP. For tax years beginning on or after January 1, 2021, Act 2021-423 allows the owner, member, partner, or shareholder of an electing passthrough entity reporting income to be allowed a refundable credit in an amount equal to its pro rata or distributive share of the Alabama income tax paid by the electing pass-through entity with respect to the corresponding tax year. This amount needs to be reported on Schedule CP. The amount from Schedule CP, Section B, line 1 should be entered on line 23. Line 24 Previous Payments This line is for amended returns only. Enter the amount of your previous payment made with your original return and/or billing notices and amended return(s). Line 25 Refundable Credit This line is only for the refundable portion of Alabama Accountability Act, Adoption Credit, or Historic Tax Rehabilitation Act of 2017 Credit. Enter the amount from Schedule OC, Section F, line F4. Line 27 Amount You Owe Subtract line 28 from line 20 and add line 30, and enter the amount on line 29 – this is the amount you owe the State of Alabama. Pay the full amount by check or money order payable to the “Alabama Department of Revenue.” On your payment write your social security number, your daytime telephone number, and “2023 Form 40NR,” and remit your payment with Form 40V. Credit Card: For other payment options, please visit our website for more information. How do I pay by ACH Debit (E-check)? You may pay by ACH Debit by going to www.myalabamataxes.alabama.gov. Do not use Form 40V when paying by ACH Debit. You will need to have your bank routing number and checking account number to use this service. No fee is charged for this service. If you are paying with funds on a foreign bank you must include an additional $25 exchange fee. If payment for the full amount of tax due is not paid by the due date of the return, you will be charged interest and will be subject to penalties. (See Penalties and Interest on page 14 of these instructions.) More importantly, if you submit your return without payment, a final assessment may be entered by the Department. A final assessment which is not appealed is as conclusive as a judgment of a circuit court. The Department may then proceed with collection by issuance of legal processes including recording of tax liens, garnishment of wages or bank accounts, levy, or a writ of seizure directed to the county sheriff as provided by Sections 40-1-2, 40-2-11(16), and 40-2923, Code of Alabama 1975. Line 30 Estimated Tax Penalty If the amount you owe (line 29) exceeds $500.00, you may be subject to an estimate, or underestimation penalty. Page 14 of this booklet provides additional information on these penalties, or you can complete Form 2210AL. See page 29, “How To Obtain Forms.” Line 31 Overpayment Previous Refund This line is for amended returns only. Enter the amount of your previous refund from your original return and amended return(s). 10 (If line 28 is larger than line 20) Subtract line 20 from line 28, and enter the amount on line 31 — this is the amount you overpaid. Line 32 Applied to 2024 Estimated Tax You may elect to credit all or part of the overpayment shown on line 31 to your 2024 estimated Tax. Once an election is made to apply this overpayment to your 2024 estimated tax, it cannot later be refunded to you or applied to pay additional tax for 2023. Line 33 Refunded to You help you file your form correctly: 1. Is your address correct? 2. If you took the standard deduction, did you use the chart on page 9? 3. Did you include your W-2 forms and any other forms? Did you assemble all forms and schedules in the proper order? (See Step 5 on page 5.) 4. Is your math correct? (Note: Check your math carefully when figuring your refund or amount you owe.) If line 31 is greater than zero, subtract lines 30 and 32 from the amount on line 31. If your return is complete and contains no errors, you should receive your refund within 8 to 12 weeks after you mail it. See When Should I Receive My Refund? on page 15 of this booklet for further information about your refund. 5. Did you find the correct tax in the Tax Table for your filing status and taxable income? Sign Your Return If you want the Department to contact your tax preparer, please give permission to do so by checking the box above the signature line. Form 40NR is not considered a return unless you sign it. Please sign in black ink only. Your spouse must also sign if it is a joint return. If you are filing a joint return with your deceased spouse, see Death of Taxpayer on page 14. Did You Have Someone Else Prepare Your Return? If you fill in your own return, the Paid Preparer’s Use Only area should remain blank. Someone who prepares your return but does not charge you should not sign. Generally, anyone who is paid to prepare your tax return must sign your return and fill in the other blanks in the Paid Preparer’s Use Only area of the return. If you have questions about whether a preparer is required to sign a return, please contact an Alabama Taxpayer Service Center. The preparer required to sign your return MUST:  Sign, by hand, in the space provided for the preparer’s signature. (Signature stamps or labels are not acceptable.)  Give you a copy of your return for your records in addition to the copy to be filed with the Alabama Department of Revenue. BEFORE signing and mailing your return, you should review it to make sure the preparer has entered the correct name(s), address, and social security number(s) in the spaces provided and reported all of your income. REMEMBER, you are responsible for the information on your return even if you pay someone else to prepare it. Please enter your daytime phone number. This will enable us to contact you and help speed your refund if there are any problems with processing your return. Common Mistakes Which Delay Refunds Errors delay your refund. This checklist should 6. Did you write your social security number, daytime phone number, and “2023 Form 40NR” on your check or money order? 7. Did you sign and date your tax form? Where To File If you are receiving a refund (Form 40NR, line 33), mail your return to: Alabama Department of Revenue P.O. Box 154 Montgomery, AL 36135-0001 If you are making a payment (Form 40NR, line 29), mail your return, Form 40V and payment to: Alabama Department of Revenue P.O. Box 2401 Montgomery, AL 36140-0001 If you are not receiving a refund or making a payment, mail your return to: Alabama Department of Revenue P.O. Box 327469 Montgomery, AL 36132-7469 Page 2, Part I Other Income All taxable income other than salaries, wages, commissions, etc. that is not reported on page 1, line 5 should be reported in page 2, Part I. The total other income from all sources should be reported in Column B under the heading “All Sources.” The income reported in Column B should be the same as would be reported by a resident of Alabama. Example: You may be required to report interest income from obligations of the U.S. Government on your federal return, but since this income is not taxable to Alabama it should not be included in Column B. All income you listed in Column B earned in the State of Alabama should also be listed in Column C 11 under the heading “Alabama Sources.” Use only the lines and schedules applicable to your types of income. Line 1 Interest and Dividend Income Any interest or dividend income received in 2023 with Alabama legal jurisdiction should be reported in Column C. All other interest or dividend items that would normally be taxable to an Alabama resident should be reported in Column B. Note: Interest or Dividend items received from pass through entities such as Partnerships or S-Corporations should not be reported as separate line items on Schedule B, but should be included in total on the Alabama Schedule E. If you received dividends and interest income of more than $1,500 in 2023, you must complete and attach Schedule B. Enter the taxable amount shown in Schedule B on Part I, line 1. Line 2 Alimony Received Alimony and separate maintenance payments received by a nonresident of Alabama in 2023 are not taxable for Alabama purposes. However, any amounts you received in 2023 must be included in the total adjusted gross income from all sources to the same extent that it is includable on your 2023 Federal return. The amount received should be listed in Column B only. Do not include amounts you received which are child support. Line 3 Pensions and Annuities Pension and annuity payments received by a nonresident are not subject to Alabama tax. However, pension and annuity payments you received in 2023 that would be taxable to a resident of Alabama must be included in the total adjusted gross income from all sources in order to compute the ratio of Alabama adjusted gross income to total adjusted gross income from all sources: Payments you received from any of the following are not taxable and should not be included in the income reported on line 3:  State of Alabama Teachers’ Retirement.  State of Alabama Employees’ Retirement.  State of Alabama Judicial Retirement.  United States Civil Service Retirement.  Retirement systems created by the Federal Social Security Acts.  Railroad retirement benefits received under the Federal Railroad Retirement Acts of 1935 and 1937.  Military Retirement Pay.  TVA Pension System Benefits.  U.S. Foreign Service Retirement and Disability Fund Annuities.  U.S. Government Retirement Fund Benefits.  Any Defined Benefit Retirement Plan in accordance with IRC 414(j). Contact your retirement plan administrator to determine if your plan qualifies. Complete Schedule RS to report all pensions and/or annuities you received in 2023 that would be taxable to a resident of Alabama. The amount to be reported would be the same as reported on your Federal return except for income from those sources previously listed as exempt. Line 4 Business Income or (Loss) If you conducted a business or practiced a profession during the taxable year, you must complete and attach a copy of Federal Schedule C or C-EZ to your Alabama return. Generally, you may deduct the ordinary and necessary expenses of doing business — the cost of merchandise, salaries, interest, taxes, rent, repairs, and incidental supplies. In the case of capital investments and improvements in depreciable property such as buildings, machines, and similar items having a useful life of more than one year, Alabama law provides for a “reasonable allowance” for depreciation over the useful life of the property. If some of your expenses are part business and part personal, you can deduct ONLY the business portion. Adjustments to Federal Schedules C and F. Alabama law differs from federal law in the treatment of some of the expenses shown on Federal Schedules C, and F, and certain items may need adjusting for Alabama purposes. The expenses which may need adjusting are:  Percentage Depletion Gas and Oil. In the case of oil and gas wells, the allowance for depletion shall be 12 percent of the gross income from the property during the taxable year, excluding from such gross income an amount equal to any rents or royalties paid or incurred by the taxpayer in respect to the property. Such amounts shall not exceed 50 percent of the net income of the taxpayer, computed without allowance for depletion, from the property, except that in no case shall the depletion allowance be less than the amount allowable under federal income tax law.  Cost Depletion Natural Resources Other than Gas and Oil. Alabama law has no provision for percentage depletion of natural resources other than gas and oil, as currently allowed under federal law. For Alabama purposes, the depletion allowance shall be computed using the cost depletion method.  Depreciation. Alabama law allows IRC Section 179 Expense for all taxable years beginning after December 31, 1989. Adjustments may be necessary if assets were acquired and placed in service prior to tax years beginning January 1, 1990.  Targeted “Jobs Credit.” You may have been allowed to take a portion of your payroll expense as a “Targeted Jobs Credit” on your federal return. This is an allowable expense for Alabama income tax purposes. Schedule F. The net profit or (loss) from farm operations, within and without Alabama, should be entered on line 7, Column B. The net profit or (loss) from farm operations in Alabama should also be entered in Column C. Line 8 Other Income  Passive Activity Losses. Alabama law has no provision, similar to current federal law, which limits the deduction of passive trade or business activity losses. Enter on line 8 any other income you cannot find a place for on your return or on another schedule. State the nature and source in the space provided, or attach a separate explanation. If you have adjustments involving any of the previously described expenses, attach an explanation and show the adjustment as “Other Expenses” on Federal Schedule C or F. The total other income from all sources should be entered in Column B, and only the other income earned in Alabama should be entered in Column C. The net profit or (loss) from business, as shown on Federal Schedule C-EZ or C after above adjustments (if applicable), should be entered on Part I, line 4. The net profit or (loss) from all operations within and without Alabama, as shown on Federal Schedule C, after above adjustments (if applicable), should be entered on Part I, line 4, Column B. The net profit or (loss) from operations in Alabama should be entered in Column C. Line 5 Gain or (Loss) from Sale of Real Estate, Stocks, Bonds, Etc. If you sold real estate, stocks, bonds, or other assets in 2023 the net gain or (loss) should be entered in column B. The net gain or (loss) from the sale of property located in Alabama should also be entered in Column C. If you sold your personal residence, any gain realized is taxable to the same extent as reported on your federal return. Please see the instructions for Schedule D for further information. Line 6 Rents, Royalties, Partnerships, Estates, Trusts, S Corporations You must complete and attach Schedule E if you received income in 2023 from any of these sources. The instructions for completing Schedule E are on page 20 of this booklet. Foreign Income Exclusion. If you are entitled to a foreign income exclusion, please attach a copy of your Federal Form 2555 to your return and report the amount of your exclusion as a credit with a negative sign (Example: -30,000) on line 8 Other Income on page 2 of your return. All foreign income must be reported on your return, in order to receive any foreign income exclusion. Nonqualified Distribution from Alabama 529 Savings Plan. If you receive a distribution from your Alabama 529 Savings plan and do not use the distribution to pay qualified expenses, the amount not used for qualifying expenses is taxable. Enter the amount of the nonqualified distribution plus 10% of the distribution and description on line 8, Columns B and C, Other Income. Nonqualified Withdrawal from ABLE Savings Account. If you make a nonqualified withdrawal as defined by Internal Revenue Code (26 U.S.C 529A), the amount of the nonqualified withdrawal, plus 10 percent of the amount withdrawn, shall be taxable as income in the year of the nonqualified withdrawal. Report this amount on line 8, Columns B and C, Other Income. Note: Net operating losses are not allowed as a deduction on line 8 (Other Income). Net operating losses can only be claimed on Form NOL-85A. Page 2, Part II Adjustments To Income Line 1 Line 7 Farm Income or (Loss) If you operated a farm during the year, you must attach Federal Schedule F to your return. Alabama law differs from Federal law in the treatment of some of the expenses shown on Federal Schedule F. These differences are discussed in the instructions for line 4, Part I. If any of these adjustments apply to your return, you should show the additional amounts as “Other Expenses” on Federal 12 Individual Retirement Arrangement (IRA), Keogh Retirement Plan, and SEP Deduction Contrib
Extracted from PDF file 2023-alabama-form-40nr-booklet.pdf, last modified December 2023

More about the Alabama Form 40NR Booklet Individual Income Tax TY 2023

Form 40NR Booklet requires you to list multiple forms of income, such as wages, interest, or alimony .

We last updated the Alabama Individual Nonresident Income Tax Instructions in February 2024, so this is the latest version of Form 40NR Booklet, fully updated for tax year 2023. You can download or print current or past-year PDFs of Form 40NR Booklet directly from TaxFormFinder. You can print other Alabama tax forms here.

Other Alabama Individual Income Tax Forms:

TaxFormFinder has an additional 47 Alabama income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form 40 Alabama Individual Income Tax Return
Form 40 Booklet Form 40 Income Tax Instruction Booklet
Schedule A, B, & DC Itemized Deductions, Interest and Dividend Income and Donation Checkoffs (Form 40)
Form 40A Individual Income Tax Return (Short Form)
Form 40-V Individual Income Tax Payment Voucher

Download all AL tax forms View all 48 Alabama Income Tax Forms


Form Sources:

Alabama usually releases forms for the current tax year between January and April. We last updated Alabama Form 40NR Booklet from the Department of Revenue in February 2024.

Show Sources >

About the Individual Income Tax

The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.

Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!

Historical Past-Year Versions of Alabama Form 40NR Booklet

We have a total of three past-year versions of Form 40NR Booklet in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:


2023 Form 40NR Booklet

40NR Booklet TY 2023_12-21-23_F.pdf

2022 Form 40NR Booklet

#10 Comm. Office

2021 Form 40NR Booklet

40NR TY 2021 Print Version.qxp


TaxFormFinder Disclaimer:

While we do our best to keep our list of Alabama Income Tax Forms up to date and complete, we cannot be held liable for errors or omissions. Is the form on this page out-of-date or not working? Please let us know and we will fix it ASAP.

** This Document Provided By TaxFormFinder.org **
Source: http://www.taxformfinder.org/alabama/form-40nr-booklet