Arizona Income Tax Instruction Packet

Income Tax Instruction Packet
Form 140 instructions
Arizona Form
140

2023 Resident Personal Income Tax Return
For information or help, call one of the numbers listed:
Phoenix
(602) 255-3381
From area codes 520 and 928, toll-free
(800) 352-4090
Tax forms, instructions, and other tax information
If you need tax forms, instructions, and other tax information,
go to the department’s website at www.azdor.gov.
Income Tax Procedures and Rulings
These instructions may refer to the department’s income tax
procedures and rulings for more information. To view or print
these, go to our website select the About tab on the home page
and select Legal Research from the drop-down menu and then
click on Procedures or Rulings from the drop-down menu.
Using the Category box, select the tax type and then scroll down
to find the Document ID or use the Search Keyword function to
locate the document.
Publications
To view or print the department’s publications, go to our
website select the About tab on the home page and select Legal
Research from the drop-down menu and then click on
Publications from the drop-down menu.

Leave the Paper Behind - e-file!

•
•
•
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E-file today and pay by April 15, 2024 to avoid penalties and
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E-file through an authorized IRS/DOR e-file provider or by
using your personal computer and the Internet.
Visit our website at www.azdor.gov for a listing of approved
e-file providers and on-line filing sources.
** For free e-file requirements, check out our website at
www.azdor.gov.
AVOID PROCESSING DELAYS: Are you mailing your
Arizona income tax return? If you are mailing your return to
the department, see the last page of these instructions for
assembly order (form sequence) information.

Who Must Use Form 140?
You (and your spouse, if married filing a joint return) may file
Form 140 only if both of you are full year residents of Arizona.
You must use Form 140 rather than Form 140A or Form 140EZ
to file for 2023 if any of the following apply to you:
• Your Arizona taxable income is $50,000 or more,
regardless of filing status.
• You are making adjustments to income.
• You itemize deductions.
(Continued on next column.)

You claim tax credits other than the family income tax
credit, the credit for increased excise taxes, or the property
tax credit.
You are claiming estimated payments.

•
•

You received the 2023 Arizona Families Tax Rebate and
are subtracting the amount of your rebate received from
Arizona gross income (see page 6, item “U”).

•

Do You Have to File?
Arizona Filing Requirements
These rules apply to all Arizona taxpayers.

You must file if you are:
• Single
• Married filing joint
• Married filing separate
• Head of Household

and your gross income is
more than:
$ 13,850
$ 27,700
$ 13,850
$ 20,800

If you are an Arizona resident, you must report income from
all sources including out-of-state income.
To see if you have to file, figure your gross income the same as
you would figure your gross income for federal income tax
purposes. Then, you should exclude income that Arizona law
does not tax. Income that Arizona law does not tax includes:
• interest from U.S. Government obligations;
• social security retirement benefits received under Title II
of the Social Security Act;
• benefits received under the Railroad Retirement Act, tier
1 or tier 2 railroad retirement benefits, railroad disability
benefits reported on federal forms RRB-1099 and RRB1099-R, railroad unemployment benefits and railroad
sickness payments paid by the Railroad Retirement
Board;
• pay received for active service as a member of the
Reserves, National Guard or the U.S. Armed Forces; or

•

benefits, annuities and pensions as retired or retainer pay
of the uniformed services of the United States. If you
are the surviving spouse of a deceased military veteran,
and are receiving payments from the uniformed
services of the United States, you may exclude 100% of
the payments you received.

NOTE: Even if you are not required to file, you must still file a
return to get a refund of any Arizona income tax withheld.

Do You Have to File if You Are an American
Indian?
You must file if you meet the Arizona filing requirements
unless all the following apply to you:
• You are an enrolled member of an Indian tribe.
• You live on the reservation established for that tribe.
• You earned all of your income on that reservation.

Arizona Form 140
For information on the Arizona tax treatment of American
Indians, see the department’s ruling, ITR 96-4, Income
Taxation of Indians and Spouses.

information, see the department’s procedure, ITP 92-1,
Procedure For Determining Residency Status.

Residents

Do You Have to File if You Are the Spouse of an
American Indian and You Are Not an Enrolled
Indian?

You are a resident of Arizona if your domicile is in Arizona.
Domicile is the place where you have your permanent home. It
is where you intend to return if you are living or working
temporarily in another state or country. If you leave Arizona for
a temporary period, you are still an Arizona resident while gone.
An Arizona resident is subject to Arizona tax on all income no
matter where the income is earned.

You must file if you meet the Arizona filing requirements. For
more information, see the department’s ruling, ITR 96-4,
Income Taxation of Indians and Spouses.

Do You Have to File if You Are in the Military?

Part-Year Residents

You must file if you meet the Arizona filing requirements
unless all of the following apply to you:

•

You are an active duty member of the United States armed
forces.

•

Your only income for the taxable year is pay received for
active duty military service.

•

There was no Arizona tax withheld from your active duty
military pay.

If you are a part-year resident, you must file Arizona
Form 140PY, Part-Year Resident Personal Income Tax Return.
You are a part-year resident if you did either of the following
during 2023:
• You moved into Arizona with the intent of becoming a
resident.
• You moved out of Arizona with the intent of giving up your
Arizona residency.

If Arizona tax was withheld from your active duty military pay,
you must file an Arizona income tax return to claim any refund
you may be due from that withholding.

Nonresidents
If you are a nonresident (including nonresident aliens), you
must file Arizona Form 140NR, Nonresident Personal Income
Tax Return.

You must also file an Arizona income tax return if you have any
other income besides pay received for active duty military
service.

What if a Taxpayer Died?

If you were an Arizona resident when you entered the service,
you remain an Arizona resident, no matter where you are
stationed, until you establish a new domicile.

If a taxpayer died before filing a return for 2023, the taxpayer's
spouse or personal representative may have to file and sign a
return for that taxpayer. A personal representative can be an
executor, administrator, or anyone who is in charge of the
deceased taxpayer’s property.

As an Arizona resident, you must report all of your income to
Arizona, no matter where you are stationed. You must include
your military pay, but using Form 140, you may subtract all pay
received for active duty military service to the extent it is
included in your federal adjusted gross income.

If the deceased taxpayer did not have to file a return but had tax
withheld, a return must be filed to get a refund.
The person who files the return should use the form the taxpayer
would have used. The person who files the return should print
the word "deceased" after the decedent's name and enter the
date of death after the decedent's name.

If you are not an Arizona resident, but stationed in Arizona, the
following apply to you:
•

You are not subject to Arizona income tax on your military
pay.

•

You must report any other income you earn in Arizona
using Form 140NR, Nonresident Personal Income Tax
Return.

If your spouse died in 2023 and you did not remarry in 2023 or
if your spouse died in 2024 before filing a return for 2023, you
may file a joint return. If your spouse died in 2023, the joint
return should show your spouse's 2023 income before death and
your income for all of 2023. If your spouse died in 2024, before
filing the 2023 return, the joint return should show all of your
income and all of your spouse's income for 2023. Print "Filing
as surviving spouse" in the area where you sign the return.
If someone else is the personal representative, he or she
must also sign the return.

To find out more, see the department’s publication, Pub. 704,
Taxpayers in the Military.

If You Included Your Child's Unearned Income on
Your Federal Return, Does Your Child Have to
File an Arizona Return?
No. In this case, the child should not file an Arizona return.
The parent must include that same income in his or her Arizona
taxable income.

Are Any Other Returns Required?
You may also have to file a fiduciary income tax return
(Form 141AZ). For details about filing a fiduciary income tax
return, call the department at (602) 255-3381.

Determining Residency Status
If you are not sure if you are an Arizona resident for state
income tax purposes, we may be able to help. For more
2

Arizona Form 140

Claiming a Refund for a Deceased Taxpayer

What if You File or Pay Late?

If you are claiming a refund for a deceased taxpayer, you must
complete Arizona Form 131, Claim for Refund on Behalf of
Deceased Taxpayer. Place the form behind the 140 return,
when mailing Form 140.

If you file or pay late, we will charge you interest and penalties
on the amount you owe. If the U.S. Post Office postmarks your
2023 calendar year return by April 15, 2024 your return will not
be late. You may also use certain private delivery services
designated by the Internal Revenue Service (IRS) to meet the
“timely mailing as timely filed” rule. For more information, see
“Mailing Your Return” at the end of these instructions.

If you are claiming a refund on Form 140-SBI for a deceased
taxpayer, you must also complete Arizona Form 131-SBI, Claim
for Refund on Behalf of Deceased Taxpayer. Place Form 131-SBI
behind Form 140-SBI when mailing both returns.

Late Filing Penalty
If you file late, we will charge you a late filing penalty. This
penalty is 4½% (.045) of the tax required to be shown on the
return for each month or fraction of a month the return is late.
This penalty cannot exceed 25% (.25) of the tax found to be
remaining due.

What are the Filing Dates and Penalties?
NOTE: If the due date for an income tax or related payment
falls on a weekend and/or legal holiday, the filing or payment
is considered timely if filed or paid on the next business day and
that business day is a day other than Saturday, Sunday or a
legal holiday.

Late Payment Penalty
If you pay your tax late, we will charge you a late payment
penalty. This penalty is ½ of 1% (.005) of the amount shown as
tax for each month or fraction of a month for which the failure
continues. We charge this penalty from the original due date of
the return until the date you pay the tax. This penalty cannot
exceed a total of 10% (.10) of the unpaid tax.

When Should You File?
Your 2023 calendar year tax return is due no later than
midnight, April 15, 2024. File your return as soon as you can
after January 1, 2024 but no later than April 15, 2024.
If you are a fiscal year filer, your return is due on the 15th day
of the fourth month following the close of your fiscal tax year.

Extension Underpayment Penalty
If you file your return under an extension, you must pay 90%
(.90) of the tax shown on your return by the return's original due
date. If you do not pay this amount, we will charge you a
penalty. This penalty is ½ of 1% (.005) of the tax not paid for
each 30-day period or a fraction of a 30-day period. We charge
this penalty from the original due date of the return until the
date you pay the tax. This penalty cannot exceed 25% (.25) of
the unpaid tax. If we charge you the extension underpayment
penalty, we will not charge you the late payment penalty under
Arizona Revised Statutes (A.R.S.) § 42-1125(D).

What if You Cannot File on Time?
You may request an automatic 6-month extension if you know
you will not be able to file on time. If you request an extension
to file your 2023 calendar year tax return, your due date is
October 15, 2024 to timely file your 2023 tax return.
NOTE: An extension does not extend the time to pay your
income tax. See the instructions for Arizona Form 204.

To get a filing extension, you can either
•

•

Apply for a state extension (Arizona Form 204). To apply
for a state extension, file Form 204 by April 15, 2024. See
Form 204 for details. You do not have to include a copy of
the extension with your return when you file, but make sure
that you check box 82F (above your name) on page 1 of
the return. If you must make a payment, use Arizona
Form 204, or visit www.AZTaxes.gov to make an
electronic payment.

NOTE: If you are subject to two or more of the above penalties,
the total cannot exceed 25%.

Interest
We charge interest on any tax not paid by the due date. We will
charge you interest even if you have an extension. If you have
an extension, we will charge you interest from the original due
date until the date you pay the tax. The Arizona interest rate is
the same as the federal rate.

Use your federal extension (federal Form 4868). File your
Arizona return by the same due date. You do not have to
include a copy of your federal extension with your return,
but make sure that you check box 82F (above your name)
on page 1 of the return.

When Should You Amend a Return?
If you need to make changes to your return after you have filed,
do not file a new return using Form 140. You must file Arizona
Form 140X, Individual Amended Income Tax Return. File your
amended return after your original return has processed.
Generally, you have four years to amend a return to claim a
refund.

When Should You File if You Are a Nonresident
Alien?
As a Nonresident Alien, do not file Form 140. Use Form 140NR,
Nonresident Personal Income Tax Return, to report your Arizona
sourced income. File Form 140NR-SBI if you elect to report your
Arizona sourced small business income on the Small Business
Income Tax Return. See the instructions for Form 140NR for
your filing due date(s).

If you amend your federal return for any year, you must also
file an Arizona Form 140X for that year.
If the IRS makes a change to your federal taxable income for
any year, you must report that change to Arizona. You must file
3

Arizona Form 140

Can You Make Estimated Payments Even if You
Do Not Have To?

Form 140X within 90 days of the final determination of the IRS.
You may use one of the following two options to report this
change.

If you do not have to make Arizona estimated income tax
payments, you may still choose to make them. For details, see
Arizona Form 140ES.

Option 1

You may file a Form 140X for that year. If you choose this
option, you must amend and mail your Arizona return within 90
days of the final determination of the IRS. Include a complete
copy of the federal notice with your Form 140X.

Line-by-Line Instructions
Tips for Preparing Your Return

Option 2

You may file a copy of the final federal notice with the
department within 90 days of the final determination of the IRS.
If you choose this option, you must include a statement in which
you must:
1. Request that the department recompute your tax and
2. Indicate if you agree or disagree with the federal notice.

•

Make sure that you enter your Social Security Number
(SSN) on your return.
Complete your return using black ink.
You must round dollar amounts to the nearest whole
dollar. If 50 cents or more, round up to the next dollar. If
less than 50 cents, round down. Do not enter cents.
If you are mailing your return, see the last page of these
instructions for the assembly order.
Make sure you include your daytime telephone number.
If filing a fiscal year return, fill in the period covered.

•
•
•

Individual Income Audit
Arizona Department of Revenue
PO Box 29084
Phoenix, AZ 85038-9084

DO YOU HAVE A COMPLICATED RETURN?

Do You Need to Make Arizona Estimated
Payments in 2024?

E-file makes filing E-file software offers:
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You must make Arizona estimated income tax payments
during 2024 if:

Single
Married filing
joint
Married filing
separate
Head of Household

You must complete your federal return before you can start
your Arizona return.

•
•

If you do not agree with the federal notice, you must also
include any documents that show why you do not agree. If you
choose Option 2, mail the federal notice and any other
documents to

Your filing status
is:

•

AND

AND

your Arizona gross
income for 2023
was greater than:
$ 75,000

your Arizona gross
income for 2024 is
greater than:
$ 75,000

$ 150,000

$ 150,000

$ 75,000
$ 75,000

$ 75,000
$ 75,000

For a list of
•
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visit
www.azdor.gov

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Entering Your Name, Address and SSN
Lines 1, 2, and 3
NOTE: Make sure you enter your SSN on the appropriate line
and your SSN is correct. If you are filing a joint return, also
make sure you enter your SSNs in the same order every year.

If you met the income threshold for 2023, you must make
estimated payments during 2024 unless you are sure you will
not meet the threshold for 2024. As a full year resident, your
Arizona gross income is your federal adjusted gross income.
Your Arizona gross income is on line 12 of the 2023
Form 140.

Enter your name, address, and SSN in the space provided. If
you are filing a joint return, enter your SSNs in the same order
as your first names. If your name appears first on the return,
make sure your SSN is the first number listed.
If you are married filing separately, enter your name and SSN
on the first line 1. Enter your spouse’s name and SSN on the
second line 1.

Use the worksheet for Arizona Form 140ES to figure how much
your payments should be. For more information about making
estimated payments, see the department’s publication,
Pub. 012, Arizona Individual Estimated Income Tax Payments.

Make sure that you enter your SSN on your return. Make sure
that all SSNs are clear and correct. You may be subject to a
penalty if you fail to include your SSN. It will take longer to
process your return if SSNs are missing, incorrect, or unclear.

What if You Make Your Estimated Payments Late?
We will charge you a penalty if you are late or if you fail to
make any required payments. See Arizona Form 221.
4

Arizona Form 140
Use your current home address. The department will mail your
refund to or correspond with you at that address.

If filing a joint return with your part-year resident spouse, you
must file a joint return using Arizona Form 140PY. See
Form 140PY instructions. For more information on filing a
joint tax return with your part-year resident or nonresident
spouse, see the department’s ruling, ITR 14-1, Filing a Joint
Tax Return When a Resident Spouse is Married to a Part-Year
Resident or Nonresident.

For a deceased taxpayer, see page 2 of these instructions.

Foreign Addresses
If you have a foreign address, enter the information in the
following order: city, province or state, and country. Follow
the country’s practice for entering the postal code. Do not
abbreviate the country name.

Box 4a - Injured Spouse Protection of Joint
Overpayment

Last Names Used in Last 4 Prior Years

Check box 4a only if you and your spouse are filing a joint
return and you or your spouse qualify as an injured spouse and
are requesting protection from application of any joint
overpayment against the other spouse’s delinquencies or debts
for back child support, court fees, and fees to counties, cities or
educational institutions. The taxpayer (spouse) requesting
injured spouse protection must have Arizona income with
taxes withheld and reported on their own Form W-2 or
Form 1099.

If the last name that you or your spouse are using on this return
is not the same as the last name you or your spouse used on
returns filed in the last 4 years, enter any other last name(s) that
you or your spouse used when filing your return during that
period.

Identification Numbers for Paid Preparers
If you pay someone else to prepare your return, that person must
also include an identification number where requested. A paid
preparer may use any of the following:
• his or her PTIN;
• his or her SSN; or
• the EIN for the business.

NOTE: You cannot use Form 203 to request protection from
offset for past-due federal taxes. You must contact the IRS.
You must complete Arizona Form 203, Request for Injured
Spouse Protection from Application of Joint Overpayment
Against Spouse’s Delinquencies and Debts, and include that
form with your tax return when filed. For more information,
see the instructions for Form 203.

A paid preparer who fails to include the proper identification
number may also be subject to a penalty.

Determining Your Filing Status

Box 5 - Head of Household Return

The filing status that you use on your Arizona return may be
different from that used on your federal return.

If you are filing as a head of household, check box 5. Enter the
name of the qualifying child or dependent in the space provided.
You may file as head of household on your Arizona return only
if one of the following applies:
• You qualify to file as head of household on your federal
return; or
• You qualify to file as a qualifying widow or widower on
your federal return.

Use this section to determine your filing status. Check the
correct box (4 through 7) on the front of Form 140.
If you qualify as married for federal purposes, you qualify as
married for Arizona purposes and must file using the status of
either married filing joint or married filing separate.
If you are single, you must file as single or if qualified you may
file as head of household (see the instructions for box 5).

Box 6 - Married Filing Separate Return

Box 4 - Married Filing Joint Return

If you are married and filing a separate return, check box 6.
Enter your spouse's name and SSN on the second line 1.

If you are married and filing a joint return, check box 4.
You may file a joint return if you were married as of
December 31, 2023. It does not matter whether or not you were
living with your spouse. You may file a joint return, even if you
and your spouse filed separate federal returns.

If you were married as of December 31, 2023, you may choose
to file a separate return. You may file a separate return, even if
you and your spouse filed a joint federal return.
Arizona is a community property state. If you file a separate
return, you must figure out how much income to report using
community property laws. Under these laws, a separate return
must reflect one-half of the community income from all sources
plus any separate income.

You may file a joint return if your spouse died during 2023 and you
did not remarry in 2023. See page 2 of these instructions for details.
Arizona Form 140 is for full year residents only. You may not
file a joint income tax return on Form 140 if any of the
following apply:
• Your spouse is a nonresident alien (citizen of and living in
another country).
• Your spouse is a resident of another state.
• Your spouse is a part-year Arizona resident.

When you file separate returns, you must account for
community deductions and credits on the same basis as
community income. Both you and your spouse must either
itemize or not itemize. If one of you itemizes, you both must
itemize. If one of you takes a standard deduction, you both must
take a standard deduction. One of you may not claim a standard
deduction while the other itemizes.

If filing a joint return with your nonresident spouse, you must file
a joint return using Arizona Form 140NR. See Form 140NR
instructions.
5

Arizona Form 140
If you and your spouse support a dependent child from
community income, either you or your spouse may claim the
dependent. Both of you cannot claim the same dependent on
both returns. For more information, see the department’s
rulings, ITR 93-18, Income Reporting Requirements for
Married Arizona Residents Who File Separate Arizona
Individual Income Tax Returns; and ITR 93-19, Deductions,
Exemptions, and Credits for Married Taxpayers Who File
Separate Arizona Individual Income Tax Returns.

•

Box 9 - Blind

NOTE: In some cases, you may treat community income as
separate income. For more information, see the department’s
ruling, ITR 93-22, When Community Income May Be Treated
as Separate Income.

If you or your spouse were partially blind as of
December 31, 2023, you must get a statement certified by your
eye doctor or registered optometrist that either:
•

If one spouse is a resident and the other spouse is not, other
special rules may apply when filing a separate return. See the
department’s ruling, ITR 93-20, Income Reporting
Requirements of Resident and Nonresident Spouses Who File
Separate Arizona Individual Income Tax Returns; and see the
department’s publication, Pub. 200, Income Tax Issues
Affecting Married and Divorced Taxpayers.
If you are filing as single, check box 7.
Use this filing status if you were single on December 31, 2023.
You are single if any of the following apply to you:
• You have never been married.
• You are legally separated under a decree of divorce or of
separate maintenance.
• You were widowed before January 1, 2023, and you did
not remarry in 2023, and you do not qualify to file as a
qualifying widow or widower with dependent children on
your federal return.

•

•

NOTE: If you got divorced during the year, see the
department’s ruling, ITR 14-2, Reporting Income, Deductions,
Exemptions, and Withholding for Divorced Individuals for the
Year of Divorce; and publication, Pub. 200, Income Tax Issues
Affecting Married and Divorced Taxpayers.

If you are married filing a joint return, enter "1" in box 9 if
you or your spouse is totally or partially blind.
Enter "2" in box 9 if both you and your spouse are totally
or partially blind and your spouse meets the above criteria.
If you are married and filing a separate return, you may
take an exemption for yourself if you are totally or partially
blind. You may only claim an exemption for your spouse
if (1) your spouse is totally or partially blind, (2) has no
Arizona adjusted gross income for the calendar year, and
(3) is not the dependent of another taxpayer.
Enter "1" in box 9 if you are totally or partially blind or
your spouse is totally or partially blind and your spouse
meets the above criteria.
Enter “2” in box 9 if you are totally or partially blind and
your spouse is totally or partially blind and your spouse
meets the above criteria.

Exemptions - Boxes 8, 9, and 11a

Box 11a - Qualifying Parents and Grandparents

Enter the number of exemptions you are claiming in boxes 8,
9, and 11a. Do not put a check mark or an “X”. You may lose
the exemption if you put a checkmark or “X” in these boxes.

NOTE: If a person who is a qualifying parent or grandparent
also qualifies as your dependent, you may include that person
as a dependent in box 10b, or you may claim that person as a
qualifying parent or grandparent in box 11a. You may not
include the same person in both box 10b and box 11a.

Box 8 - Age 65 or Over
NOTE: If a taxpayer’s 65th birthday was January 1, 2024
(born 1/1/1959), that person is considered to be age 65 at the
end of 2023 for federal income tax purposes and likewise for
Arizona income tax purposes.

•

You cannot see better than 20/200 in your better eye with
glasses or contact lenses or

• Your field of vision is 20 degrees or less.
If your eye condition is not likely to improve beyond the
conditions listed above, you can get a statement certified by
your eye doctor or registered optometrist to that effect instead.
You must keep the statement for your records.
• If you are single or filing as head of household, enter "1"
in box 9 if you are totally or partially blind.

Box 7 - Single Return

•

Enter "2" in box 8 if both you and your spouse were 65 or
older in 2023 and neither of you are claimed as a dependent
by another taxpayer.
If you are married and filing a separate return, enter
"1" in box 8 if you were 65 or older and not claimed by
another taxpayer. You cannot take an exemption for your
spouse. Your spouse, if 65 or older and not claimed by
another taxpayer, may take this exemption on their own
separate return.

You must complete the qualifying parent and grandparent
section (lines 11b and 11c) on page 1 (and Part 2 on page 4, if
more space is needed) before you can total your exemptions for
qualifying parents and grandparents. Be sure to check the box
on page 1 indicating you are completing page 4.

If you are single or filing as head of household, enter "1"
in box 8 if you were 65 or older in 2023 and not claimed as
a dependent by another taxpayer.

A qualifying parent or grandparent may be any one of the
following:

If you are married filing a joint return, enter "1" in box 8 if
you were 65 or older and not claimed as a dependent by
another taxpayer or your spouse was 65 or older in 2023
and not claimed as a dependent by another taxpayer.

•
•
6

Your parent, grandparent, or great-grandparent, etc.
If married filing a joint return, your spouse’s parent,
grandparent, or great-grandparent, etc.

Arizona Form 140
You may claim this exemption if all of the following apply:

You may lose the exemption for qualifying parents and
grandparents if you do not furnish this information. Enter the
total number of qualifying parents/grandparents in box 11a.

1.

The parent, grandparent, or great-grandparent was 65 years
old or older during 2023.

2.

The parent, grandparent, or great-grandparent lived in your
principal residence for the entire taxable year.

Dependents - Boxes 10a and 10b

If your parent or grandparent died during the taxable year,
this requirement will still be met if he or she lived with you
for the entire part of the year in which he or she was alive.
Temporary absences by the parent or grandparent for
special circumstances, such as a hospital stay or care in a
hospice facility, count as time lived in the taxpayer’s
principle residence.

Boxes 10a and 10b identify the number of your qualifying
dependents that are either under the age of 17 (box 10a) or age
17 and over (box 10b). This information is used to compute the
allowable Dependent Tax Credit.
Include only those
dependents in box 10a or 10b that you are using to compute the
allowable Dependent Tax Credit claimed on line 49.

3.

Boxes 10a and 10b

You paid more than one-half of the support and
maintenance costs of the parent or grandparent during the
taxable year.

NOTE: If a person who is a qualifying parent or grandparent
also qualifies as your dependent, you may include that person
as a dependent in box 10b to compute the allowable Dependent
Tax Credit, or you may claim that person as a qualifying parent
or grandparent in box 11a. You may not include the same
person in both box 10b and box 11a.

To help you determine if you paid more than one-half of
your parent or grandparent’s support during the taxable
year, it is recommended that you review the department’s
procedure, ITP 14-1, Procedure for Determining Support
for Purposes of the Parents and Grandparents Exemption
Allowed under A.R.S. § 43-1023(C) and complete the
worksheet. Keep the worksheet for your records.
4.

Lines 10c through 10e
You must complete the dependent information section (lines
10c through 10e) on page 1 (and Part 1 on page 4, if more space
is needed) for each person counted in either box 10a or 10b. Be
sure to check the box on page 1 indicating you are
completing page 4.

The parent or grandparent required assistance with
activities of daily living.
The term “activities of daily living” means two or more of
the following listed categories. Activities of daily living
include both basic activities of daily living and
instrumental activities of daily living. The categories of
activities of daily living are: dressing, eating, ambulating,
toileting,
medicating
and
hygiene,
shopping,
housekeeping, managing personal finances, basic
communication, food-preparation, and transportation.

You may claim only those individuals that qualify as your
dependent for federal purposes. For each qualifying individual,
enter the following information:

a)
b)
c)
d)

Temporary absences: Your child or dependent is
considered to have lived with you during periods of time
when temporarily absent due to special circumstances such
as: illness, education, business, or vacation. Your child is
also considered to have lived with you during any required
hospital stay following birth, as long as the child would
have lived with you during that time but for the
hospitalization.
e) - check box 1 (for box 10a) if this person is under the age
of 17 or
- check box 2 (for box 10b) if this person is age 17 or over;
and
f) check the box if you did not claim this person on your
federal return due to educational credits.

For more information regarding what the term “activities of
daily living” means when determining an Arizona resident
taxpayer’s eligibility for this exemption, see the department’s
ruling, ITR 14-3, "Activities of Daily Living" for the Purpose of
the Exemption Allowed Under A.R.S. § 43-1023(C).
To help you determine if your parent or grandparent required
assistance with activities of daily living to meet this
requirement, it is recommended that you review the
department’s procedure, ITP 14-2, Procedure for Determining
Whether a Parent or Grandparent Requires Assistance with
Activities of Daily Living for Purposes of the Exemption
Allowed under A.R.S. § 43-1023(C) and complete the checklist.
Keep the checklist for your records.

Lines 11b and 11c

NOTE: If you did not claim a dependent who is a student on
your federal return in order to allow the student to claim a
federal education credit on the student’s federal return, you
may still claim the dependent on your Arizona return.
For more information, see the department’s ruling, ITR 05-2,
Will Arizona Allow a Dependent Exemption When a Taxpayer
Does Not Claim Federal Exemption in Order to Claim the
Education Credit?

For each qualifying parent and grandparent, enter the following
information:
a)
b)
c)
d)
e)
f)

first and last name;
social security number;
relationship to taxpayer;
the number of months this person lived in your home;

first and last name;
social security number;
relationship to taxpayer;
the number of months this person lived in your home;
check this box if the person is age 65 or over;
check this box if the person died in 2023.
7

Arizona Form 140
You may lose the dependent tax credit if you do not furnish this
information. Enter the total number of dependents in box 10a
and 10b.

NOTE: If you are filing a “zero” SBI return to claim any
overpayment from estimated/extension payments made for the
SBI tax return, check the box and enter “zero” on line 13. Be
sure to file both returns together by the due date (including
extension). See Form 140-SBI form instructions for completing
a “zero” tax return.

Totaling Your Income
Line 12 - Federal Adjusted Gross Income
You must complete your federal return before you enter an
amount on line 12. You must complete a 2023 federal return to
determine your federal adjusted gross income, even if you are
not filing a federal return.

Subtract line 13 from line 12.

Arizona uses federal adjusted gross income as a starting point
to determine Arizona taxable income. Your federal adjusted
gross income is your Arizona gross income.

NOTE:

Line 14 – Modified Federal Adjusted Gross Income

Additions to Income
•

If you are electing to report your small business income on
Form 140-SBI and if any of the following additions are
directly related to the small business income, report that
addition on Form 140-SBI. If the addition is not directly
related to small business income, make the addition on
Form 140.

•

If you are not filing Form 140-SBI, make that addition on
Form 140.

NOTE: Be sure to use your federal adjusted gross income and
not your federal taxable income.
If the amount on line 12 is more than $75,000 ($150,000 if filing
a joint return), you may need to make estimated payments. See
"Do You Need to Make Estimated Payments in 2024?" on page 4.

Arizona Small Business Income Tax Return

Line 15 - Non-Arizona Municipal Interest
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

Individuals may elect to report their small business income on
Arizona Form 140-SBI, Small Business Income (SBI), for the
small business income amount included in their federal adjusted
gross income.
An individual’s small business income is reported on federal
Schedules B, C, D, E, F and Form 4797 (for amounts not
included on Schedule D). For more information, see Form 140SBI and instructions.

Enter the amount of interest income from non-Arizona
municipal bonds that you did not include as income on your
federal return.
You may exclude any expenses incurred to purchase or carry
the obligation. Reduce the interest income by the amount of
those expenses that you could not deduct on your federal return.

Additional information and guidance can be found in the
department’s Publication 712, Summary of Arizona Small
Business Income and Taxation.

If you received tax exempt interest from municipal bonds, keep
a schedule listing the payors and the amount received from each
payor for your records. You should also keep supporting
documents for amounts received from Arizona municipal bonds
that are exempt from Arizona income tax. These may be items
such as bank statements, brokerage statements, etc.

How do I elect to report Small Business Income
on Arizona Form 140-SBI?
Taxpayers make the election by simply completing Form 140-SBI
reporting their small business income and including the
completed form with their Arizona Form 140 tax return, when
filed.

Line 16 - Partnership Income Adjustment
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

NOTE: You must include Form 140-SBI with your Form 140,
when filed. If you do not include Form 140-SBI with your
Form 140, processing of your return may be delayed or your
subtraction on line 13 may be denied. See the Mailing
instructions for the correct address when mailing both
Form 140 and Form 140-SBI.

Complete line 16 if you received an Arizona Form 165
Schedule K-1 and line 3 shows a difference between federal and
state distributable income.

Modified Federal Adjusted Gross Income

If the difference reported on line 3 of your Form 165 Schedule
K-1 is a positive number, enter that difference as an addition on
line 16.

Line 13 - Small Business Income
If you elect to report your small business income on Arizona
Form 140-SBI, check the box on line 13 and enter the amount
of small business income reported on Form 140-SBI, line 10.

NOTE: If the difference reported on line 3 of your Form 165
Schedule K-1 is a negative number, enter the difference on 27.
Line 17 - Total Federal Depreciation
If you are making the small business election and this addition
is directly related to small business income reported on
8

Arizona Form 140
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

reported on line 3 of your Form 141AZ Schedule K-1 is a
positive number, include that amount on line 18.

Enter the total amount of depreciation deducted on your federal
return. If you make an entry here, you should also take a
subtraction on line 26. To figure out how much you should
subtract, see the instructions for line 26.

NOTE: If the amount reported on line 3 of your Form 141AZ
Schedule K-1 is a negative number, include that amount as an
Other Subtraction on line 36.
C. Ordinary Income Portion of Lump-Sum Distributions
Excluded on Your Federal Return
Make this adjustment if you use federal averaging for lump-sum
distributions from your pension or profit-sharing plan. Arizona
law does not provide for averaging. Enter the amount of the
distribution that you treated as ordinary income on your federal
return. If you choose to treat the capital gain portion of the
distribution as ordinary income, you must also include that
amount.

Line 18 - Other Additions to Arizona Gross Income
NOTE:
•

If you are electing to report your small business income on
Form 140-SBI and if any of the following “other
additions” are directly related to the small business
income, report that addition on Form 140-SBI. If the
addition is not directly related to small business income,
make the addition on Form 140.

•

If you are not filing Form 140-SBI, make that “other
addition” on Form 140.

For more information, see the department’s ruling, ITR 93-5,
Arizona's Income Tax Treatment of the Capital Gain Portion of
a Lump Sum Distribution from a Qualified Retirement Plan.

Use line 18 if any of the following special circumstances apply.

D. Items Previously Deducted for Arizona Purposes

NOTE: If you are reporting any adjustment on line 18 complete
the schedule on page 5 of your tax return, Other Additions to
Arizona Gross Income, and include it with your return.

Arizona statutes prohibit a taxpayer from deducting items more
than once. If your Arizona taxable income includes items
previously deducted for Arizona purposes, you must add such
amounts to your Arizona gross income.

If you are not reporting any adjustment on line 18, do not include
page 5 with your return.

E. Claim of Right Adjustment for Amounts Repaid in 2023

You may either add (on line 18) or subtract (on line 36) items
A and B, depending on your situation.

NOTE: For items E, Fa and Fb; taxpayers that made the
election to file an Arizona Small Business Income Tax Return
in 2023, if the income required to be paid back under the claim
of right is the type of income that would be included in lines 4
through 9 of the 140-SBI return if the income were reported in
2023, the adjustment should be made in the 140-SBI return. All
other claim of right adjustments should be made on the regular
140 return.

A. Married Persons Filing Separate Returns
If you file a separate Arizona return, you must report the
following income on that return:
• one-half of the community income from all sources, and
• all of your separate income.
If you and your spouse file a joint federal return but separate
Arizona returns, you must make sure that each separate return
reflects the correct income. If you begin your Arizona return
with only the income that you earned during the year, you will
have to adjust this income.

You must make an entry here if all of the following apply:
• During 2023, you were required to repay amounts held
under a claim of right.
• The amount required to be repaid during 2023 was more
than $3,000.
• You took a deduction for the amount repaid on your 2023
federal income tax return.

If you file separate federal returns, each of your federal returns
should already reflect the correct income. Since your separate
Arizona returns will begin with the federal adjusted gross
income, you will not have to adjust your income.

If the above apply, include the amount deducted on your federal
income tax return. For more information on the Arizona claim
of right provisions, see the department’s procedure, ITP 16-1,
Procedure for Individuals Who Restore Substantial Amounts
Held under a Claim of Right.

If you adjust your income, keep a schedule for your records of
how you figured your adjustment. For more information, see
the department’s publication, Pub. 200, Income Tax Issues
Affecting Married and Divorced Taxpayers.
B. Fiduciary Adjustment
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

F(a). Claim of Right Adjustment for Amounts Repaid in
Prior Taxable Years
You must make an entry here if all of the following apply:
• During a year prior to 2023, you were required to repay
amounts held under a claim of right.
• You computed your tax for that prior year under Arizona's
claim of right provisions.
• A net operating loss or capital loss was established due to
the repayment made in the prior year.

A fiduciary uses Arizona Form 141AZ Schedule K-1 to report
to you your share of the fiduciary adjustment from the trust or
estate.
Line 3 of Form 141AZ Schedule K-1 shows your share of the
fiduciary adjustment from the estate or trust. If the amount
9

Arizona Form 140
•

You are entitled to take that net operating loss or capital
loss carryover into account when computing your 2023
Arizona taxable income.

H(b). Adjusted Basis in Property for Which You Have
Claimed an Agricultural Pollution Control Equipment
(Credit 325)

•

The amount of the loss carryover included in your federal
income is more than the amount allowed to be taken into
account for Arizona purposes.

If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

Include the amount by which the loss carryover included in
your federal adjusted gross income is more than the amount
allowed for the taxable year under Arizona law.

The amount by which the adjusted basis computed under the
internal revenue code with respect to property that is
agricultural pollution control equipment for which a credit
(Credit 325) was taken before taxable year 2022 and that is sold
or otherwise disposed of during the taxable year exceeds the
adjusted basis of the property for agricultural pollution control
equipment computed under section 43-1081.01 (Credit 325).

F(b). Adjustment for Net Operating Loss due to Claim of
Right
You must add-back the adjustment for any net operating loss
previously claimed that is related to the amount of your claim
of right reported.

H(c). Adjusted Basis in Property for Which You Previously
Claimed a credit for Pollution Control Equipment
(Credit 315)

G(a). Addition Due to Claiming the Agricultural Water
Conservation System (Credit 312)
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

You must make an addition to income for the amount of
expenses disallowed by reason of claiming the credit. See the
instructions for completing Credit Form 312.

The amount by which the adjusted basis computed under the
internal revenue code with respect to property that is pollution
control equipment for which a credit (Form 315) was taken
before taxable year 2022 and that is sold or otherwise disposed
of during the taxable year exceeds the adjusted basis of the
property computed under section 43-1081 (Credit 315).

G(b). Addition to S Corporation Income Due to Claiming
Pass-through Credit for Agricultural Water Conservation
System (Credit 312)
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

I. Nonqualified Withdrawals from 529 College Savings
Plans
You must make an addition to income if both of the following
apply to you:

Shareholders of an S corporation who claim a credit passed
through from an S corporation must make an addition to income
for the amount of expenses disallowed by reason of claiming
the credit.

•
•

You received a nonqualified withdrawal from a 529 college
savings plan.
You did not include the amount of the withdrawal in your
federal adjusted gross income.

An S corporation that passes the following credits through to its
shareholders must notify each shareholder of his or her pro rata
share of the adjustment (Form 312-S, line 1). You must include
an amount on this line when claiming the Agricultural Water
Conservation System Credit (Form 312). See the instructions for
completing Credit Form 312.

The amount that you must include is the amount withdrawn, but
no more than the difference between the amount of
contributions subtracted in prior years and the amount added in
any prior years.

H(a). Adjusted Basis in Property for Which You Have
Claimed a Credit for Investment in Qualified Small
Businesses (Credit 338)

•

If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

•

A nonqualified withdrawal is a withdrawal other than any of the
following:

The amount by which the adjusted basis computed under the
internal revenue code with respect to property for which a credit
was claimed (Credit 338) and that is sold or otherwise disposed
of during the taxable year exceeds the adjusted basis of the
property computed under section 43-1074.02 (Credit 338).
10

A qualified withdrawal. A qualified withdrawal is a
withdrawal from an account to pay the qualified higher
education expenses of the designated beneficiary of the
account.
A withdrawal made as the result of the death or disability
of the designated beneficiary of an account.

•

A withdrawal that is made on the account of a scholarship, or
the allowance or payment described in IRC § 135(d)(1)(B)
or (C), and that is received by the designated beneficiary,
but only to the extent of the amount of this scholarship,
allowance or payment.

•

A rollover or change of designated beneficiary.

Arizona Form 140
J. Sole Proprietorship Loss of an Arizona Nonprofit
Medical Marijuana Dispensary included in Federal
Adjusted Gross Income
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.
NOTE: A dual licensee that elects to operate on a for-profit
basis does not qualify for a subtraction for the medical
marijuana portion of their business.

taxpayer was an Arizona nonresident, in the Arizona taxable
income of a return filed for a taxable year in which the taxpayer
is an Arizona resident. Therefore, a capital loss incurred from
non-Arizona sources while the taxpayer was an Arizona
nonresident cannot be carried forward to a taxpayer's Arizona
resident return when the loss carryover is reflected in the
taxpayer's federal adjusted gross income.
The taxpayer must make an addition to Arizona gross income
on the full-year Arizona resident return for the amount of such
capital loss carryforward deduction included in the computation
of the taxpayer’s federal adjusted gross income.

If you are registered as an Arizona sole proprietorship with the
Arizona Department of Health Services to operate in this state
as a nonprofit medical marijuana dispensary, you are required
to add the amount of the loss from the dispensary that is
included in the computation of your federal adjusted gross
income. Include the amount of the loss.

For more information, see the department’s ruling, ITR 13-6,
Can a Capital Loss Incurred as a Non-Resident Be Used to
Offset Income in a Year in Which the Taxpayer Is A Resident?
M. Americans with Disabilities Act - Access Expenditures
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

NOTE: If the Arizona nonprofit medical marijuana dispensary
is registered with the Arizona Department of Health Services as
anything other than a sole proprietorship, this addition does not
apply.

If a subtraction is taken on line 36, Other Subtractions from
Income (Item M), for the full amount of eligible business access
expenditures paid or incurred during the taxable year to comply
with the Americans with Disabilities Act of 1990 or
A.R.S Title 41, chapter 9, article 8; you must make an addition
to Arizona gross income for any amount that is included in the
computation of federal adjusted gross income for the current
year, plus any federally amortized amounts.

In addition, a sole proprietorship of an Arizona dual licensee
that has not elected to operate on a for-profit basis may subtract
the portion of income included in federal adjusted gross income
that is from the medical marijuana portion of the business.
NOTE: A dual licensee that elects to operate on a for-profit
basis does not qualify for a subtraction for the medical
marijuana portion of their business.

N. Amortization or Depreciation for Child Care Facility
You may need to make an addition for depreciation or
amortization if you elected to amortize the cost of a child care
facility under Arizona law in effect before 1990 and you are still
deducting amortization or depreciation for that facility on your
federal income tax return.

K. Federal Net Operating Loss (NOL) Carryforward from
Non-Arizona Sources Accrued While a Nonresident
An individual cannot include a federal NOL carryforward
deduction incurred from non-Arizona sources while the
taxpayer was an Arizona nonresident in the Arizona taxable
income of a return filed for a taxable year in which the taxpayer
is an Arizona resident.

O. Net Capital (Loss) from Exchange of One Kind of Legal
Tender for another Kind of Legal Tender

The taxpayer must make an addition to Arizona gross income
on the full-year Arizona resident return for the amount of the
NOL carryforward deduction included in the taxpayer’s federal
adjusted gross income. For more information, see the
department’s ruling, ITR 13-5, Can a Net Operating Loss
Incurred as a Non-Resident Be Used to Offset Income in a Year
in Which the Taxpayer Is A Resident?

NOTE: If you elected to file the Arizona Small Business
Income Tax Return, only claim the addition on this return if the
net capital loss to which the addition relates was not moved to
the Arizona Small Business Income Tax Return.
To determine if you are required to make this addition to
income, you must net all gains and (losses) from all exchanges
of one kind of legal tender for another kind of legal tender,
including amounts shown on Form 165 Schedule K-1,
Form 120S Schedule K-1, and Form 141AZ Schedule K-1.

NOTE: For a non-Arizona source loss incurred while the
taxpayer was an Arizona nonresident, the taxpayer would not
be allowed to amend a prior year resident Arizona income tax
return to claim the NOL carry back deduction.

Enter the amount of any net capital (loss) included in Arizona
gross income for the taxable year that is derived from the
exchange of one kind of legal tender for another kind of legal
tender.

L. Federal Capital Loss Carryforward Deduction Incurred
from Non-Arizona Sources Prior to Arizona Residency
NOTE: This addition is not related to small business income
and should not be reported on Form 140-SBI. Make this
addition on Form 140.

NOTE: If the amount from all sources results in a net capital
gain from the exchange of one kind of tender for another kind
of tender, enter that amount page 6, “R”.

An individual cannot include a capital loss carryforward
deduction, incurred from non-Arizona sources while the
11

Arizona Form 140
For the purposes of this paragraph:

credit was taken on Credit Form 325 that exceeds the
amount of depreciation or amortization computed pursuant
to internal revenue code on the Arizona adjusted bases of
the property.

(a) "Legal tender" means a medium of exchange, including
specie that is authorized by the United States Constitution or
Congress for the payment of debts, public charges, taxes and
dues.

•

(b) "Specie" means coins having precious metal content.
P. Entity-Level Income Tax Payment
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not take the addition on Form 140, enter the
addition on Form 140-SBI.
If you are claiming the income tax credit on Form 355, Credit
for Entity-Level Income Tax Paid on Your Behalf from a
Partnership and/or an S Corporation, you must add the amount
deducted by the partnership and/or S Corporation for the
amount of Arizona income tax paid on your behalf in 2023.

If you have more than one adjustment related to tax credits, add
the amounts together and enter the total.
S. Other Adjustments
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not take the addition on Form 140, enter the
addition on Form 140-SBI.

Enter the total amount of tax paid shown on:

•
•

If you previously claimed the Pollution Control Equipment
Credit (Form 315) before tax year 2022, you must make an
addition to income for the amount by which the depreciation
or amortization computed under the internal revenue code
with respect to property for which a credit was taken on
Credit Form 315 that exceeds the amount of depreciation or
amortization computed pursuant to internal revenue code on
the Arizona adjusted bases of the property.

Arizona Form 165, Schedule K-1, Part 5, lines 10 and 11.
Arizona Form 120S, Schedule K-1, Part 5, lines 9 and 10.

Other adjustments may be necessary. For example, you must
add-back expenses related to income that Arizona does not tax.
If you have more than one Other Adjustment, add the amounts
together and enter the total.

NOTE: Enter the tax amount actually paid by the Partnership or S
Corporation in 2023. Tax amounts paid in 2024 for tax year 2023
will be added-back on your 2024 tax return. These payments include
any 4th QTR estimated taxes paid in January 2024 and any 2024 tax
payments made with the Entity’s tax return on your behalf.

T. Total Other Additions to Arizona Gross Income
Add all amounts from page 5, and enter the total on line 18.
Line 19 - Subtotal

Q. Credit for Motion Picture Production Costs
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

Add lines 14 through 18 and enter the total.

Subtractions from Income
NOTE:

If you are claiming a credit on Form 334, Credit for Motion
Picture Production Costs, you must make an adjustment
(addition) to your Arizona gross income for the amount of any
motion picture production costs that was deducted pursuant to
the Internal Revenue Code (IRC) for which a tax credit is
claimed on Form 334.

•

If you are electing to report your small business income on
Form 140-SBI and if any of the following subtractions are
directly related to the small business income, report that
subtraction on Form 140-SBI. If the subtraction is not
directly related to small business income, report the
subtraction on Form 140.

If you received a pass-through credit from a partnership, LLC
or S Corporation, you must also add-back your pro-rated
expenses shown on your Form 334-P, Line 4b and/or Form 334-S,
line 4b, provided by the pass-through entity.

•

If you are not filing Form 140-SBI, take that subtraction on
Form 140.

You may only subtract those items for which statutory authority
exists. You cannot take a subtraction without such authority.

R. Other Adjustments Related to Tax Credits
If you are making the small business election and this addition
is directly related to small business income reported on
Form 140-SBI, do not report the addition on Form 140, enter
the addition on Form 140-SBI.

You may not subtract any amount that is allocable to income
excluded from your Arizona taxable income.
If you have any questions concerning subtractions from income,
call one of the numbers listed on page 1 of these instructions.
Lines 20 through 24 - Net Capital Gain or (Loss)

You may also need to make an addition if you claimed certain
tax credits.
•

NOTE: For lines 20-24; if you elected to file the Arizona Small
Business Income Tax Return, only claim the subtraction on this
return if the net capital gain to which the subtraction relates
was not moved to the Arizona Small Business Income Tax
Return.

If you claimed the Agricultural Pollution Control
Equipment Credit (Form 325) before tax year 2023, you
must make an addition to income for the amount by which
the depreciation or amortization computed under the
internal revenue code with respect to property for which a

12

Arizona Form 140
If you have net capital gains or (losses) not related to small
business income, enter those amounts on Form 140, lines 20-24.

If you completed the worksheet at the end of these instructions,
enter the amount from line 5 of the worksheet.

If you are not filing a small business income tax return, include
all net capital gains or (losses) on Form 140, lines 20-24.

If you did not complete the worksheet and you have no net longterm capital gain from assets acquired after December 31, 2011,
enter zero, “0”.

NOTE: If you enter an amount on line 20, you must complete
lines 21 and 22. If you are taking a subtraction on line 24 for
any net long-term capital gain from assets acquired after
December 31, 2011, you must also complete line 23. If you do
not complete lines 20 through 23, you cannot take the
subtraction on line 24.

Line 24 - Net Long-Term Capital Gain Subtraction
From
Income
for
Assets
Acquired
After
December 31, 2011.
Multiply the amount on line 23 by 25% and enter the result.
CAUTION: If you take a subtraction for the net capital gain
derived from investment in a qualified business (on line 25) or
the net capital gain from the exchange of one kind of legal
tender for another kind of legal tender (on page 6, item “R”),
that includes any long-term capital gain from an investment
made after December 31, 2011, you cannot include that
portion in your computation of the allowable subtraction on
line 24 for any net long-term capital gain from assets acquired
after December 31, 2011, and included in federal adjusted
gross income. For more information, see the worksheet on
page 31.

You may subtract 25% (.25) of any net long-term capital gain
included in your federal adjusted gross income that is derived
from an investment in an asset acquired after December 31, 2011.
Complete the Worksheet for Net Long-Term Capital Gain
Subtraction for Assets Acquired after December 31, 2011, at the
end of these instructions to determine the allowable subtraction.
Keep the worksheet for your records.
NOTE: If you do not have any net capital gain or (loss) to
report, enter zero, “0” on lines 20-22.

1099-DIV: If you received Form 1099-DIV issued from a fund
Administrator and the 1099-DIV included long-term capital
gains from the sale of assets within the fund (for example a
mutual fund) for the current tax year and the form did not
include the acquisition date of each asset sold within the fund,
you cannot verify that the long-term capital gain was from an
asset acquired by the Fund was after December 31, 2011, for
the purpose of the allowable subtraction on line 23. In this case,
you may want to contact the Fund Administrator and request to
obtain the acquisition date of each asset sold within the fund. If
the Administrator does not provide you with the specific
date(s), then those assets cannot be included on line 23.

Line 20 - Total Net Capital Gain or (Loss)
If you reported a net capital gain or (loss) on your federal
income tax return, enter the total net capital gain or (loss)
reported on the Capital Gain or (Loss) line on your federal
return. This amount should be included in your federal adjusted
gross income.
Line 21 - Total Net Short-Term Capital Gain or (Loss)
Enter the total amount of net short-term capital gain or (loss)
reported on federal Schedule D. This amount should be
included in your federal adjusted gross income.
NOTE: If you are not required to report dividend distributions
and/or short-term capital gains from mutual funds on federal
Form Schedule D, do not include the short-term capital gain
distributed by the mutual fund on line 21.

1099-B: If you received Form 1099-B showing a capital gain
or (loss) from the sale of your portion of a fund (for example a
mutual fund), Form 1099-B would generally include your
purchase date of the fund including acquisition dates of assets
included in your portion of the fund when reporting short-term
or long-term capital gains or (losses). In this cas