Arkansas income question

[cientax]

I have a client that lived in Arkansas for only four months. I'm trying to determine what, if any of the income is taxable for Arkansas tax.

Interest income on insurance Policy $ 42 Policy held by insurance company in SC

Interest income from Bank in AR $ 7584

Government Pension from OPM $22800

IRA distribution from bank in AR $ 625

Social Security Benefits are not taxable in AR

Interest on Government debt bonds are not taxable in AR.

I DO NOT have the Arkansas tax return on my ATX program. I do have it for the 2003 program and I put all the income on that program to see if it would help but it does not carry any income to Column C of the AR1000NR only to Column A. Since I am having to make the proration manually, can someone look at the figures above and give me an idea as to what, if any, is amount to carry to Column C. Remember, they only lived there the first four months of the year then moved to Texas. They are 83 years of age.

Thanks for your outstanding help.

[Laurie P]

I am not in AK but have had to do simpler spliting between states.

I would find out for the income where they lived when they received it and split it out accordingly. For example on the pension, if it is a monthly amount received then I would take 4 out of the 12 months and allocate to AK as income.

For Georiga, there is an allocation worksheet where I put in the amount of income for GA and it adjusts the main forms to calcualte the correct tax.

I hope this helps.

Laurie

[jainen]

>>allocate to AK as income<<

I'm sure the client would appreciate that because Alaska doesn't have income tax, but let's get back to AR!

Regardless of where the bank or payer is, interest and pension income is sourced to the state of residence at the time received. So for example if the taxpayer moved away and then phoned back to his Arkansas bank to send out his IRA funds, that would probably not count as AR income. But it's a little tricky, because having a bank account is one of the main indications of residency. AR might argue that he had not changed his residence until the accounts were all moved. Note that it is entirely possible to be a resident of BOTH states at the same time, because each has separate rules.

[kcjenkins]

I have a client that lived in Arkansas for only four months. I'm trying to determine what, if any of the income is taxable for Arkansas tax.

Interest income on insurance Policy $ 42 Policy held by insurance company in SC

Interest income from Bank in AR $ 7584

Government Pension from OPM $22800

IRA distribution from bank in AR $ 625

OK, use the NR/PY form [You can get a fill-in form at http://www.state.ar.us/dfa/income_tax/docu...0NR_2006_re.pdf if you don't want to pay for the state from ATX.] The total Fed income goes in Col A [and B if Married] and the AR only goes in Col C. So in C you would show interest earned while living in AR, only, ditto for the Pension income and IRA distribution, and the interest income. Then his home state should give him credit for what he paid to AR. AR will want a copy of the Federal return, and his home state will want a copy of the AR return, to support that credit.