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Arizona Form 309

not separately shown on a specific line of the State XY return, since State XY computes its tax on the total income and then

prorates that tax to reflect the tax attributable to income derived from sources within State XY. For the purpose of the credit, Mr.

and Mrs. F compute the entire income upon which State XY tax is imposed as follows:

Mr. and Mrs. F’s Farm income sourced to State XY (State XY’S

equivalent of Arizona adjusted gross income

computed under A.R.S. § 43-1094)

$16,000

Plus State XY’s equivalent of Arizona’s dependent exemptions

Entire income upon which State XY tax is imposed

$16,000

Form 309, Page 2 – Schedule of Income Allocation Instructions

Complete page 2, Schedule of Income Allocation, only if you

This schedule allocates income between income sourced to

are a full-year Arizona resident who is also considered a

the other state and income from everywhere else that is

resident of another state under the laws of that other state.

taxable to the other state.

Complete column (a) before

completing columns (b) through (d). On lines 1 through 10

All other taxpayers skip page 2, Schedule of Income

of column (a), for each line, enter the amounts reported on

Allocation.

your federal income tax return. In column (b), enter the

NOTE: If you are a full-year Arizona resident that is also

amounts listed in column (a) that are included in income

considered to be a resident of another state under the laws

reported on your Arizona return. In column (c), enter the

of that other state, you must complete the Schedule of

amounts listed in column (a) that are included in income

Income Allocation on page 2 of Form 309 before you

reported on the return filed with the other state. In column

complete page 1 of Form 309.

(d), enter the amounts listed in column (c) that would be

Because the credit allowed for a full-year Arizona resident

sourced to the other state if you were a nonresident of that

that is also considered to be a resident of another state is for

state filing a nonresident return to that state.

taxes paid to that other state on income sourced to that other

state, you must complete the Schedule of Income Allocation,

before you can complete lines 1 through 6 of Form 309.

The following example illustrates how to complete Form 309 for an Arizona resident who is also considered to be a

resident of another state under the laws of that other state.

EXAMPLE:

Facts:

Mr. and Mrs. R are Arizona residents who are temporarily living and working in State Z. They will be there for one year and

then they will return to Arizona. During the current taxable year, Mr. and Mrs. R have been living and working in State Z for 10

and one-half months. Because Mr. and Mrs. R have been living in State Z for more than 183 days during the tax year, State Z

considers Mr. and Mrs. R to be residents of State Z and taxes all of their income from the time they moved to State Z. Because

Mr. and Mrs. R are Arizona residents who are temporarily out of Arizona, they are still full-year Arizona residents for Arizona

income tax purposes and must file a full-year Arizona income tax return and include all income for the taxable year, wherever

derived. For the taxable year, Mr. and Mrs. R have the following income.

Mr. R’s wages from employment in Arizona

$ 15,000

Mr. R’s wages from employment in State Z

$ 42,000

Mrs. R’s wages from employment in State Z

5,000

Interest income

5,000

Rental income from AZ property

$ 20,000

Total income

$ 87,000

Arizona Form 309 Instructions - Credit For Taxes Paid To Another State Or Country - 2014 Page 8

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