Texarkana, Arkansas employers are not required to withhold Arkansas taxes on these employees as long as a form AR-TX is completed stating that the employee actually lives within the city limits of Texarkana, Texas and reports the amount of exempt wages.
This form is completed by the employer and given to the employee to be filed with the Arkansas individual income tax return. A copy is also sent to the State Withholding Branch along with the State’s copy of W-2’s. Non-Texarkana, Arkansas employers must withhold Arkansas taxes on employees regardless of the fact that they live in Texarkana, Texas.
When you work on your Arkansas return it will ask about Border City Exemption
Click Yes if you lived in Texarkana, Arkansas at any time during 2020 and answer the questions about that income.
If you print and mail your Arkansas return you can include the AR-TX form from your employer. If you e-file save the AR-TX form with your 2020 tax records.
AR-TX
