If you have rental income in another state, it is recommended that you file a nonresident return showing the rental income/expenses from the property regardless if the property is generating income or losses. Your rental property might be generating passive loss which is carried forward each year to be used to offset income in future years. In addition, there is depreciation expense which is deducted from your property which upon sale of the property will be "recaptured for tax purposes".
Depreciation and Depreciation Recapture
Also, please review the following definitions :
AAGI- Arizona Adjusted Gross Income is simply the Federal Adjusted Gross Income (AGI) adjusted for the state taxes. (For example, there may income/deductions allowed for federal that are/are not allowed for the state.) This is the amount before any credits, personal exemptions, or standard/itemized deductions. If the only thing you are reporting is your rental property, then your AAGI will be the net profit for AZ from that rental.
AZ Taxable Income is the net profit from your rental minus credits, personal exemptions, and standard/itemized deductions. If your AZ Source Income is a negative number, and your only income in AZ is the rental property, then you will have a passive loss to carryforward.
GI - Gross Income is the total of every dollar received on your rental property before deductions or adjustments. Your AZ Source Income should be the same as your Gross Income (GI) for Arizona.
@Dave61948
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