I live in CA and have a rental property in AZ. I am filing the 140NR with AZ due to the fact I have a 1099-MISC for my AZ Rental property. The question I have is it seems I am getting taxed by AZ on the full amount on my 1099-Misc rental income yet I paid for property taxes, repairs, hoa, etc and cant seem to find a place to deduct these on my AZ 140NR. Doesn't seem fair I get taxed by AZ the full amount of the 1099-Misc rental income when I had expenses. On my fed return I was only taxed on about 25% of the 1099- Misc rental income as I could deduct all those costs. Any ideas how I can get this reduced? Can I itemize these costs in my AZ 140NR? There is a place where they ask about the depreciation on the Fed return but it doesn't reduce the 1099-misc income on the AZ 140NR. Seems they keep referring back to my 1040 Schedule A but that is for CA deductions. Any help on reducing the my AZ tax exposure on this 1099-Misc rental income would be greatly appreciated.
The 1099-MISC for the rental should be listed as rental income (Schedule E) on your Federal return.
Be sure not to enter it as "personal" income.
Schedule E also lists expenses, so you only claim the "profit" as income on your Arizona non-resident return.
Pease always do the non-resident state return first so that state tax paid can flow to your resident state return if applicable.
@KrisD15 --
Since CA and AZ are "reverse credit" states, I believe that in this instance the taxpayer should complete the resident state return before doing the non-resident state return. In reverse-credit situations, the "other state credit" is granted by the non-resident state.
Thank you. Actually I did CA Resident first and AZ Non Resident did deduct what CA charged for taxes.
Thank you Champ. Yes you should do the resident tax return first and the Non Resident AZ deducted what CA charged for taxes.
I did the CA first and what I paid in CA was deducted from the Non Resident AZ Taxes.
I still don't see an answer to your question about the Arizona nonresident tax return not taking into account all the expenses for a rental property. It appears TurboTax is calculating Arizona state income tax based solely on the gross income collected via rent and not for the adjusted amount after rental property expenses are deducted. Please help
When I did my CA resident tax return first it picked up on the actual income (from Fed return) after deductions. On AZ Form 301 line 3 you enter the "Credit for Taxes Paid to Another State or Country........................ From Form 309 "Computation of Other State or Country Tax Credit" which made my AZ tax be 0. CA and AZ have a reciprocal tax agreement.