topic Residency in State tax filing

Residency

upsdixon — Thu, 09 May 2024 16:54:55 GMT

My husband and I both work in MS (only- no AR income), but are purchasing a home in AR (cash transaction). We plan on renting something in MS while we finish out our work careers. We will be living in AR on weekends and vacations. A couple of questions:

1. will we have to pay ANY income taxes to AR if we only make money in MS? I know we will continue paying MS state income taxes.

2. Will be able to be considered an AR resident even if all our income is from MS?

Re: Residency

Bsch4477 — Thu, 09 May 2024 17:12:24 GMT

I assume that you live and work in MS.
1. You won’t owe AR tax if you have no AR income.
2. You will not be a resident of AR.

Re: Residency

Hal_Al — Fri, 10 May 2024 11:52:12 GMT

Q. will we have to pay ANY income taxes to AR if we only make money in MS?

A. No. You will only need to file an AR income tax return if you somehow start get ting AR source income.

Q. Will we be able to consider ourselves as AR residents even if all our income is from MS?

A. Once you become AR residents, even if you continue to have MS income, you will have to file an AR tax return*. You will become an AR resident when you start spending more than 6 months, per year, in AR. Reference: https://casetext.com/regulation/arkansas-administrative-code/agency-006-department-of-finance-and-administration/division-05-division-of-revenues/regulation-1997-4-comprehensive-individual-income-tax-regulations/rule-26-51-102-definitions/rule-226-51-1029-residency-determination.

*This is the general rule: The income is work state (WS) source income since it was earned there. Resident States (RS) tax all their resident's income, regardless of where earned. You will file a non-resident tax return for the WS and report the WS income. You will file a full year resident return for the RS, reporting all your income. The RS will give you a credit, or partial credit for any tax paid to the WS.

Re: Residency

TomD8 — Fri, 10 May 2024 14:50:56 GMT

Will be able to be considered an AR resident even if all our income is from MS?

Your residency is not determined by your income source. There are two scenarios under which you would become a resident of Arkansas for tax purposes:

1. You literally move from MS to AR. This means that you abandon your domicile (your main, primary home) in Mississippi and re-establish it in Arkansas. In this scenario you become an AR resident on day one - the day that you begin living in AR with the intent of AR being your new domicile.

2. You keep your domicile in MS, but you maintain a place of abode in AR and spend more than 6 months of the tax year in AR. The six months do not have to be contiguous. In this scenario you would be both a domiciliary resident of MS and a statutory resident of AR.

A resident of MS has no tax obligation to AR unless: 1) they become a domiciliary or statutory resident of AR; OR 2) they have AR-source income