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AZ Income Tax Out of State Remote Worker

I live in Nevada and work remotely for a company in Arizona. I was physically present in AZ for 4 days in all of 2023. I can't seem to get ahold of AZDOR despite my many, many attempts to get clarification on this answer. My employer listed AZ and my income on my 2023 W-2 so TurboTax says I have to file but based on all the things I've read it doesnt look like I'm required to pay AZ income tax since I was not present in the state for more than 60 days. Do I have to file with AZ or not? If I do, how do I claim exempt or do I just zero out my income for AZ? If I don't have to file how does AZ know I was a remote employee?

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Accepted Solutions
Cynthiad66
Expert Alumni

AZ Income Tax Out of State Remote Worker

It depends.  You must file an AZ return to receive all withholdings back as a refund.  For instance, if your W-2 shows Box 15 as AZ and an amount in Box 17, then you will need to file an AZ Nonresident return to get those withholdings refunded.  When you prepare a Non-Resident return, you will most likely receive all of the withholdings as a refund.   

 

No, you do not have to zero out your state income.  The system will accurately show that you are a Non-Resident for less than 60 days and generate a refund. The key is to answer the interview questions accurately in My Info to get started.  See below.

 

TurboTax has very specific questions about earning income out of state.  You should make sure that you address those questions as they would lend to reporting the income accurately based on AZ laws.  See the Exhibits below.  First go back to the My Info Section of your return, as seen in the 1st Exhibit.

 

 

Answer this question yes.

 

 

You name the state and the software will prompt you for further information when you get to the AZ return.  The state return should automatically generate as a Non-Resident return.  Be sure to answer those interview questions accurately. 

 

 

You are correct,  an employer may not have to withhold Arizona tax from wages paid to a nonresident performing services in the state under the following circumstances:

  • The employee is physically present in Arizona for less than 60 days in a calendar year to perform a service benefitting the employer; and
  • The employer is an individual, fiduciary, partnership, corporation, or limited liability company having property, payroll, and sales in Arizona; or, a related entity has more than 50% direct or indirect common ownership.  See this link:  Arizona Withhold Exceptions

 

Nevada does not have a personal income tax.   Arizona has a flat 2.50 percent individual income tax.

 

To re-iterate, (see W-2 below) if box 15 and box 17 are AZ and an amount in box 17 you want to file to recover withholdings.

 

 

If you entered the W-2 accurately, TurboTax will prompt you to complete the return for AZ.  No return is required for NV.

 

 

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View solution in original post

3 Replies
Cynthiad66
Expert Alumni

AZ Income Tax Out of State Remote Worker

It depends.  You must file an AZ return to receive all withholdings back as a refund.  For instance, if your W-2 shows Box 15 as AZ and an amount in Box 17, then you will need to file an AZ Nonresident return to get those withholdings refunded.  When you prepare a Non-Resident return, you will most likely receive all of the withholdings as a refund.   

 

No, you do not have to zero out your state income.  The system will accurately show that you are a Non-Resident for less than 60 days and generate a refund. The key is to answer the interview questions accurately in My Info to get started.  See below.

 

TurboTax has very specific questions about earning income out of state.  You should make sure that you address those questions as they would lend to reporting the income accurately based on AZ laws.  See the Exhibits below.  First go back to the My Info Section of your return, as seen in the 1st Exhibit.

 

 

Answer this question yes.

 

 

You name the state and the software will prompt you for further information when you get to the AZ return.  The state return should automatically generate as a Non-Resident return.  Be sure to answer those interview questions accurately. 

 

 

You are correct,  an employer may not have to withhold Arizona tax from wages paid to a nonresident performing services in the state under the following circumstances:

  • The employee is physically present in Arizona for less than 60 days in a calendar year to perform a service benefitting the employer; and
  • The employer is an individual, fiduciary, partnership, corporation, or limited liability company having property, payroll, and sales in Arizona; or, a related entity has more than 50% direct or indirect common ownership.  See this link:  Arizona Withhold Exceptions

 

Nevada does not have a personal income tax.   Arizona has a flat 2.50 percent individual income tax.

 

To re-iterate, (see W-2 below) if box 15 and box 17 are AZ and an amount in box 17 you want to file to recover withholdings.

 

 

If you entered the W-2 accurately, TurboTax will prompt you to complete the return for AZ.  No return is required for NV.

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

AZ Income Tax Out of State Remote Worker

So I didnt have any withholdings but it does report wages in box 16. So that is my question as TurboTax identifies that and tells me to fill out an AZ return and tells me I owe $2500~.

AZ Income Tax Out of State Remote Worker

Oh, I see what I did with the My Info part. Thanks for your help!

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