How do I file my taxes if I live in New Mexico, but work in Arizona?

[ColeenD3]

Please see this answer from IreneS.

You will have to file:

• a nonresident return for Arizona; and
• a resident return for New Mexico.

You are subject to Arizona income tax on all income derived from Arizona sources. Since you work in AZ you have to file a return there.

Because you live in New Mexico, you have to file a return there.  However, NM gives a credit for taxes paid to other states by New Mexico residents.

IMPORTANT:  Prepare your nonresident state (AZ) first so that the taxes paid to AZ flow properly to the NM return to calculate the credit.