I live in the bordor cities Texarkana Ar., Texarkana Tx do I need to send a form AR-TX alone with my tax returns

[DanielV01]

Which of the two states do you live in, and which of the two states do you work in?

[billra]

Retired and live in Texarkana AR

[DanielV01 · Accepted solution]

Yes, it seems to be required.  There is a special agreement between Arkansas and Texas that allows your income to be non-taxable to Arkansas, but a return is required, and the form you mention is attached to the return.  Here is a direct quote from the memorandum that documents this information:  Arkansas residents whose permanent residence is within the city limits of Texarkana, Arkansas are exempt from

Arkansas individual income taxes. All income received is exempt while the taxpayer is a resident of Texarkana, Arkansas. The taxpayer is required to file an Arkansas Individual Income Tax Return and submit all appropriate W-2’s and schedules to support the income and deductions. The form AR-TX is also submitted with the tax return which reports the exempt amount of wages earned from a particular employer. (Italics added)

Admittedly, this memorandum does not specifically mention retirement income, which is normally reported on a 1099-R.  However, it does say that all income is exempt while a resident of Texarkana, and retirement income would normally be taxed in Arkansas.  This is how you would report it so that you are not taxed on it.

Here is a link for the memorandum itself:  

texarkana exemption letter - Arkansas Department of Finance and ...

[Annopter]

My permanent address is in Humble, Tx (included on my personal business, previous federal tax filings, and my driver's license) but 

I have a temp address in Texarkana, AR where I have a W2s that went to the Texarkana address. I did not know about the AR tax form since I am a Humble Tx resident an I am being penalize for not filing. What do I do since my permanent address is in Humble, Tx and not Texarkana?

[DanielV01]

For your situation, it depends.  The letter that is referenced to in my above answer Texarkana Tax Exemption (a PDF file) mentions that the exemption is available in either of two situations:

1. If you are a Texarkana, AR permanent resident, you are exempt from Arkansas Tax on all sources.  You would still need to file an AR return, and file Form AR-TX to show the exemption.
2. If you are a Texarkana, TX permanent resident, you are exempt from Arkansas individual income tax on income earned in Texarkana, AR only.  Income from anywhere else in AR would still be taxable to AR.  The same tax forms mentioned above still apply.

In addition to these provisions, if your income is from Texas, and you are a Texas resident, Arkansas cannot tax you if you are not a resident of Arkansas.  Arkansas can only tax you on income earned in Arkansas.  (One caveat:  you have a residence in Arkansas.  If you spend at least 183 days physically present in Arkansas, Arkansas considers you a resident and can tax all of your income.  However, if they consider you a resident, your residency is Texarkana, AR, and you fall into exemption #1 above).

However, if you are a TX resident, and not from Texarkana, TX, then Arkansas can tax you on all of your income you earn anywhere in AR, including Texarkana.

Since your situation has some nuance to it, you might want to contact the Arkansas Department of Finance and Administration.  Review your situation with them using the PDF document provided, and then you will get a better idea of what you need to do.

Chances are that at a minimum you will need to file the outstanding Arkansas returns.  If you qualify to have the income exempted from Arkansas tax, then you will include the corresponding AR-TX forms referenced above.  Your tax should go down to zero, and you can request the Department to waive penalties/fees if they still apply.  

[Hal_Al]

@DanielV01  - Does the TT Arkansas software support form AR-TX?

[Hal_Al]

@Annopter  - If you had the Humble address all year, I think it's pretty clear, you need to file an AR return and pay tax on your AR income. 

"Arkansas residents whose permanent residence is within the city limits of Texarkana, Arkansas are exempt from Arkansas individual income taxes. "  Reference: https://www.dfa.arkansas.gov/images/uploads/incomeTaxOffice/texarkana%20exemption%20letter.pdf

[DanielV01]

@Hal_Al  Yes.  TT supports the form as part of the Arkansas filing.  In fact, the program allows for @Annopter to allocate the income earned in Arkansas while a "resident" of Arkansas.  However, what the program allows you to input and what Arkansas allows per tax code are likely two different stories.  I do lean to agreeing that Annopter is liable for Arkansas tax, provided there actually is Arkansas income.  But, if Arkansas is stating that they are assessing tax solely based on the Texarkana address, when the income is earned inside of Texas, then either the Texarkana exemption applies, or Arkansas can't assess tax on the income, because Arkansas can't tax a nonresident on income earned in another state other than Arkansas.  Either way, it might be a good idea to contact the state Department of Finance and Administration if further clarification is needed.

However, if it is only a matter of reporting the income on Form AR-TX, TurboTax can do this, yes.

[RBBrittain]

Funny I'm just now seeing this even though I live in AR (but not Texarkana). AR's "Border City Exemption" (an AR state law, not an "agreement"; TX has no state income tax) exempts (a) ALL income (regardless of source) of Texarkana, AR residents, and (b) wage or business income earned in Texarkana, AR by Texarkana, TX residents. (Only street addresses within the city limits of Texarkana, AR or TX qualify.) Form AR-TX is issued with W-2's to employees residing in either Texarkana to document this exemption; it is filed with your AR return.

TurboTax Arkansas will pick up your AR-taxable income as usual, but it then asks if you lived in Texarkana during the year. If so, it will walk you thru the steps to deduct exempt income, including any information from Forms AR-TX.

@billra is exempt from AR income tax, but must still file a return to claim the exemption. His retirement plan probably won't send him a Form AR-TX, but as long as his AR return has a Texarkana, AR street address he should be OK.

@Annopter  : It depends on whether or not you actually worked in AR. If you only received your W-2 in AR but didn't work *or* live there, contact the Arkansas Department of Finance and Administration for assistance. If you did work in AR while a resident of Humble, TX (*not* Texarkana, AR or TX), that income is subject to AR non-resident tax.

[XrichieX]

Hey what do I do if I accidentally said I lived in texarkana arkansas and I dont

[KarenJ2]

If you have already filed your returns, you will need to send the IRS Form 8822 (see link below) in order to correct your address with the IRS.

If you live in Texas, as Texas does not have a individual state tax, you do not need to file a state return.

Form 8822 Change of Address

[kyorec]

Where do I send form AR-TX?

[MaryM428]

Texarkana, Arkansas employers are not required to withhold Arkansas taxes on these employees as long as a form AR-TX is completed stating that the employee actually lives within the city limits of Texarkana, Texas and reports the amount of exempt wages.

This form is completed by the employer and given to the employee to be filed with the Arkansas individual income tax return. A copy is also sent to the State Withholding Branch along with the State’s copy of W-2’s. Non-Texarkana, Arkansas employers must withhold Arkansas taxes on employees regardless of the fact that they live in Texarkana, Texas.

When you work on your Arkansas return it will ask about Border City Exemption

Click Yes if you lived in Texarkana, Arkansas at any time during 2020 and answer the questions about that income.

If you print and mail your Arkansas return you can include the AR-TX form from your employer.  If you e-file save the AR-TX form with your 2020 tax records.

AR-TX

[EK1953]

We have employees file form AR4EC(TX) but we cannot find how to get  form AR-TX to file with the employee to report earnings for the tax year.