Resident of Arizona, worked part of year in Alaska

[David Kutzler]

Arizona is my permanent state of residence, but I worked for 13 weeks on a professional staffing agency assignment in Alaska. Arizona has a state income tax, but Alaska has no income tax. Is my Alaska income taxable by Arizona?

My Alaska income was reported on a separate W-2, which showed federal income tax withholding, but no state withholding. I entered this W-2 into TurboTax for federal tax purposes, but my Arizona return shows me owing about $1,100 in Arizona State income tax, likely from the Alaska income. If I am not liable for Arizona State Income Tax from my Alaska earnings, how can I tell TurboTax to ignore this income for state tax purposes?

[ThomasM125 · Accepted solution]

The time you worked in Alaska would not affect your resident status in Arizona.

The way state taxes work is if you work in a state that has an income tax, then you pay tax to that state for the time you worked there and get credit for it on your tax return for the state you live in.

However, in your case you worked in a state that has no income tax, so you will not get a credit. So, all of your income is taxable in Arizona.