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AR ADC 006.05.307-26-51-504Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 05. Division of Revenues
Rule 307. Comprehensive Individual Income Tax Regulations (Refs & Annos)
Ark. Admin. Code 006.05.307-26-51-504
1.26-51-504(a) Calculating the Credit
When the gross income of an Arkansas resident includes income derived from sources outside the State of Arkansas, such as property or business activity, the Arkansas income tax liability shall first be computed as if all of the Arkansas resident's income was derived from sources within the State of Arkansas. However, a credit shall be allowed against the resident's Arkansas income tax liability in the amount of any income tax actually owed by the resident for the tax year at issue to any other state or territory.
Any credit given shall not be allowed to exceed what the tax would be on all the Arkansas resident's income, from wherever derived, if such tax was calculated using Arkansas income tax rates. No credit shall be allowed against the resident's Arkansas income tax liability unless the resident can clearly show that he or she would be subject to double taxation on a portion of his or her income unless the credit is allowed.
Example: Mr. and Mrs. Jones file a full year resident return in the state of Arkansas. Mr. Jones works in Arkansas and earns $30,000. Mrs. Jones works in Oklahoma and also earns $30,000. Mrs. Jones paid $1,500 tax to Oklahoma. The Jones' file as status “4” married filing separate on same return.
Mr. Jones
Mrs. Jones
Arkansas Tax
Total Tax
Personal Credits
Other State Tax Credit
Tax Liability
*  The other state tax credit is limited to what the amount of Arkansas tax would be if the Oklahoma income was earned in Arkansas
The Jones' must attach a copy of their Oklahoma tax return to their Arkansas tax return in order to receive this credit.
1.26-51-504(b) Prerequisites to Claiming the Credit
Before a resident of Arkansas may properly claim a credit for income tax paid to another state or territory, he or she shall include with their Arkansas income tax return the following information:
1. The amount of income tax owed to any other state or territory; and
2. If so requested by the Department's Individual Income Tax Section, information which shows in detail the amount of gross and net income derived by the Arkansas resident from sources outside the State of Arkansas.
1.26-51-504(c) Restriction of Credit
The credit against Arkansas individual income tax liability for income taxes actually owed to another state or territory shall only be available to Arkansas residents or part-year residents. Nonresidents are not eligible for this credit.
The credit shall also be available to fiduciaries and partnerships residing or domiciled in Arkansas which either:
1. Are subject to Arkansas income tax;
2. Have to report income for purposes of Arkansas income tax.
Current with amendments received through August 15, 2023. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.05.307-26-51-504, AR ADC 006.05.307-26-51-504
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