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006.05.307-26-51-801. RETURNS BY INDIVIDUALS

AR ADC 006.05.307-26-51-801Arkansas 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 006.05.307-26-51-801
006.05.307-26-51-801. RETURNS BY INDIVIDUALS
1.26-51-801(a) Who Should File
Every person receiving gross income from Arkansas sources shall file an Arkansas individual income tax return for the tax year such gross income was received with the Revenue Division of the Arkansas Department of Finance and Administration. Arkansas “sources” shall include real or personal property located within Arkansas and business or personal activity carried on within Arkansas. However, gross income received by nonresident individuals from entirely “passive” sources within Arkansas is not subject to Arkansas individual income tax and thus need not be reported by such individuals to the Arkansas Department of Finance and Administration. Examples of gross income derived entirely from passive sources would be interest earned on a bank account located within Arkansas or dividends from stocks held by an investment firm located within Arkansas as part of its client's investment portfolio.
2.26-51-801(a) Filing Status “4” - Married Filing Separately on the Same Return
Married taxpayers who both have a net taxable income for the tax year may find that this method of tax computation will provide the greatest reduction in their tax liability over any other filing statuses that are available. The net result will be either a combined refund or a combined tax due. If there is tax due, both spouses will be considered jointly liable for it even though they are filing separately.
1.26-51-801(c) Completing and Signing Returns
If, for whatever reason, a taxpayer does not complete his or her own Arkansas individual income tax return, the return should be completed by an authorized agent or by a guardian or other court appointed person charged with caring for the taxpayer, the taxpayer's estate, or both. An “authorized agent” may be designated by power of attorney, Will or any other form of authorization made by the taxpayer that is clear and unambiguous and that was made by the taxpayer while of sound mind and without duress or coercion. If the authorized agent is merely a paid tax return preparer hired by the taxpayer, both the tax return preparer and the taxpayer must sign the return.
1.26-51-801(d)(1) Head of Household
A taxpayer shall be considered the head of a household if, and only if, the following three conditions are met:
1. The taxpayer is not married at the close of his tax year;
2. The taxpayer is not a “surviving spouse” as defined by IRC Reg. 1.2-2(a); and
3. The taxpayer maintains as his home a household which constitutes (for the tax year at issue) the principal place of abode, as a member of such household, at least one of the individuals described in IRC Reg. 1.2-2(b)(3)(i) or (ii);
The taxpayer maintains, whether or not as his home, a household which constitutes (for the tax year at issue) the principal place of abode of at least one of the individuals described in IRC Reg. 1.2-2(b)(4).
1.26-51-801(d)(2) Surviving Spouse
The term “qualifying widow or widower with dependent child” shall mean the same thing as the term “surviving spouse.” A surviving spouse's Arkansas individual income tax return for each of the next two (2) tax years following the tax year in which the other spouse died shall be treated as a joint return and therefore taxed at the joint return rate if the surviving spouse:
a) Has not remarried at any time before the close of the tax year;
b) “Maintains” (pays more that 50% of the costs of) a household as his or her home which is the principal place of abode of a son or daughter (including adopted or foster children) or a stepson or stepdaughter;
c) Is entitled to a dependency deduction for at least one child; and
d) Was entitled to file a joint return with the deceased spouse for the year of death.
This “surviving spouse” rule does not apply to the tax year in which the spouse died. A joint return may be filed for a husband and wife (thus using a joint return tax rate) where their tax years start on the same day and end on different days because of the death of either or both. However, if the surviving spouse remarries before the close of his tax year, he cannot file a joint return for himself and his deceased wife.
1.26-51-801(d)(4) Dependent Defined
A person qualifies as a taxpayer's “dependent” only if all of the following provisions are met:
a) Relationship test -- the person is *related to the taxpayer or is a member of the taxpayer's household. The person will be considered a member of the taxpayer's household if, for the taxpayer's entire tax year, the person had as his principle place of abode the home of the taxpayer;
b) The person's gross income does not equal or exceed the exemption amount. However, this gross income test does not apply to a child of the taxpayer who either:
i) has not reached the age of 19 at the end of the calendar year in which the taxpayer's tax year begins; or
ii) is a student who has not reached the age of 24 at the close of the calendar year.
c) Support test -- except for a divorced or separated parent claiming his child as a dependent, a taxpayer can claim a person as a dependent only if he furnishes more than 50% of such person's support during the calendar year in which the taxpayer's tax year begins. A taxpayer who provides at least 10% of a person's support under a multiple support agreement may also meet the “support” test. Refer to IRC Reg. 1.152-3. The support test for a child of divorced or separated parents is set forth in IRC Reg. 1.152-4 and 1.152-4T.
**Support funds can take many forms. However, where the claimed dependent is in an institution supported by a state, charity, etc., the amount spent by the institution on the claimed dependant is part of support and is treated as furnished by the institution.
d) The person does not file a joint return under certain conditions. A taxpayer cannot take a dependency exemption for a married person who files a joint return with his or her spouse for a tax year beginning in the same calendar year that the taxpayer's tax year begins. However, an exemption may be claimed for a married dependent if neither the dependent nor his or her spouse is required to file a return but they file only to claim a refund of all tax withheld.
e) To qualify as a dependent, at some time during the calendar year in which the tax year of the taxpayer begins, a person must be:
i) a citizen or resident of the United States;
ii) a resident of the Canal Zone, Panama, Canada or Mexico; or
iii) a “national” of the United States.
*Relationship test.
A person meets the relationship test only if he has one of the following relationships to the taxpayer:
Empty Checkbox​ child or descendant of child;
Empty Checkbox​ stepchild;
Empty Checkbox​ brother, sister, by whole or half blood;
Empty Checkbox​ stepbrother, stepsister;
Empty Checkbox​ father, mother or ancestor of either (grandparent, great-grandparent, etc.);
Empty Checkbox​ stepfather, stepmother;
Empty Checkbox​ nephew, niece;
Empty Checkbox​ brother or sister of father or mother (uncle, aunt);
Empty Checkbox​ brother-, sister-, father-, mother-, son-, or daughter-in-law. IRC Reg. 1.151-3(a).
A child born alive qualifies for the full dependency exemption (if other tests are met) even if the child lives only momentarily.
A person is treated as the taxpayer's child if the person is:
Empty Checkbox​ legally adopted by the taxpayer. IRC Reg. 1.152-2(c).
Empty Checkbox​ a member of the taxpayer's household, and is placed with the taxpayer by an authorized placement agency for legal adoption by the taxpayer under a formal application filed with the agency -- the agency must be authorized to place children for adoption by a government or governmental subdivision (state, foreign country, etc.) IRC Reg. 1.152-2(c)(2).
Empty Checkbox​ a foster child if he or she meets the “member of household” test. IRC Reg. 1.152-2(c)(4).
The relationship must exist with respect to the taxpayer claiming the dependency exemption on the taxpayer's separate return. On a joint return, the relationship need exist with respect to only one spouse, and it does not matter which spouse furnished the dependent's support.
These individuals do not meet the relationship test: taxpayer's grandnephew, grandniece, stepchild's descendant, aunt's husband, foster parent.
**Support test - definition of support
Support includes:
Empty Checkbox​ food, school lunches, toilet articles and haircuts;
Empty Checkbox​ clothing;
Empty Checkbox​ recreation, including toys, summer camp, horseback riding, entertainment and vacation expenses;
Empty Checkbox​ medical and dental care, including premiums on accident and health insurance;
Empty Checkbox​ child care expenses, even though a credit is also allowed for these expenses;
Empty Checkbox​ allowances, gifts;
Empty Checkbox​ son's or daughter's wedding costs;
Empty Checkbox​ lodging -- when furnished in kind, it is measured by its fair market value rather than actual cost. IRC Reg. 1.152-1(a)(2).
Empty Checkbox​ education -- these costs include board, uniforms at military schools, and tuition, even where free schooling is available. Scholarship payments received by a dependent are treated as support furnished by someone other than the taxpayer. However, scholarships are not counted in determining whether the taxpayer furnished more than fifty percent (50%) of the dependent's support if these tests are met:
i) the dependent is a child (including stepchild, foster child, or child adopted or placed for adoption) of the taxpayer, and
ii) is a full-time student at an educational institution. IRC Reg. 1.152-1(c);
Empty Checkbox​ Social Security benefits received by a child and used for his support are considered provided by the child. IRC Reg. 1.152-1(a)(2)(ii);
Empty Checkbox​ Armed Forces dependency allotments -- the amount contributed by the government and the amount withheld from the pay of the member of the Armed Forces are treated as contributed by the member.
1.26-51-801(e) Withholding for Low Income Employees
If a person's gross income is not high enough to subject the person to Arkansas' individual income tax, such person must complete and submit to his employer Form AR4ECSP. This form, also known as the employee's special withholding exemption certificate, must be signed and dated by the employee. This form allows an employer, who would normally withhold Arkansas income tax from the wages of such an employee, to refrain from doing so.
Current with amendments received through August 15, 2023. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.05.307-26-51-801, AR ADC 006.05.307-26-51-801
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