§ 26-51-435 - Nonresidents or part-year residents. - Arkansas Statutes

26-51-435. Nonresidents or part-year residents.

(a) Nonresidents or part-year residents of Arkansas shall compute their taxable income as if all income were earned in Arkansas.

(b) Using Arkansas income tax rates, nonresident or part-year residents of Arkansas shall compute their tax liability on the amount computed in subsection (a) of this section.

(c) From the tax liability computed in subsection (b) of this section there shall be deducted all allowable credits to determine the amount of tax due.

(d) (1) Nonresidents shall divide adjusted gross income from Arkansas sources by the adjusted gross income from all sources to arrive at the applicable percentage that Arkansas adjusted gross income represents of all adjusted gross income received by the taxpayer in the income year.

(2) Part-year residents shall divide adjusted gross income received while an Arkansas resident by the adjusted gross income from all sources to arrive at the applicable percentage that the adjusted gross income received while an Arkansas resident represents of all adjusted gross income received by the taxpayer in the income year.

(e) Nonresidents and part-year residents shall multiply the amount computed in subsection (c) of this section by the applicable percentage from subsection (d) of this section in order to determine the amount of income tax which must be paid to the State of Arkansas.

(f) For the purpose of ascertaining the income tax due by a nonresident or part-year resident of Arkansas with income derived from two (2) or more states, the credit available under 26-51-504 for income tax paid to other states shall be calculated in the following manner:

(1) The credit shall not exceed what the tax would be on the outside income, if added to the Arkansas income, and calculated at Arkansas income tax rates; and

(2) The credit is limited to the total income tax owed to other states on income that has been:

(A) Reported as taxable income to both Arkansas and the other states;

(B) Reported as income from all sources; and

(C) Included as Arkansas income.