Alabama Form 40NR – Nonresident and Part-Year Resident Income Tax Return (2026)
Last reviewed: 2025-11-12
Use the Alabama Tax Form Calculator Alabama Form 40NR – Nonresident/Part-Year Resident Income Tax Return as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 Alabama state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.
Form 40NR is used by nonresidents and part-year residents of Alabama to report income earned in the state and calculate the portion of tax owed to Alabama. This ensures fair taxation only on income derived from Alabama sources such as wages, rental income, or business activities within the state. The return also allows credits for taxes paid to other jurisdictions to avoid double taxation.
Nonresidents must file Form 40NR if they received Alabama-source income that meets or exceeds the state filing threshold. Part-year residents must file if they lived in Alabama for any portion of the year and earned income while a resident.
How to Complete Alabama Form 40NR
Follow these key steps to correctly calculate and apportion your Alabama income:
- Part I – Allocation of Income: Report total income from all sources (Line 5B) and the portion earned in Alabama (Line 5C). Compute your apportionment ratio by dividing Alabama income by total income (Line 10).
- Part II – Adjusted Gross Income: Subtract allowable adjustments such as IRA deductions or moving expenses from your total and Alabama income to determine adjusted gross income (Line 12B and 12C).
- Part III – Deductions and Exemptions: Apply either the standard deduction or itemized deductions, apportioned based on your income ratio. Include personal and dependent exemptions as applicable.
- Part IV – Tax and Payments: Use the Alabama income tax rates to calculate tax liability (Line 19). Apply credits for taxes paid to other states (Schedule CR) and subtract any withholding or estimated payments to determine the balance due or refund.
Attach all W-2s, 1099s, and supporting schedules (e.g., Schedule CR for credits, Schedule A for itemized deductions) when submitting your return.
| FILING STATUS | ||
| FS | Filing Status | |
| PART I – ALLOCATION OF INCOME | ||
| 5B | Total income from all sources | |
| 5C | Income from Alabama sources | |
| 6B | Adjustments to income (e.g., IRA, moving expenses) | |
| 6C | Adjustments related to Alabama income | |
| 7B | Total adjusted income (5B + 6B) | |
| 7C | Total adjusted Alabama income (5C + 6C) | |
| 8B | Total deductions allowable for federal adjusted gross income | |
| 8C | Deductions connected with Alabama income | |
| 9B | Total income after deductions (7B − 8B) | |
| 9C | Total Alabama income after deductions (7C − 8C) | |
| 10 | Apportionment ratio (9C ÷ 9B) | |
| PART II – ADJUSTED GROSS INCOME COMPUTATION | ||
| 11B | Total federal adjustments (e.g., educator, HSA, moving expenses) | |
| 11C | Alabama portion of adjustments | |
| 12B | Federal adjusted gross income (9B − 11B) | |
| 12C | Alabama adjusted gross income (9C − 11C) | |
| PART III – DEDUCTIONS AND EXEMPTIONS | ||
| 13C | Standard or itemized deduction (apply apportionment) | |
| 14B | Federal taxes paid deduction | |
| 14C | Alabama portion of federal taxes paid | |
| 15C | Personal exemptions (apportioned) | |
| 16C | Dependent exemptions (apportioned) | |
| 17C | Total deductions (13C + 14C + 15C + 16C) | |
| 18C | Taxable income (12C − 17C) | |
| PART IV – TAX AND PAYMENTS | ||
| 19 | Tax (apply Alabama rate schedule to Line 18C) | |
| 20 | Credits for taxes paid to other states (Schedule CR) | |
| 21 | Tax withheld from Alabama income (W-2, 1099) | |
| 22 | Balance Due (Tax − credits − withholding) | |
| 23 | Overpayment (if credits + withholding > tax) | |
| DEDUCTION METHOD | ||
Examples and Scenarios
Example 1 – Nonresident Employee: Jordan, a Florida resident, worked in Alabama for 45 days earning $12,000. Total income for the year was $48,000, so the apportionment ratio is 0.25. Only $12,000 × 3.07% = $368.40 is taxable by Alabama.
Example 2 – Part-Year Resident: Avery moved from Georgia to Alabama on July 1, earning $36,000 before the move and $28,000 after. Only the $28,000 is subject to Alabama tax. Use Form 40NR to allocate income before and after residency change.
Example 3 – Multi-State Business Income: A consultant with operations in both Alabama and Mississippi earned $60,000 total, with $24,000 attributed to Alabama clients. The apportionment ratio (0.40) applies to both income and deductions to determine taxable Alabama income.
Last reviewed: 2025-11-12: If you believe this form requires an update, please contact us.
Further Guidance and Related Forms
- Form 40 – Alabama Resident Income Tax Return
- Schedule CR – Credit for Taxes Paid to Other States
- Schedule A – Itemized Deductions
- Alabama Department of Revenue – Individual Income Tax
Form 40NR ensures that Alabama only taxes income earned within its borders while providing fair apportionment for part-year residents. Accurately reporting your total and Alabama income helps avoid penalties and ensures compliance with Alabama’s state tax laws.
Quick Access Tools
Frequently Asked Questions
What records should taxpayers keep to document capital gains and losses reported on Schedule D?
Taxpayers should retain brokerage statements, consolidated 1099 forms, purchase confirmations, sale confirmations, cost-basis records, improvement receipts for real property, and depreciation schedules for any assets subject to annual deductions. Alabama audits often focus on basis accuracy and verification of loss carryovers, so keeping documentation for both acquisition and sale is essential. For long-term holdings, records may go back many years and should be stored securely. Even when brokerage firms track basis, taxpayers bear ultimate responsibility for accuracy. Maintaining detailed records ensures clean reporting and reduces the risk of adjustments or disallowed losses during review.
Does sales or property tax affect this page?
This page models income/payroll taxes only; other taxes affect your budget, not paycheck math.
Where can I get help understanding complex allocation scenarios on AL-40NR?
Complex allocation issues—such as multi-state employment, remote work with periodic Alabama presence, cross-border business operations, or shared pass-through ownership—often require careful review to avoid over-reporting or under-reporting Alabama income. You can begin by exploring the detailed nonresident calculator at https://www.taxformcalculator.com/calculator/alabama/al-40nr.html, which helps you model income scenarios and validate your allocation percentages. This tool can be especially helpful for part-year movers who had pay originating in one state while performing duties in another. It also assists in identifying which adjustments and credits need to be prorated. For filers with pass-through entities, rental property, or substantial business activity, methodical use of the calculator can prevent errors that may otherwise lead to amended returns, delayed refunds, or Alabama Department of Revenue inquiries.
Why don’t my brackets match payroll tables?
Employers may use different rounding/timing tables; small variances are normal.
What documentation should taxpayers keep to support KRCC-I claims?
Taxpayers must retain the original Alabama Capital Credit certificate, pass-through K-1 statements showing their credit allocation, project approval letters from the Alabama Department of Commerce, prior-year KRCC-I schedules reflecting carryforward balances and the certified project number. Supporting documentation must demonstrate the taxpayer’s ownership interest for each period in which the credit is claimed. While Alabama does not require filing all documents with the return, the Department of Revenue can request them at any time, and incomplete documentation may result in a denied or reduced credit. These records should be retained for the full credit duration, as claims may span up to 20 years.
Important Notes
All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.