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 is Alabama Schedule KRCC-I used for?
Schedule KRCC-I is required for taxpayers who receive a share of the Alabama Capital Credit from qualifying industrial or commercial projects. This credit, established to encourage economic development, allows project investors or pass-through entity members to apply a portion of the approved credit to their Alabama individual income tax. Schedule KRCC-I documents the project name, certificate number, annual credit share, carryforward amounts and the portion being applied to the current year’s income tax liability. The form ensures that taxpayers do not exceed their allowable credit and provides Alabama with an audit trail linking each credit claim to the certified project under the Alabama Capital Credit Act.
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.
How are bonuses withheld in Alabama?
Employers may use supplemental methods; totals reconcile on your annual return. Model as supplemental in the calculator.
Any millionaire or surcharge thresholds?
If applicable, they’re reflected in the Alabama bracket table and notes.
What happens if I start making payments late in the year?
If you begin making estimated payments after the first quarter, Alabama allows you to adjust the remaining payments. For example, if you start after April 1, divide the annual amount by three instead of four. The latest possible estimated payment date is January 15 of the following year for income earned in the current year.
Important Notes
All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.