CA Resident with AZ rental property

Forum|Forum|4 years ago
March 16, 2022
1 reply
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I live in CA and have a rental property in AZ. I am filing the 140NR with AZ due to the fact I have a 1099-MISC for my AZ Rental property. The question I have is it seems I am getting taxed by AZ on the full amount on my 1099-Misc rental income yet I paid for property taxes, repairs, hoa, etc and cant seem to find a place to deduct these on my AZ 140NR. Doesn't seem fair I get taxed by AZ the full amount of the 1099-Misc rental income when I had expenses. On my fed return I was only taxed on about 25% of the 1099- Misc rental income as I could deduct all those costs. Any ideas how I can get this reduced? Can I itemize these costs in my AZ 140NR? There is a place where they ask about the depreciation on the Fed return but it doesn't reduce the 1099-misc income on the AZ 140NR. Seems they keep referring back to my 1040 Schedule A but that is for CA deductions. Any help on reducing the my AZ tax exposure on this 1099-Misc rental income would be greatly appreciated.

KrisD15

The 1099-MISC for the rental should be listed as rental income (Schedule E) on your Federal return.

Be sure not to enter it as "personal" income.

Schedule E also lists expenses, so you only claim the "profit" as income on your Arizona non-resident return.

Pease always do the non-resident state return first so that state tax paid can flow to your resident state return if applicable.

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TomD8

Employee

@KrisD15 --

Since CA and AZ are "reverse credit" states, I believe that in this instance the taxpayer should complete the resident state return before doing the non-resident state return. In reverse-credit situations, the "other state credit" is granted by the non-resident state.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.