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The federal amounts that you use on your Arizona return may not be the same as the federal amounts from your federal tax return.
Each year the Arizona State Legislature considers if they will adopt changes made to the federal tax law during the prior year. These forms assume the Legislature will adopt all federal law changes made after January 1, 2020. If you use the amounts from your 2020 federal tax return to complete your Arizona return and the Legislature does not adopt the 2020 federal changes, you may have to amend your return at a later date for any difference between Arizona and federal law.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On March 24, 2020, the Governor signed Senate Bill 1296 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2019 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustment for issues such as bonus depreciation are still in place. The instructions issued with the 2019 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2019 see the 2019 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Please Note: This 2019 conformity notice does not include any federal legislation enacted after January 1, 2020 including the retroactive provisions in 2020 Cares Act or the Consolidated Appropriations Act, 2021 that may impact 2019. Taxpayers should not file an Arizona amended return for 2019 based on federal NOL carrybacks until the Arizona legislature determines whether to conform to the 2020 Cares Act or the Consolidated Appropriations Act, 2021. Taxpayers who file Arizona amended returns for 2019 based on federal NOL carrybacks provisions that Arizona has not conformed to may have their refunds held in abeyance.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On May 31, 2019, the Governor signed House Bill 2757, which conformed to the definition of federal adjusted gross income (federal taxable income for corporations), including federal changes made during 2018 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustment for issues such as bonus depreciation are still in place. The instructions issued with the 2018 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2018, see the 2018 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
In addition to 2018 conformity, several changes were made to Arizona’s income tax code for tax year 2019. Arizona’s standard deduction was significantly increased to match the federal standard deduction amount ($12,200 single/married filing separate, $18,350 head of household, $24,400 married filing joint). Arizona removed its subtraction for personal and dependent exemptions. Arizona now provides a $100 child tax credit for dependents under age 17 and $25 tax credit for dependents age 17 and over. This credit is phased out for federal adjusted gross income greater than $200,000 single/married filing separate and head of household and $400,000 married filing joint. Arizona also now allows taxpayers to increase their standard deduction by 25% of the charitable contributions that would have been claimed had the taxpayer itemized deductions.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On April 5, 2018, the Governor signed House Bill 2647 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2017 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustment for issues such as bonus depreciation are still in place. The instructions issued with the 2017 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2017 see the 2017 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On March 3, 2017, the Governor signed Senate Bill 1290 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2016 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustments for issues such as bonus depreciation are still in place. The instructions issued with the 2016 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2016 see the 2016 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
In addition to conforming to the changes made to the Internal Revenue Code with regard to the measurement of income, Senate Bill 1290 also amended 3 Arizona statutes to conform to other relevant changes in federal tax law. Pursuant to A.R.S. § 43-306(C), an Arizona partnership that has no Arizona income, deductions of credits for a taxable year is no longer required to file a partnership return for that year. Pursuant to A.R.S. § 43-412(B), the annual Arizona reconciliation withholding return is due with the department on or before January 31 of the year following the year for which the report is made. Pursuant to A.R.S. § 43-313, within 31 days after the end of each calendar year, employers shall furnish each employee with statement of the amount withheld during the previous tax year, showing the gross earnings and the amount withheld.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On May 11, 2016, the Governor signed Senate Bill 1288 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2015 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustments for issues such as bonus depreciation are still in place. The instructions issued with the 2015 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2015 see the 2015 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
In addition to conforming to the changes made to the Internal Revenue Code with regard to the measurement of income, Senate Bill 1288 also amended 3 Arizona statutes, added new session law and established a new Arizona statute to conform to other relevant changes in federal tax law. Pursuant to A.R.S. § 43-325(3), for taxable years beginning from and after December 31, 2015, partnership returns are due on or before the fifteenth day of the third month following the close of the taxable year. A.R.S. § 43-1414 was added in response to the federal change in partnership audits which provides for an imputed underpayment to be assessed at the partnership level. A.R.S. § 43-327 and A.R.S. § 43-1401 were both amended in order to incorporate A.R.S. § 43-1414.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On April 09, 2015, the Governor signed Senate Bill 1188 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2014 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustments for issues such as bonus depreciation are still in place. The instructions issued with the 2014 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2014 see the 2014 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On April 24, 2014, the Governor signed Senate Bill 1300 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2013 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustments for issues such as bonus depreciation are still in place. The instructions issued with the 2013 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2013 see the 2013 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On April 5, 2013, the Governor signed Senate Bill 1168 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2012 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for prior non-conformity adjustments for issues such as bonus depreciation or the increased § 179 expenses are still in place. The instructions issued with the 2012 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2012 see the 2012 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Arizona did not conform to a portion of the FAA Modernization and Reform Act (Public Law 112-95, Section 1106) that allows individuals that were qualified airline employees that received certain payments made by a commercial passenger airline carrier under the approval of a federal bankruptcy court in a case filed after 9/11/2001 and before 1/1/2007, to make contributions to a traditional Individual Retirement Account (IRA) and treat the contributions as if they were made in the year in which the airline payments were received. A Taxpayer that amends their federal tax returns due to this provision for any tax year prior to 2012 should not amend their Arizona return for those years. Instead the Arizona taxpayers will be allowed a credit on their 2013 Arizona individual income tax return based on the reduction in tax that would have occurred if they would have been allowed to amend their Arizona 2001 through 2011 returns for the provision in Public law 112-95, Section 1106.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On March 16, 2012, the Governor signed House Bill 2120 which conformed to the definition of federal adjusted gross income (federal taxable income for corporations) including federal changes made during 2011 and did not add any new non-conformity additions or subtractions. However, additions and subtractions created for non-conformity purposes for 2009 as well as prior non-conformity adjustments for issues such as bonus depreciation or the increased § 179 expenses are still in place. The instructions issued with the 2011 Arizona tax returns are correct. For a complete list of the additions and subtractions that apply to 2011 see the 2011 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On February 14, 2011, the Governor signed House Bill 2008 which conformed to the definition of federal adjusted gross income including federal changes made during 2010 and did not add any new non-conformity additions or subtractions. However, all of the additions and subtractions created for non-conformity purposes for 2009 as well as prior non-conformity adjustments for issues such as bonus depreciation or the increased § 179 expenses are still in place. The instructions issued with the 2010 Arizona tax returns are correct. This includes adjustments to back out the federal deferral of the DOI and OID under section 108(i) of the internal revenue code (see A.R.S. §§ 43-1021(33), 43-1021(34), 43-1022(33) and 43-1022(34)). The additions and subtractions are also still in place that require the addback of all federal depreciation taken under section 167(a) of the internal revenue code and the subtraction for the depreciation that would have been claimed if the taxpayer had made the election to opt out of bonus depreciation under section 168(k)(2)(D)(iii) of the internal revenue code. For a complete list of the additions and subtractions that apply to 2010 see the 2010 instructions for Arizona Form 140 (individuals) or Arizona Form 120 (corporations). The statutory additions are in A.R.S. § 43-1021 (A.R.S. § 43-1121 for corporations) and the subtractions are in A.R.S. § 43-1022 (A.R.S. § 43-1122 for corporations).
Arizona has not fully conformed to the federal changes to the Internal Revenue Code made in 2009. Read below to determine if your Arizona income tax returns are impacted by this.
Each year the Arizona legislature considers whether to amend Arizona Revised Statutes § 43-105 to conform to changes made to the Internal Revenue Code during the prior year. On April 27, 2010, the Governor signed House Bill 2156 which incorporated the federal changes made in 2009 into Arizona’s definition of “internal revenue code.” However, House Bill 2156 also included additions to and subtractions from income that have the effect of Arizona not conforming to the following changes:
Arizona Form 140X-NC, Individual Amended Return for Non-Conformity Issues Only
The only purpose for the new Arizona Form 140X-NC is for taxpayers to make non-conformity changes (other than the net operating loss adjustments) to their previously filed Arizona individual income tax returns. Because this form is limited to non-conformity issues, it is simpler to complete than Arizona Form 140X. In addition, if you file Form 140X-NC to report non-conformity changes and pay the entire tax due by October 17, 2011, you will not owe any penalties or interest on the additional tax.
What if do not (or cannot) use Form 140X-NC?
If you amend your 2009 return but do not (or cannot) use Form 140X-NC, you will be billed for interest and possibly penalties. However, if the amended return includes adjustments you had to make for non-conformity issues and you filed and paid the tax by October 17, 2011, you should write to the Department for abatement of the penalties and interest related to non-conformity adjustments. Sign and date the request and include your telephone number and your tax identification number or social security number. Send your request to:
Arizona Department of Revenue
Penalty Review Unit
1600 W. Monroe
Phoenix, AZ 85007
In the future the Department may post additional information on the impact of these non-conformity issues on your income tax liability for 2009. If the Department provides additional information you can learn about it by reviewing updated versions of this Notice.