(1) Individuals domiciled within Alabama
(residents) are taxable on their entire income, whether earned within or
without Alabama, subject to certain exclusions and exemptions as provided under
Alabama income tax law, regardless of their physical presence within Alabama at
any time during the taxable year. Individuals domiciled within Alabama should
file a Resident Individual Income Tax Return, Form 40 or 40A each year.
(a) Domicile is the home, the fixed place of
habitation; while residence is a transient place of dwelling. Domicile is the
place where one lives and has his permanent home and principal establishment,
and to which he has the intention of returning when he is absent. Domicile may
be established by birth, by choice, or by operation of law.
(b) Each person has one and only one
domicile. Once established, a domicile continues until a new one is established
coupled with the abandonment of the old.
1.
Domicile is established by physical presence in a jurisdiction, coupled with
the present intent to establish domicile in the subject jurisdiction.
(i) A person's intent will be ascertained by
examining his actions.
2. A taxpayer has the burden of proof in
establishing a change in domicile.
(c) Federal employees, including military
personnel, domiciled in Alabama continue to be so domiciled, irrespective of
their period of absence or actual place of residence, and are subject to the
Income Tax Law of Alabama until proof of change of domicile has been
made.
(d) A husband and wife will
be presumed to have the same domicile, unless clearly established otherwise.
1. An Alabama resident who marries a
nonresident will continue to be an Alabama resident until and unless a new
domicile is established as provided in subparagraph (b) above.
2. A nonresident who marries an Alabama
resident will continue to be a nonresident until and unless a new domicile is
established in Alabama as provided in subparagraph (b) above.
(e) A minor child will be presumed
to have the same domicile as the custodial parent or guardian.
(2) Individuals not domiciled
within Alabama who maintain a permanent place of abode within Alabama, or who
spend more than a total of seven months (whether or not consecutive) of the
taxable year within Alabama shall be presumed to be residents, and taxable on
their net income from within and without Alabama during the taxable year. They
should file Resident Individual Income Tax Return, Form 40 or Form 40A each
year. For instructions for individuals who are residents for less than one year
(part-year residents), see Rule
810-3-2-.01(4).
(a) A permanent place of abode is interpreted
to mean a dwelling place permanently maintained by the taxpayer; it is not
necessary that he be the owner, or that he occupy it himself.
(b) The Department may require individuals
claiming domicile outside the State of Alabama to furnish a statement of
information with details to support their claim.
(3) Nonresident individuals receiving taxable
income from property owned or business transacted (including wages for personal
services) within Alabama are taxable on such income from within Alabama. They
should file Nonresident Individual Income Tax Returns, Form 40NR, each year.
See Rules
810-3-14-.05 (relating to taxable income of nonresidents) and
810-3-15-.21 (relating to allowable deductions of nonresidents).
(a) Resident individuals living in federal
areas located within Alabama or any other state over which the United States
exercises exclusive or concurrent jurisdiction, such as the Muscle Shoals
reservation and military areas such as Maxwell Air Force Base and Redstone
Arsenal, are taxable on their entire net income. See Rule
810-3-2-.01(2).
(b) Nonresident
individuals (other than military personnel) living in federal areas located
within Alabama over which the United States exercises exclusive or concurrent
jurisdiction are taxable on income earned in such areas; including income from
business transacted in these areas.
(c) This paragraph (3) applies only to income
or receipts received after December 31, 1940, the effective date of Public Law
No. 819, known as the Buck Act. Under this act the United States has ceded to
the States the jurisdiction to tax persons residing within or receiving income
from transactions occurring or services performed, in all federal areas
heretofore or hereafter acquired by the United States. The term "Federal Area"
means any land or premises held or acquired by or for the use of the United
States, or any Department, Establishment, or Agency thereof, and over which the
United States exercises exclusive or concurrent jurisdiction.
(d)
1.
Military personnel who are not residents of Alabama and who receive military
pay while stationed in Alabama, shall be deemed not to have received such
income for services performed within, or from sources within Alabama. This
subparagraph (d) applies to all military compensation received after September
8, 1939, in accordance with §514 of Public Law 732.
2. Wives of military personnel who earn
income in Alabama, unless specially exempt under
Public
Law 111-97 referred to as the Military Spouses
Residency Relief Act, and military personnel who earn nonmilitary income in
Alabama, are taxed on such income.
(e) Spouses will be presumed to have the same
domicile, unless proven otherwise.
1. EXAMPLE:
|
IncomeResident(or
includable as Income from all sources if Nonresident)
|
Taxable to
Nonresident
|
Taxable
to
|
Income During Taxable Year
|
Military Member
|
Military
|
Not in combat zone
|
$ 6,000
|
$6,000
|
$-0-
|
In combat zone
|
1,000
|
-0-
|
-0-
|
Quarters allowance
|
1,500
|
-0-
|
-0-
|
Subsistence allowance
|
600
|
-0-
|
-0-
|
Uniform allowance
|
100
|
-0-
|
-0-
|
Travel allowance
|
100
|
-0-
|
-0-
|
Flight pay
|
200
|
200
|
-0-
|
Sea duty
|
200
|
200
|
-0-
|
Trailer allowance
|
100
|
-0-
|
-0-
|
Income from Other
States
|
Compensation
|
200
|
200
|
-0-
|
Business, Interest, Dividends, Rents, etc.
|
800
|
800
|
-0-
|
Income from Alabama
|
Compensation
|
700
|
700
|
700
|
Business, Rental Income, etc.
|
300
|
300
|
300
|
Total Income
|
$11,900
|
Taxable if Taxpayer is a resident
|
$ 8,400
|
Taxable if Taxpayer is not a resident
|
$1,000
|
Spouse
|
Income from Other
States
|
Compensation (Including Federal Civil Service)
|
$ 500
|
$ 500
|
$-0-
|
Business, Interest, Dividends, Rents, etc.
|
500
|
500
|
-0-
|
Income from Alabama
|
Compensation (Including Federal Civil Service)
|
5,600
|
5,600
|
5,600
|
Business, Rental Income, etc.
|
400
|
400
|
400
|
Total Income
|
$7,000
|
Taxable if Taxpayer is a resident
|
$7,000
|
Taxable if Taxpayer is not a resident
|
$6,000
|
(4) An individual who becomes a resident of
Alabama must include in gross income all income from sources both within and
without Alabama for the period of residence. A resident moving away from
Alabama during the year includes in gross income only income from sources both
within and without Alabama until date of termination of his residence in this
state. The Department should be notified of the termination of taxpayer's
residence, including all pertinent facts relating to the termination.
(a) EXAMPLE: Taxpayer moved from New York to
Alabama on September 1. Prior to that date he had no Alabama income. After
moving to Alabama, he had an income of $5,000. He must file a return on Form
40, (Resident Individual Income Tax Return) reporting the $5,000, but need not
report any income earned before September 1. He is entitled to the same annual
exemptions as a resident for a full year. See Rule
810-3-19-.02(3).
(b) EXAMPLE: Taxpayer moved from Alabama to
Mississippi on November 1. Prior to that time he earned $8,000 taxable income
in Alabama, and had no Alabama income during November and December. He should
notify the Department of the termination of his residence in Alabama, and file
a return on Form 40 (Resident Individual Income Tax Return) reporting the
$8,000 income. He may claim the annual exemptions to which he would be entitled
were he a resident for the entire year.
(c) An individual, a resident for part of the
taxable year and a nonresident for the other part of the taxable year, having
taxable income in both periods, should file two returns:
1. One return should be filed on Form 40 as a
resident, covering the period of residence. All income, from whatever source
within or without the state, earned during such period of residence should be
included in this return, and exemptions should be claimed for the total annual
exemptions to which the taxpayer is entitled.
2. A second return should be filed on Form
40NR as a nonresident, covering income from sources in Alabama for the period
of nonresidence. No personal exemptions and/or credit for dependents would be
allowable on the nonresident return as the full annual amount would have been
allowed on the resident return.
(i) EXAMPLE:
Taxpayer, married and having two dependents, moved from Alabama to Tennessee on
April 1. Prior to April 1, his income from Alabama sources amounted to $2,000.
After April 1, his Alabama income was $3,000 and his income from other sources
was $6,000, or a total income from all sources of $9,000 after April 1.
Taxpayer must file two returns:
(I) His
return as a resident (Form 40) should report income of $2,000, and the annual
exemption he could claim were he a resident for the entire year.
(II) His return as a nonresident (Form 40NR)
would report $3,000. No personal exemptions and/or credit for dependents would
be allowable on the nonresident return as the full annual amount would have
been allowed on the resident return.