FREQUENTLY ASKED QUESTIONS
ALABAMA INDIVIDUAL INCOME TAX
FREQUENTLY ASKED QUESTIONS
ALABAMA INDIVIDUAL INCOME TAX
The following are frequently asked questions concerning the Alabama individual income tax laws. The answers for these questions and many others can be found in the downloadable versions of the Form 40, Form 40A, and Form 40NR booklets available on this web site.
How
should the deduction for self-employment tax be treated with the change
in the method for computing
the Federal Income Tax Deduction?
The self-employment tax must be deducted as an itemized deduction on the cash basis. The Department's position has been that the self-employment tax is considered paid when the federal tax return is completed and filed, whether the monies used to pay it came from estimated payments, withholding or money paid with the return. When the tax return is completed and filed the taxpayer is able to determine how much of his estimate and/or withholding is used to pay federal income tax and how much is used to pay self-employment tax, and not until then.
As an example: A taxpayer pays $15,000 in estimated tax for 2000 When the 2000 return is filed in 2001 the taxpayer owes $5,000 in income tax and $9,180 in self-employment tax. His Federal Income Tax (FIT) deduction for 2000 would be his $15,000 estimated tax payments. Any 1999 refunds received in 2000 or 1999 payments made in 2000 would be reported on the appropriate lines. We are also assuming that there were no other refunds or liabilities received or paid in 2000.
On his 2001 return, considering that 2001 is the transition year to the accrual basis of deducting FIT, the taxpayer would report a $10,000 (9180 + 820) FIT refund and take a $9180 itemized deduction for self-employment tax on Schedule A. He would deduct his 2001 Federal income tax liability on the appropriate line. At the time the federal return is filed the amount of self-employment tax will have been determined and that amount would be deductible on the 2002 return as an itemized deduction, just as in prior years.
The taxpayer would not lose any self-employment
tax deduction for any year.
When will I get my refund?
That depends upon several things: Whether or not you filed electronically, how early in the tax season you filed, etc. To get your refund faster file early or file electronically.
To check on the status of your refund, wait at least six weeks after
filing your return, then phone our REFUND HOTLINE: 1-334-353-2540.
Instructions for Refund Hotline!
When must I file my Alabama individual income tax return?
Your 2001 Alabama individual income tax return is due April 15, 2002.
Does Alabama accept the federal extension of time for filing form?
No. You must use Alabama's Form 4868A, a copy of which is available
on our web site.
Who must file an Alabama individual income tax return?
Full year residents whose filing status is "Single", "Married Filing Separate Return", or Head of Family" must file if gross income for the year is at least $1,875. Those whose filing status is "Married Filing Joint Return" and whose gross income for the year is at least $3,750 must file an Alabama income tax return.
Part year residents whose filing status is "Single," "Married Filing Separately," or "Head of Family" must file if annual gross income is at least $1,875 while an Alabama resident. Those whose filing status is "Married Filing Jointly" must file if annual gross income is at least $3,750 while an Alabama resident.
Nonresidents must file a return if Alabama income exceeds the allowable prorated personal exemption.
What filing status should I use to file my return?
There are four different filing statuses available under Alabama law:
1. Single
2. Married Filing a Joint Return
3. Married Filing a Separate Return, and
4. Head of Family
For an explanation of the filing statuses click
here.
To what personal exemptions am I entitled?
Taxpayers using the Single and Married Filing Separately filing statuses are entitled to a $1,500 personal exemption. Taxpayers using the Married Filing Jointly and Head of Family filing statuses are entitled to a $3,000 personal exemption.
Part year residents are entitled to the full exemption amount.
A dependent or student may claim a personal exemption even if claimed by
someone else.
Would a foster child qualify as a dependent?
You cannot claim a foster child, friend, cousin, yourself, or your spouse
as a dependent on your Alabama income tax return.
Is the "Head of Family" filing status in Alabama the same as the "Head
of Household" filing status for federal purposes?
Yes, with a few exceptions. In Alabama, a foster child does not qualify a taxpayer to claim "Head of Family". Also, you must be unmarried in order to qualify for "Head of Family" filing status with the state.
How much is the Alabama standard deduction?
The Alabama standard deduction is based on the filing status used by the taxpayer.
The standard deduction for taxpayers using the Single filing status, the Married Filing Separately filing status and the Head of Family filing status is the lessor of 20% of adjusted gross income or $2,000.
The standard deduction for taxpayers using the Married Filing Jointly
filing status is the lessor of 20% of adjusted gross income or $4,000.
If I itemize on my federal tax return, do I have to itemize on my
state return?
No.
What are Alabama's individual income tax rates?
For single persons, heads of families, and married persons filing separate returns:
2% First $500 of taxable income
4% Next $2,500 of taxable income
5% All taxable income over $3,000
For married persons filing a joint return:
2% First $1,000 of taxable income
4% Next $5,000 of taxable income
5% All taxable income over $6,000
What interest income is exempt from Alabama taxation?
Interest on obligations of the State of Alabama or any county, city,
or municipality of Alabama, and interest on obligations of the United States
or any of its possessions.
Can I deduct child care expenses on my Alabama income tax return?
No, nor does Alabama have a child care tax credit.
I am in the military and not a legal resident of Alabama. If
I and/or my spouse also have civilian jobs in Alabama, must we report that
income to Alabama?
Yes, on Form 40NR, a copy of which is available on this web site.
Must I report the sale of my personal residence?
If your personal residence was sold prior to 1998, you would be required to report the sale of your home on federal Form 2119.
Because Alabama law is now the same as federal law in this area, the
treatment of 1998 Alabama tax returns, and forward, will be the same as for
your federal return. Please also see the summary of Act
98-502, for the changes to the law concerning the sale of a personal residence.
What are the limitations on my IRA deduction?
Contributions: Contributions to an individual retirement arrangement (IRA) may be taken as an adjustment to income, the same as for federal tax purposes. These deductible contributions represent a deferral of tax on a portion of your income.
Distributions: At the time funds are distributed from these IRA accounts, the amount on which tax has been deferred cannot be claimed as part of the cost basis in the fund.
Since Alabama income tax law prior to 1982 did not conform to federal tax law in this area, you may have a cost basis in the fund for amounts contributed prior to 1982.
Roth IRA: Alabama recognizes Roth IRA's. Please also see the summary
of Act 98-502 for the changes that occurred to Alabama
income tax laws concerning IRA accounts.
If I file using the Married Filing Jointly filing status on my federal
return, do I have to file a joint Alabama return?
No, you can use the Married Filing Separately filing status.
Should I itemize my deductions or should I use the standard deduction?
You may use either method. Compute your deduction using both methods
and compare the results. Base your deduction on the method resulting in
the greatest advantage to you.
Can I have my Alabama individual income tax return filed electronically?
Probably. Check with your Authorized IRS E-file Provider to determine if this option is available to you! Almost any return that can be filed electronically for the IRS can also be filed electronically for Alabama.
More on the Alabama Electronic Filing Program
Can I file electronically my Alabama individual income tax return
from my home using my personal computer?
Yes. More on PC Online Filing.
Do you have a TTY number for the hearing impaired?
Yes. Our TTY number is (334) 242-3061.
My employer went out of business/or will not give me a W-2 form.
What can I do?
Submit a copy of the complete federal Form 4852 (Substitute W-2) and
attach it to your Alabama return with copies of your pay stubs and/or leave
and earnings slips.
Will you fax Alabama tax forms to me?
No. We are happy to mail or ship to you as many forms as you need. Please phone or fax your request to your nearest Taxpayer Service Center. For bulk orders, please use our Form 2300, which you may download from this web site. Mail or fax it to the address/number shown. Also, most of the Alabama individual income tax forms are available in downloadable form on this web site. Alabama Individual Income Tax Forms.
What if I have any other questions about my Alabama individual income
tax return?
You have several available resources for assistance:
- Specific instructions for all three of Alabama's income tax returns are available on this web site or in print.
- Submit your questions via e-mail from this web site.
- The Alabama Taxpayer Service Center nearest you. Phone
and fax numbers are listed on this web site.
What income must I report on my Alabama return?
All income is subject to Alabama income tax unless specifically exempted by state law.
Click here for a listing of taxable income.
What income is exempt from Alabama income taxation?
Click here for a listing of exempt income items.
Who qualifies as my dependent?
