Alabama individual income tax filing requirements are based on residency status and the source of income. Taxpayers are classified as residents, part-year residents, or nonresidents. Nonresidents must file Form 40NR if they have income that is taxable to Alabama because it is derived from Alabama sources.
Alabama taxes residents on all income regardless of source, while nonresidents are taxed only on Alabama-source income. Part-year residents are taxed on all income received while an Alabama resident, plus Alabama-source income received while a nonresident portion of the year.
When to File Form 40NR
You must file Form 40NR if:
- You are not a resident of Alabama and you received income from Alabama sources, such as wages for services performed in Alabama, business income attributable to Alabama, or income from property located in Alabama.
- You are a nonresident whose Alabama-source income requires filing an Alabama return based on the filing thresholds applicable to Alabama taxpayers.
- You were a resident of another state but had taxable income connected to Alabama activities during the tax year.
Military Spouses (MSRRA – Servicemembers Civil Relief Act):
A spouse of a servicemember may exclude from Alabama taxation wages earned in Alabama if the spouse meets federal Military Spouses Residency Relief Act requirements, including maintaining the same domicile state as the servicemember and meeting statutory conditions. Income not qualifying for the exclusion remains subject to normal Alabama residency or sourcing rules.
Filing Requirements by Residency Status
- Resident (Form 40): File Form 40 if you are a full-year Alabama resident. Residents are taxed on all income, regardless of where it is earned.
- Nonresident (Form 40NR): File Form 40NR if you are not a resident and have Alabama-source income.
- Part-Year Resident: File Form 40 and report income earned while a resident and Alabama-source income earned while a nonresident.
Filing Methods
- File electronically through My Alabama Taxes (MAT) at no charge.
- Use the Federal/State Electronic Filing Program through an authorized tax preparer.
- Free electronic filing programs are available for eligible taxpayers, including low- to moderate-income filers.
Source:
Form 40 (Alabama Resident Return)
Form 40NR, Alabama 2025 Individual Income Tax Return (Nonresidents Only)
Disclaimer: Always verify requirements with the official forms and instructions from the Alabama Department of Revenue. For complex situations, consult a CPA or tax attorney.