Alabama Form 40 Instructions

If you are a non-resident of Alabama or only reside in the state for a portion of the year, you must complete and submit Alabama Form 40. This is a standard tax form that you will find available on the state’s website and in many local libraries and government offices. Alabama Form 40 Instructions are straightforward. The form must be filled out and submitted to the state of Alabama with your supporting documentation.

Almost all income is subject to state tax, including salaries, wages, bonuses, commissions, interest, dividends, rents, royalties, business or professional income, Alimony, estate and trust earnings, and other types of compensation. The following types of income are excluded from state income taxes: military pay, federal unemployment compensation, social security and spousal benefits, child support and other government payments, and charitable contributions.

Married couples filing jointly must report all their income, exemptions, deductions, and credits on this form. They must sign the return even if only one of them had any income during the tax year. Nonresident military personnel stationed at a duty station within Alabama and receiving Alabama-earned income may be exempt from state income tax by claiming the total allowable personal exemption on this form. On this form, they must also claim the credit for taxes paid to a foreign country.

How to Fill Out Alabama Form 40?

Alabama Form 40 has two pages. The first page includes:

• Taxpayers’ General Information
• Filling Status/Exemptions
• Income and Adjustments
• Deductions
• Tax
• Payments
• Amount You Owe
• Overpaid
• Donations
• Refund

The second page includes:

• Part I – Other Income
• Part II – Adjustments to Income
• Part III – Dependents
• Part IV – General Information (All Taxpayers)
• Signature

Form 40 Line-by-Line Instructions

Lines 1-5:  Filing Status / Exemptions Checkboxes

INCOME AND ADJUSTMENTS

Line 5a: Alabama Income Tax Withheld (from Schedule W-2, line 18, column G)

Line 5b: Wages, salaries, tips, etc. (from Schedule W-2, line 18, column I plus J)

Line 6: Enter interest and dividend income (also attach Schedule B if over $1,500)

Line 7: Enter other income

Line 8: Total income. Add amounts in the income column for line 5b through line 7

Line 9: Total adjustments to income (from page 2, Part II, line 16).

Line 10: Adjusted gross income. Subtract line 9 from line 8.

DEDUCTIONS

Line 11: Check box A if you itemize deductions, and enter the amount from Schedule A, line 27. Check box b, if you do not itemize deductions, and enter standard deduction

Line 12: Enter federal tax deduction

Line 13: Enter personal exemption (From Lines 1-4).

Line 14: Enter dependent exemption (from page 2, Part III, line 2

Line 15: Enter total deductions. Add lines 11, 12, 13, and 14

TAX

Line 16: Taxable income. Subtract line 15 from line 10

Line 17: Income Tax due. Enter amount from tax table or check if from

Line 18: Net tax due Alabama. Check box if computing tax using Schedule OC, otherwise enter amount from line 17

Line 19: Additional taxes (from Schedule ATP, Part I, Line 3)

Line 20: Alabama Election Campaign Fund. You may make a voluntary contribution to the following.

Line 20a: Checkboxes $1 or $2 if you want to voluntarily contribute to Alabama Democratic Party.

Line 20b: Checkboxes $1 or $2 if you want to voluntarily contribute to Alabama Republican Party.

Line 21: Total tax liability and voluntary contribution. Add lines 18, 19, 20a, and 20b

PAYMENTS

Line 22: Alabama income tax withheld (from column A, line 5a)

Line 23: 2021 estimated tax payments/Automatic Extension Payment

Line 24: Amended Returns Only — Previous payments

Line 25: Refundable Credits. Enter the amount from Schedule OC,Section F, line F4

Line 26: Payments from Schedule CP, Section B, Line 1

Line 27: Total payments. Add lines 22-26.

Line 28: Amended Returns Only – Previous refund

Line 29: Adjusted Total Payments. Subtract line 28 from line 27

AMOUNT YOU OWE

Line 30: If line 21 is larger than line 29, subtract line 29 from line 21, and enter AMOUNT YOU OWE, and add line 31. Place payment, along with Form 40V, loose in the mailing envelope. (Form 40V be provided along with the payment.)

Line 31: Penalties (from Schedule ATP, Part II, line 3)

OVERPAID

Line 32: If line 29 is larger than line 21, subtract line 21 from line 29, and enter amount OVERPAID

Line 33: Amount of line 32 to be applied to your 2022 estimated tax.

DONATIONS

Line 34: Total Donation Check-offs from Schedule DC, line 2 

REFUND

Line 35: REFUNDED TO YOU. (CAUTION: You must sign this return on the reverse side.) If line 32 is greater than zero, subtract lines 31, 33 and 34 from line 32

PART I – OTHER INCOME

Line 1: Enter the Alimony received

Line 2: Business income or (loss) (attach Federal Schedule C or C-EZ

Line 3: Gain or (loss) from sale of Real Estate, Stocks, Bonds, etc. (attach Schedule D)

Line 4a:  Total IRA distributions

Line 4b: Taxable amount

Line 5a: Total pensions and annuities.

Line 5b: Taxable amount.

Line 6: Rents, royalties, partnerships, estates, trusts, etc. (attach Schedule E)

Line 7: Farm income or (loss) (attach Federal Schedule F)

Line 8: Other income (state nature and source

Line 9: Total other income. Add lines 1 through 8. Enter here and also on page 1, line 7

PART II – ADJUSTMENTS TO INCOME

Line 1a: Enter your IRA deduction

Line 1b: Enter your IRA deduction.

Line 2: Enter your spouse’s IRA deduction.

Line 3: Payments to a Keogh retirement plan and self-employment SEP deduction.

Line 4: Penalty on early withdrawal of savings.

Line 5: Enter Alimony paid. Enter Recipient’s last name. Enter SSN.

Line 6: Enter moving Expenses (Attach Federal Form 3903) to City. Enter State and ZIP code.

Line 7: Enter self-employed health insurance deduction

Line 8: Payments to Alabama College Counts 529 Fund or Alabama PACT Program

Line 9: Enter health insurance deduction for small employer employee

Line 10: Enter costs to retrofit or upgrade home to resist wind or flood damage

Line 11:  Enter deposits to a catastrophe savings account

Line 12: Enter contributions to a health savings account

Line 13: Enter deposits to an Alabama First-Time and Second Chance Home Buyer Savings Account

Line 14: Enter Firefighter’s Insurance Premiums

Line 15: Enter Contributions to an Achieving a Better Life Experience (ABLE) savings account

Line 16: Enter total adjustments here. Add lines 1 through 15. Enter here and also on page 1, line 9

PART III – DEPENDENTS

Line 1: Total number of dependents from Schedule DS, line 1b.

Line 2: Amount allowed. (Multiply the total number of dependents claimed on line 1 by the amount on the dependent chart in the instructions.) Enter the amount here and on page 1, line 14.

Final Section: PART IV – General Information ( All Taxpayers Must Complete This Section )