The Arkansas Border City form is a document that allows residents of Texarkana, Arkansas, and Texarkana, Texas, to claim an exemption from Arkansas income tax on income earned within the city. To qualify for this exemption, specific conditions must be met, including filing with a valid street address and attaching necessary documentation for W-2 income. For those who meet the criteria, completing the form can lead to significant tax savings.
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The Arkansas Border City form plays a crucial role for residents of Texarkana, a unique city that straddles the state line between Arkansas and Texas. This form is essential for individuals who earn income in Texarkana, as it outlines the specific exemptions available to residents of both states. For residents of Texarkana, Arkansas, the income they earn is exempt from Arkansas income tax, while residents of Texarkana, Texas, also benefit from this exemption for income earned in the Arkansas portion of the city. However, it is important to note that any other income sourced from Arkansas remains taxable. To successfully claim this exemption, individuals must adhere to several requirements. First, they must file their tax return using their street address, as utilizing a Post Office Box or Rural Route will result in disqualification. Additionally, for those claiming an exemption based on W-2 income, it is necessary to attach both the W-2 form and the employer-supplied Form AR-TX. Non-wage income, such as interest or dividends, does not require the AR-TX form but may need further verification for adjustments. Finally, a complete Arkansas tax return must be filed, detailing total income from all sources, with the exemption claimed as an adjustment on Form AR1000ADJ. Understanding these guidelines is vital for residents to navigate their tax obligations effectively.
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Border City Exemption (Texarkana – Arkansas and Texas)
If you were a resident of Texarkana, Arkansas, the income you earned is exempt from Arkansas income tax.
If you were a resident of Texarkana, Texas, the income you earned working in the city of Texarkana, Arkansas is exempt from Arkansas Income Tax. Any other income you earned from Arkansas sources is taxable to Arkansas.
To claim this exemption, you must meet the following conditions:
1)You must file using your street address within the city limits of either Texarkana, Arkansas or Texarkana, Texas. If you use a Post Office Box or Rural Route this exemption will be disallowed.
2)If you are claiming an exemption for income from a W-2 form, you must attach the W-2 and the Form AR-TX supplied by your employer. The AR-TX is not required for non-wage income such as interest, dividends, Schedule C, Schedule F, Schedule E, or retirement. Additional information may be required for verification if an adjustment for these types of income is allowed.
3)You must file an Arkansas return and report your total income from all sources. You may claim the exemption for eligible income as an adjustment on Form AR1000ADJ.
NOTE: The AR4EC is the form you supply your employer, so they know to issue you an AR-TX form. This is not the form you send with your return.
Revised 3/17/2023
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