State of Arkansas Income Tax Return for an S by llx92753


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									Arkansas 2010
       Individual Income Tax
                Forms and Instructions

      Full Year Resident
      Part Year Resident
         Nonresident                                     Governor Mike Beebe

Using e-file will allow you to:               Free File Alliance:
                                               	 Want to file your return for free?
 	 Join the 790,741 who e-filed last year.
                                               	 Did you make $54,000 or less?
    Get a confirmation # proving you filed.    	 Are you eligible for the Federal Earned
                                                 Income Tax Credit?
    Receive a refund in less than 10 days.
                                               	 Are you a member of the military?
    Choose direct deposit option for faster
                                              As a member of the “Free File Alliance”, the State
    refund and additional security.
                                              of Arkansas is able to offer certain taxpayers the
                                              opportunity to electronically file their return with
    File your return free of math errors.
                                              no fee. If you meet certain criteria you may be
                                              eligible for this program. Go to our website for
Other E-Services available for all

                                              Tax Tables:
 	 On-line refund inquiry 24/7 to avoid
                                              The tax brackets are indexed for inflation. The
   time consuming phone calls
                                              highest tax rate on net income now begins at
                                              $32,700 (increased from $32,600 in 2009).
 	 Pay tax by credit card
                                              For your questions/comments:
    See page 4 of the booklet for details
                                              Manager, Individual Income Tax
                                              P. O. Box 3628
                                              Little Rock, AR 72203

         e           file
                                               TAX HELP AND FORMS

 Internet                                                                       Mail
You can access the Department of Finance and Administra-                        Choose the appropriate address below to mail your return:
tion’s website at:
                                                                                	 TAX DUE RETURN:
                                                         Arkansas State Income Tax
                                                                                       P.O. Box 2144
	 	 Check the status of your refund                                                   Little Rock, AR 72203-2144

	 	 Download current and prior year forms and                                  	 REFUND RETURN:
     instructions                                                                      Arkansas State Income Tax
                                                                                       P.O. Box 1000
	 	 Access latest income tax news and archived news                                   Little Rock, AR 72203-1000

	 	 Get e-file information                                                     	 NO TAX DUE RETURN:
                                                                                       Arkansas State Income Tax
                                                                                       P.O. Box 8026
You can e-mail questions to:                                                           Little Rock, AR 72203-8026

                                    Be sure to apply sufficient postage or your return will not be
                                                                                delivered by the U.S. Postal Service.

 Phone                                                                                       Walk-In
Individual Income Tax Hotline................................. (501) 682-1100   Representatives are available to assist walk-in taxpayers
                                                         or (800) 882-9275      with income tax questions, but are not available to prepare
                                                                                your return.
Representatives are available to assist callers at the numbers
above during normal business hours (Monday through Friday                       No appointment is necessary, but plan to arrive before 4:00
from 8:00 a.m. to 4:30 p.m.) with:                                              p.m. to allow sufficient time for assistance.

		 Taxpayer Assistance	  	 Notices Received                                   The Individual Income Tax Office is located in Room 2300,
		 Forms                 	 Amended Returns                                    Ledbetter Building, at 1816 W. 7th Street in Little Rock.
	 Audit and Examination	  Payment Information
                                                                                Office hours are Monday through Friday from 8:00 a.m. to
(For Hearing Impaired Access call (501) 682-4795 using a                        4:30 p.m.
Text Telephone Device.)

Other Useful Phone Numbers:
       Estimated Tax ................................. (501) 682-1100
       Withholding Tax .............................. (501) 682-7290                          Forms
       Collections ...................................... (501) 682-4720
       Revenue Legal Counsel ................. (501) 682-7030                   	           Access our website at:
       Corporate Income Tax .................... (501) 682-4775                       
       Sales and Use Tax.......................... (501) 682-7104
       Office of Problem Resolution and ... (501) 682-7751                      	           Call the Individual Income Tax Hotline
            Tax Information Office (Offers In Compromise)                                    (see “Phone”)

          Internal Revenue Service ............... (800) 829-1040               	           Obtain at county revenue offices
          Social Security Administration ........ (800) 772-1213
                                                                                	           Write to:
                                                                                                 Arkansas State Income Tax Forms
                                                                                                 P 3628
                                                                                                 Little Rock, AR 72203-3628

Page 2
Tax Help and Forms............................................................................................................ 2
Electronic Filing Information ............................................................................................... 4
For Taxpayers’ Information ................................................................................................. 5
Special Information for 2010 ............................................................................................... 6
Military Personnel Information ............................................................................................ 7
Frequently Asked Questions ............................................................................................... 8
Definitions ........................................................................................................................... 9
You May Be Able To Save Money ..................................................................................... 10
Instructions .................................................................................................................. 11-16
Form Inserts
          Consumer Use
          Voter Registration
Instructions (continued) .................................................................................................... 17
Instructions (for AR3, Itemized Deduction Schedule) .................................................. 17-19
Mortgage Insurance Premiums (PMI) Worksheet............................................................. 20
Student Loan Interest Worksheet ..................................................................................... 21
IRA Phase Out Chart ........................................................................................................ 21
Self-Employed Health Insurance Deduction Worksheet ................................................... 22
Mileage and Depletion Allowances ................................................................................... 22
Depreciation Information................................................................................................... 22
How to Fill Out Your Check ............................................................................................... 23
Preservation of Tax Records............................................................................................. 23
If the IRS Audits You ......................................................................................................... 24
Information Exchange Programs with the IRS .................................................................. 24
Taxpayer Bill of Rights ...................................................................................................... 25
Low Income Tax Tables ............................................................................................... 26-27
Regular Tax Table ........................................................................................................ 28-30
Index to Instructions.......................................................................................................... 31
Before Mailing Your Return Checklist .................................................................Back Cover

                                                                                                                                            Page 3
                                                                                       De irec
                                   ELECTRONIC FILING                                  Op pos t
                                          Begins January 14, 2011                       tio it

         	 E-file is hassle-free both your federal and Arkansas income tax returns are
            filed electronically in one transmission.

         	 E-file is smart computer programs catch 98% of tax return errors.

         	 E-file is worry-free receive acknowledgement within 2 days if your return has
            been received and accepted.

         	 E-file gets your money to you fast refunds are issued within 10 days after
            you receive state acknowledgement.

                         Arkansas participates in the Federal/State Electronic Filing Program for
              id r       Individual Income Tax. The program is available to most full year residents
           Pa are
             ep          and certain qualifying nonresidents and part year residents.
                                Since Arkansas is a member of the “Free File Alliance,” depending
                                on the level of income, taxpayers may qualify to file returns for free.
                                (Go to for details.)
                       On            Over 150,000 taxpayers took advantage of On-line Filing last
                      Fr line        year. The same advantages are obtained by On-line Filing as by
                     Ho om           Electronic Filing, but it does not require a preparer. For a nomi-
                         e           nal fee your federal and state returns can be prepared and filed

                                    OTHER E-SERVICES
                  These services are available for all filers (paper and electronic).

                     Available Now:

                      Refund Inquiry

                     	 by Credit Card
                       (vendor charges nominal fee)

                                                             or call (800) 272-9829

Page 4
Individual and Corporation income taxes are the largest source of state general revenue.
                Where It Comes From:

                  Where It Is Spent:

                                                                                           Page 5
                          SPECIAL INFORMATION FOR 2010
Amended Returns
Beginning with tax year 2010, to amend their original returns taxpayers will simply check the “AMENDED RETURN” box on
Form AR1000F, AR1000NR, or AR1000S, and then complete the return using their corrected information. No separate amended
return form will be necessary. See page 12 for instructions. (For tax years 2009 and prior, amended forms are available at

All payments must now be accompanied by an appropriate payment voucher, including payments made with returns.
Failure to send a voucher with a payment will cause delayed processing of the payment, which could result in a billing notice
being sent. See line 50C on Form AR1000F or AR1000NR for instructions.

ATAP (Arkansas Taxpayer Access Point) will allow taxpayers or their representatives to log on to a secure site and manage
all of their tax accounts online. ATAP will allow taxpayers to make name and address changes, view letters on their accounts,
make payments and check refund status. (Registration with ATAP is not required to make payments or check refund status.)
Go to for more information.

Nonresident Apportionment Change
For tax years 2010 and forward, the nonresident tax apportionment calculation will be carried to six places to the right of the
decimal. This applies to percentages less than and greater than 1%. See instructions for line 36C on Form

New Check-off Added (Act 211 of 2009)
Beginning with tax year 2009 taxpayers are allowed to divert all or part of their state income tax refund to an Arkansas Tax
Deferred Tuition Savings Program account. See Form AR1000-CO for instructions.

Extension of Time for Veterans (Retirees) to File for Refund (Act 238 of 2009)
Extends the statute of limitations for a veteran to file a claim for refund of an overpayment that results from retroactive deter-
mination by the Secretary of Veterans Affairs that part or all of the uniformed service retirement payments to the taxpayer are
payments made for a service-connected disability and are not included in gross income. Effective January 1, 2001.

Military Spouses Residency Relief Act
Exempts a military spouse’s income from Arkansas tax if the service member’s Home of Record is not Arkansas and the spouse’s
domicile is the same as the service member’s Home of Record. Effective January 1, 2009. For tax year 2010 write the words
“military spouse” at top of tax return and attach a completed Form AR-MS (available at and a
copy of service member’s LES to verify Home of Record. (For future tax purposes, the nonmilitary spouse must submit a new
payroll withholding form, ARW-4MS to his/her employer each year to exempt future withholding.)
New Set Off Added (Act 713 of 2009)
Authorizes a set off against an Arkansas income tax refund for a debt owed to the Internal Revenue Service. Provides a pro-
cedure for non-debtor taxpayer or spouse to challenge the setoff of a joint tax refund. Effective January 1, 2009.
Income Tax Technical Corrections Act (Act 372 of 2009)
         IRC §121 and §134 as in effect on January 1, 2009 regarding the exclusion from income of qualified military benefits
         provided to members of the United States military. The adoption of these sections of the Internal Revenue Code includes
         the provisions of the Military Family Tax Relief Act of 2003 previously not adopted by Arkansas.

         IRC §163 as in effect on January 1, 2009 regarding deduction of qualified mortgage insurance premiums as interest expense.

         IRC §165(h) and §165(i) as in effect on January 1, 2009 regarding losses arising from a casualty or disaster.

         IRC §108 and §1017 as in effect January 1, 2009 allows up to $2 million forgiveness of certain debt on taxpayer’s
         principal residence ($1 million for a married person filing a separate return).

         IRC §179 as in effect on January 1, 2009, allows greater dollar limits and phase out thresholds. The maximum deduction
         allowed for property placed in service during tax year 2010 is now $133,000. The deduction is decreased “dollar for dollar” for
         property over $530,000, and no deduction is allowed for property over $663,000. (See Page 22 for more information).

         NOTE: Arkansas has not adopted provisions included in the American Recovery and Reinvestment Act of 2009.
Page 6
                                   MILITARY PERSONNEL

Military Spouses Residency Relief Act
Exempts a military spouse’s income from Arkansas tax if the service member’s Home of Record is not Arkansas and the
spouse’s domicile is the same as the service member’s Home of Record. Effective January 1, 2009. For tax year 2010
write the words “military spouse” at top of tax return and attach a completed Form AR-MS (available at www.arkansas.
gov/incometax) and a copy of service member’s LES to verify Home of Record. (For future tax purposes, the nonmilitary
spouse must submit a new payroll withholding form, ARW-4MS to his/her employer each year to exempt future withhold-

The Military Family Tax Relief Act of 2003 (Act 372 of 2009)
This act adopts IRC 121, 134, and 162 as in effect on January 1, 2009. Provisions of this act include exclusion of gain
on sale of principle residence, deduction of overnight travel expenses for National Guard and Reserve members, and
exclusion from income of “qualified military benefits”. (See IRS Publication 3, Armed Forces’ Tax Guide, for more

Extension of Time for Veterans (Retirees) to File for Refund (Act 238 of 2009)
This act extends the statute of limitations for a veteran to file a claim for refund of an overpayment that results from ret-
roactive determination by the Secretary of Veterans Affairs that part or all of the uniformed service retirement payments
to the taxpayer are payments made for a service-connected disability and are not included in gross income. Effective
January 1, 2001.

Treatment of Combat Pay Clarified (Act 29 of 2005)
This act adopts Sections 112 and 692 of the Internal Revenue Code as in effect on January 1, 2005 to clarify that combat
zone compensation is exempt from Arkansas individual income tax and that the income of a member of the armed forces
is exempt in the year of the person’s death. This act applies to tax years beginning on or after January 1, 2005.

The Servicemembers Civil Relief Act

        Deferral of Tax - Upon notice to the Internal Revenue Service or the tax authority of a state or a political
        subdivision of a state, the collection of income tax on the income of a servicemember falling due before or during
        military service shall be deferred for a period not more than 180 days after termination of or release from military
        service, if a service member’s ability to pay such income tax is materially affected by military service.

        Accrual of Interest or Penalty - No interest or penalty shall accrue for the period of deferment by reason
        of nonpayment on any amount of tax deferred under this section.

        Statute of Limitations - The running of a statute of limitations against the collection of tax deferred under
        this section, by seizure or otherwise, shall be suspended for the period of military service of the servicemember
        and for an additional period of 270 days thereafter.

        Residence or Domicile - A servicemember shall neither lose nor acquire a residence or domicile for purposes
        of taxation with respect to the person, personal property, or income of the servicemember by reason of being
        absent or present in any tax jurisdiction of the United States solely in compliance with military orders.

        Military Service Compensation - Compensation of a servicemember for military service shall not be
        deemed to be income for services performed or from sources within a tax jurisdiction of the United States if the
        servicemember is not a resident or domiciliary of the jurisdiction in which the servicemember is serving in com-
        pliance with military orders.


        U.S. Military retirement DOES NOT qualify as U.S. Military compensation, and IS NOT eligible for the $9,000
        military exemption on Lines 9A or 9B. U.S. Military retirement is eligible for the $6,000 retirement exemption and
        should be listed on Lines 17A and/or 17B.

                                                                                                                        Page 7
                         FREQUENTLY ASKED QUESTIONS

         You may get additional information on the following topics by accessing our website at:


  TOPICS:                                                  TOPICS:

  FILING REQUIREMENTS                                      TAX COMPUTATION
       Who must file                                           Choosing the correct table
       Which form - AR1000F, AR1000NR, AR1000S                 Standard Deduction
       When, where and how to file                             Capital Gains Tax
       Which filing status                                     Tax credits, general
       Dependents defined                                      Child Care Credit
       Estimated tax                                           Other State Tax Credit
       Amended returns                                         Business Incentive Tax Credit
                                                               Adoption Credit
  INCOME DEFINITIONS                                           Political Contributions Credit
      Wages, salaries                                          Gambling Winnings Tax
      Interest received
      Dividends received                                   GENERAL INFORMATION
      Alimony received                                        Refunds - how long to wait
      Business income                                         How to request copies of tax returns
      Capital gains and losses                                Extensions of time to file
      Pensions and annuities                                  Penalty for underpayment of estimated tax
      Farming and fishery income                              W-2 form - what to do if not received
      Gambling income                                         Estate tax
      Nontaxable income
      Earnings of clergy                                   NOTICES AND LETTERS
                                                               Taxpayer Bill of Rights
  ADJUSTMENTS TO INCOME                                        Billing procedures
      Individual Retirement Accounts (Traditional)             Penalty and interest charges
      Alimony paid                                             Collection procedures
      Border city exemption (Texarkana - AR and TX)
      Permanently disabled individual                      NONRESIDENT - PART YEAR RESIDENT
      Medical Savings Accounts and                            Which return to use
           Health Savings Accounts                            How to compute tax
      Intergenerational trusts                                How to apportion tax liability
      Moving expenses
      Interest paid on student loans                       ELECTRONIC FILING
      Tax Deferred Tuition Savings Plan                        Electronic filing program

      Should you itemize
      Medical and dental expenses
      Interest expenses
      Casualty losses
      Miscellaneous expenses
      Limitation if AGI over certain amount
      Post Secondary Tuition Deduction

Page 8
  Gross income is any and all income (before deductions) other than the kinds of income specifically described as exempt from tax on
  pages 11 and 12 “Exempt From Income Tax”.

  Exception: The $6,000 exemption on retirement income and the $9,000 exemption on military income as described on
  page 12 are included in gross income.

  This is the place you intend to have as your permanent home and the place you intend to return to whenever you are away. You can
  have only one domicile. Your domicile does not change until you move to a new location which you intend to make your permanent
  home. If you move to a new location but intend to stay there only for a limited time (no matter how long), your domicile does not change.
  This also applies if you are working in a foreign country.

  You are a full year resident if you lived in Arkansas all of tax year 2010, or if you have maintained a domicile or Home of Record in
  Arkansas during the tax year.

  You are a nonresident if you did not make your domicile in Arkansas.

  You are a part year resident if you established a domicile in Arkansas or moved out of the state during calendar year 2010.

  If Arkansas is your Home of Record (HOR) and you are stationed outside the State of Arkansas, you are still required to file an AR1000F
  reporting all of your income, including U.S. Military Compensation. If you are stationed in Arkansas and your Home of Record is another
  state, Arkansas does not tax your U.S. Military Compensation.

  U.S. Military compensation includes wages received from the Army, Navy, Air Force, Marine Corps, Coast Guard, National Guard, Re-
  serve Units, and the U.S. Public Health Service.

  You may claim as a dependent any person who received over half of his or her support from you, earned less than $3,650 in gross
  income, and was your:

                Child             Stepchild          Mother             Father            Grandparent        Brother
                Sister            Grandchild         Stepbrother        Stepsister        Stepmother         Stepfather
                Mother-In-Law     Father-In-Law      Brother-In-Law     Sister-In-Law     Son-In-Law         Daughter-In-Law

  Or, if related by blood: Uncle, Aunt, Nephew, Niece or, an individual (other than your spouse) who, for the taxable year of the taxpayer,
  had the same principal place of abode as the taxpayer and was a member of the taxpayer’s household. The term “dependent” includes
  a foster child if the child had as his principal place of abode the home of the taxpayer and was a member of the taxpayer’s household
  for the taxpayer’s entire tax year.

  The term “dependent” does not apply to anyone who is a citizen or subject of a foreign country UNLESS that person is a resident of
  Mexico or Canada.

  If your child/stepchild was under age 19 at the end of the year, the $3,650 gross income limitation does not apply. Your child/step-
  child may have earned any amount of income and still be your dependent if the other dependency requirements in this section were met.

  If your child/stepchild was a student under age 24 at the end of the calendar year, the $3,650 gross income limitation does
  not apply. The other requirements in this section still must be met.

  To qualify as a student, your child/stepchild must have been a full-time student for five (5) months during the calendar year at a
  qualified school, as defined by the Internal Revenue Service.

  If your dependent died during the tax year, you may claim the full amount of tax credit for the dependent on your tax return regard-
  less of when the death occurred during the year.

  Arkansas has adopted Internal Revenue Code §151(c)(6) regarding the tax treatment of kidnapped children.

                                                                                                                                   Page 9
          You may be able to save money on your taxes. Did any
          of the following apply to you in 2010?

              You had a disabled dependent See instructions for Line
              7C, Page 13, and Line 13, Form AR1000ADJ.

              You were an Arkansas resident and worked in an-
              other state See instructions for Line 2, Form AR1000TC.

              You were married and both you and your spouse
              had income See “Married Couples Choosing the Best Filing
              Status,” Page 12.

              Your child was enrolled in an approved Early Child-
              hood Education program See instructions for Line 41,
              Page 16.

              You received military income See instructions for Lines
              9A and 9B, Pages 13-14. (For military retirement see Page 14.)

              You received employer-sponsored retirement or a
              qualified traditional IRA See instructions for Lines 17A
              and 17B, Page 14.

              You paid tuition for yourself, your spouse, or your
              dependent to attend a post-secondary institution
              See Form AR1075. (Form not available in booklet; see “Forms”,
              Page 2, for more information.)

              You contributed to an Arkansas Tax Deferred Tuition
              Savings Program (529 Plan) See instructions for Line 2,

Page 10

                         WHO MUST FILE A TAX RETURN
     FULL YEAR RESIDENTS (Use Form AR1000F)                                                                                            Individual Income Tax Section
     If your                               and your                                               file if GROSS                        ATTN: Extension
     MARITAL STATUS                        FILING STATUS                                          INCOME*                              P.O. Box 3628
     is:                                   is:                                                    is at least                          Little Rock, AR 72203-3628
     Single (Including divorced            Single                                                 $10,682
     and legally separated)                                                                                             NOTE:     The maximum extension that will be
                                                                                                                                  granted to an individual on an AR1055
                                           Head of                                                $15,185                         is one hundred and eighty (180) days,
                                           Household                                                                              extending the due date until October
     Married                               Married Filing Joint                                   $18,012
                                           with 1 or less dependents                                                    When you file your return, check the box indicating
                                                                                                                        you filed a state extension.

                                           Married Filing Joint                                   $21,677               NOTE:     If the box on the front of the
                                           with 2 or more dependents                                                              AR1000 is not checked, you will
                                                                                                                                  not receive credit for your fed-
                                                                                                                                  eral or state extension.

                                           Married Filing Separately                              $3,999                Payments made on extension should be
                                                                                                                        made on Form AR1000ES, Voucher 5.
  Widowed in 2008           Qualifying                             $18,012
  or 2009, and not          Widow(er)
  remarried in 2010         with dependent child                                                                         See Page 17 for information on
*Gross income is all income (before deductions) other than income specifically                                           penalties and interest.
described as exempt on pages 11 and 12 “Exempt From Income Tax.”

     Exception: The $6,000 exemption on retirement income and the $9,000 exemption on
     military income as described on page 12 are included in gross income.                                              EXEMPT FROM INCOME TAX

     If your gross income was less than the amount shown in the last column for your filing status, you are             NOTE:     List exempt income on AR4,
     not required to file a return. However, you must file a return to claim any refund due.                                      Part III and include the total on
                                                                                                                                  AR1000F/AR1000NR, Line 51.
     NONRESIDENTS (Use Form AR1000NR)                                                                                             (You do not need to list exclusion
                                                                                                                                  amounts from numbers 10-12.)
     Nonresidents who received any taxable income from Arkansas sources must file a return
     (regardless of marital status, filing status, or amount).                                                          1.   Money you received from a life insur-
                                                                                                                             ance policy because of the death of
     PART YEAR RESIDENTS (Use Form AR1000NR)                                                                                 the person who was insured is exempt
     Part year residents who received any taxable income while an Arkansas resident must file a return                       from tax.
     (regardless of marital status, filing status, or amount).
                                                                                                                        NOTE:     You must include as taxable income any
WHEN TO FILE                                                       time the return was filed or two (2) years from                interest payments made to you from the
                                                                   the time the tax was paid, whichever is later.                 insurer (the insurance company that is-
1.     You can file your calendar year original tax                                                                               sued the policy).
       return any time after December 31, 2010, but           IF YOU NEED MORE TIME
       NO LATER THAN APRIL 18, 2011, (unless                                                                            2.   Money you received from life insur-
       an extension has been granted).                        If you request an extension of time to file your               ance, an endowment, or a private an-
                                                              federal income tax return (by filing federal Form              nuity contract for which you paid the
2.     If you file a fiscal year tax return, your return is   4868 with the IRS) you are entitled to receive                 premiums is allowed cost recovery
       due NO LATER THAN three and one-half                   the same extension on your Arkansas income tax                 pursuant to Internal Revenue Code §72.
       (3 ½) months following the close of                    return. The federal automatic extension extends
       the income year.                                       the deadline to file until October 17th. In order to      3.   Amounts you received as child sup-
                                                              receive the extension for state purposes, when                 port payments are exempt from tax.
NOTE:       T h e d at e o f t h e p o s t m a r k            you file your return check the box on the face of
            stamped by the U.S. Postal Ser-                   the Arkansas return indicating you filed a federal        4.   Gifts, inheritances, bequests, or de-
            vice is the date you filed your                   extension.                                                     vises are exempt from tax.
                                                              The Department no longer requires that a copy             5.   Scholarships, grants, and fellowships
3.     If the due date of your return falls on a Satur-       of federal Form 4868 be attached to your                       are taxed pursuant to Internal Rev-
       day, Sunday, or legal holiday, the return will         state tax return. When the return is complete and              enue Code §117. Stipends are taxed
       be considered timely filed if it is postmarked         ready to file, simply check the box on the face of             in their entirety. For additional information
       on the next business day.                              the return.                                                    on scholarships, fellowships, and stipends see
                                                                                                                             instructions for Line 20.
4.     Statute of Limitations – Refunds. An amended           If you do not file a federal extension, you can file an
       return or verified claim for refund of an over-        Arkansas extension using Form AR1055 before               6.   Interest you received from direct
       payment of any state tax for which the tax-            the filing due date of April 18th. Inability to pay            United States obligations, its posses-
       payer is required to file a return must be filed       is not a valid reason to request an Arkan-                     sions, the State of Arkansas, or any
       by the taxpayer within three (3) years from the        sas extension. Send your request to:                           political subdivision of the State of
                                                                                                                                                                Page 11
     Arkansas is exempt from tax. Obliga-              NOTE:     The total exemptions from all plans                       Be sure the placement of the last name
     tions include bonds and other evidence of                   described under 11 and 12 cannot                          matches placement of the first name.
     debt issued pursuant to a government unit’s                 exceed $6,000 per taxpayer, not                           (You must be legally married to file in
     borrowing power. (Interest received on tax                  including recovery of cost.                               this manner.)
     refunds is not exempt income, because it did
     not result from a debt issued by the United                                                                MARRIED COUPLES CHOOSING THE
     States, the State of Arkansas, or any political   Gambling winnings from Arkansas elec-                    BEST FILING STATUS
     subdivision of the State of Arkansas.) Interest   tronic games of skill are not included
     from government securities paid to individuals    as income and the 3% withholding is                      If you and your spouse had separate incomes, you
     through a mutual fund is exempt from tax.         excluded from Line 37. To determine if                   might save money by figuring your tax separately
                                                       your gambling winnings are taxable, see                  using one of the following two methods. Use the
7.   Social Security benefits, VA benefits,            instructions for Line 20.                                method that suits you best.
     Workers’ Compensation, Unemploy-
     ment Compensation, Railroad Retire-                                                                        METHOD A.       List your income separately under
     ment benefits and related supple-                 FILING AN AMENDED RETURN                                                 Column A (“Your Income”). List your
     mental benefits are exempt from tax.                                                                                       spouse’s income separately under
                                                       If filing an amended return, check the box at                            Column B (“Spouse’s Income”).
8.   The rental value of a home or the                 the top right corner of Form AR1000F/ AR1000NR/                          Figure your tax separately and
     housing allowance paid to a duly                  AR1000S. Complete the return using the following                         then add your taxes together. See
     ordained or licensed minister of a                instructions, replacing the incorrect entries from                       instructions for Married Filing Sepa-
     recognized church is exempt to the                your original return with the corrected entries.                         rately on the Same Return, Box 4.
     extent that it was used to rent or                Attach an explanation and supporting
     provide a home. The rental value of a             documentation for items changed. (Do                     If you use Method A, your result will be either a COM-
     home furnished to a minister includes utilities   not file an amended return until after your              BINED REFUND or a COMBINED TAX DUE.
     furnished to the minister as part of compensa-    original return has been processed.)
     tion. The housing allowance paid to a minister                                                             METHOD B.       File separate individual tax returns.
     includes an allowance for utilities paid to the   Amended return needed:                                                   See instructions for Married Filing
     minister as part of compensation to the extent    •  to make changes or adjustments to your                                Separately on Different Returns,
     it was used to furnish utilities in the home.        original return                                                       Box 5.
                                                       •  if the IRS examines your federal return for any       If you use Method B, one of you may owe tax and
9.   Disability income MAY BE exempt from                 tax year and changes your net taxable income          the other may get a refund. The tax due must be
     tax pursuant to Internal Revenue Code                (required to file an Arkansas amended return          paid with the proper tax return and the refund will be
     §104.                                                within 90 days of notification)                       due on the other return. YOU MAY NOT OFFSET
                                                                                                                ONE AGAINST THE OTHER.
10. The first $9,000 of U.S. Military Com-             Amended return not needed:
    pensation is exempt from tax.                      •  to correct a Social Security Number
                                                          or address (Call (501) 682-1100 or write to           BOX 3. Filing Status 3 (Head of House-
11. If you received income from an em-                    Individual Income Tax Section, P.O. Box 3628,                hold)
    ployer sponsored retirement plan,                     Little Rock, AR 72203. You may be asked to
    including disability retirement, that                 provide documentation.)                               To file as Head of Household you must have been
    is not exempt under IRC §104, the                  •  if you are notified by the Income Tax Section         unmarried or legally separated on December 31,
    first $6,000 is exempt from tax. For                  that there is an error on your original return        2010 and meet either 1 or 2 below. The term “Un-
    tax years 2003 and later, if you contrib-          •  if filing a federal amended return with no            married” includes certain married persons who lived
    uted after-tax dollars to your plan, you are          impact on your Arkansas income tax return             apart, as discussed at the end of this section.
    allowed to recover your cost (investment)
    in your retirement plan in accordance with
    Internal Revenue Code §72. Then the first                  FILING STATUS                                    1.   You paid over half the cost of keeping a home
                                                                                                                     for the entire year that was the main home of
    $6,000 of the balance is exempt from tax. (If
                                                                                                                     your parent whom you can claim as a depen-
    you received income from military retirement,      DETERMINE YOUR FILING STATUS
                                                                                                                     dent. Your parent did not have to live with you
    you may adjust your figures if the payment
                                                                                                                     in your home.
    included Survivor’s Benefit Payments. The
    amount of adjustment must be listed on the         BOX 1. Filing Status 1 (Single)
    income statement, and supporting documen-
    tation must be submitted with the return.)         Check this box if you are SINGLE or UNMARRIED
                                                                                                                2.   You paid over half the cost of keeping a
                                                       and DO NOT qualify as HEAD OF HOUSEHOLD.
                                                                                                                     home in which you lived, and in which one
12. If you received a traditional IRA dis-             (Read the instructions for BOX 3 to determine if you
                                                                                                                     of the following also lived, for more than six
    tribution after reaching the age of                qualify for HEAD OF HOUSEHOLD.)
                                                                                                                     (6) months of the year (temporary absences,
    fifty-nine and one-half (59 1/2), the
                                                                                                                     such as vacation or school, are counted as
    first $6,000 is exempt from tax. Your
                                                                                                                     time lived in the home):
    traditional IRA distribution may be adjusted       BOX 2. Filing Status 2 (Married Filing
    for nondeductible IRA contributions, if any, by           Joint)
                                                                                                                     a. Your unmarried child, grandchild, great-
    completing Federal Form 8606 and attach-
                                                                                                                        grandchild, adopted child or stepchild.
    ing it to your Arkansas return. Premature dis-     Check this box if you were MARRIED and are filing
                                                                                                                        This child did not have to be your depen-
    tributions made on account of the participant’s    jointly. IF YOU ARE FILING A JOINT RETURN,
                                                                                                                        dent, but your foster child must have been
    death or disability also qualify for the exemp-    YOU MUST ADD BOTH SPOUSES’ INCOME
                                                                                                                        your dependent.
    tion. All other premature distributions            TOGETHER. Enter the total amount in column A on
    or early withdrawals including, but                Lines 8 through 20 under “Your/Joint Income”.
                                                                                                                     b. Your married child, grandchild, adopted
    not limited to, those taken for medical
                                                                                                                        child or stepchild. This child must have
    expenses, higher education expenses                NOTE:     If you are married, filing on the same form,
                                                                                                                        been your dependent.
    or a first-time home purchase do not                         and using different last names, separate
    qualify for the exemption.                                   the last names by using a slash.
                                                                                                                     c. Any other relative whom you could claim
                                                                                                                        as a dependent.
A surviving spouse qualifies for the exemption;                  EXAMPLE:
however he/she is limited to a single $6,000 ex-                 John Q. and Mary M. Doe/Smith, or
emption.                                                         Mary M. and John Q. Smith/Doe

Page 12
                                                               PERSONAL TAX                                                   INCOME
Even if you were not divorced or legally separated                CREDITS                                     FULL YEAR RESIDENTS
in 2010, you may be considered unmarried and
                                                                                                              If your filing status is Married Filing Separately on
file as Head of Household. See Internal Revenue        LINE 7A. Each taxpayer and spouse is entitled          the Same Return, both Column A and Column B
Service instructions for Head of Household to          to one personal tax credit. You can claim additional   must be used. Write your income in Column A and
determine if you qualify.                              Personal Tax Credits if you can answer “Yes” to any    your spouse’s income in Column B. For all other
                                                       of these questions:                                    filing statuses, write all income in Column A only.
BOX 4. Filing Status 4 (Married Filing                    Is your filing status Head of Household or          PART YEAR AND NONRESIDENTS
       Separately on the Same Return)                          Qualifying Widow(er)?                          Complete Column A and Column B of the NR1
                                                          On January 1, 2011, were you age 65 or over?        as if you were a full year resident. List all of your
Check this box if you were married and are filing         On December 31, 2010, were you deaf?                income from all sources for the entire year in these
SEPARATELY ON THE SAME TAX RETURN.                        On December 31, 2010, were you blind?               two columns.
This method of tax computation may reduce your
tax liability if both spouses had income. The result   Check the box or boxes that apply to you and/or        List in Column C the total combined income (for
will be either a combined refund or a combined         your spouse. You CANNOT claim any of these             both spouses) earned while Arkansas residents
tax due.                                               credits for your children or dependents.               and income derived from Arkansas sources.
IF ONE SPOUSE HAD A TOTAL NEGATIVE                     Blindness is defined as being unable to tell light     The total tax must be computed on the income
INCOME, YOU MUST FILE MARRIED FILING                   from darkness, having eyesight in the better eye not   totals in Columns A and B. After all allowable tax
JOINTLY.                                               exceeding 20/200 with corrective lens, or having a     credits have been subtracted from the total tax,
                                                       field of vision limited to an angle of 20 degrees.     prorate the remaining balance. See instructions
                                                                                                              for Lines 36A, 36B, 36C, and 36D.
BOX 5. Filing Status 5 (Mar ried Fil-                  You can claim the Deaf Credit only if the average
       ing Separately on Different Re-                 loss in speech frequencies (500 to 2000 Hertz) in      PART YEAR RESIDENTS AND NONRESI-
       turns)                                          the better ear is 86 decibels, I.S.O., or worse.       DENTS MUST ATTACH A COPY OF YOUR
                                                                                                              FEDERAL RETURN, OR YOUR ARKANSAS
Check this box if you were married and are filing      Any taxpayer age 65 and over not claiming a            RETURN WILL NOT BE PROCESSED.
separate tax returns.                                  retirement income exemption on Line 17 is eligible
                                                       for an additional $23 (per taxpayer) tax credit.       Round all amounts to the nearest dollar.
                                                       Check the box(es) marked “65 Special”.                 (For example, if your Form W-2 shows $10,897.50,
                                                                                                              round to $10,898. If your Form W-2 shows
                                                       Add the number of boxes you checked on Line            $10,897.49, round to $10,897.)
BOX 6. Filing Status 6 [Qualifying                     7A. Write the total in the box provided. Multiply
       Widow(er)]                                      the number by $23 and write amount in space            Staple the state copy of each of your W-
                                                       provided.                                              2(s) and 1099-R(s) to the left margin of
Check this box if you are a QUALIFYING
                                                                                                              the front of the return.
                                                       LINE 7B. List the name(s) of your dependent(s),
You are eligible to file as a QUALIFYING               Social Security Numbers, and relationship to           LINE 8. Add the wages, salaries, tips, etc. re-
WIDOW(ER) if your spouse died in 2008 or 2009          you in the space provided. DO NOT INCLUDE              ported on your W-2(s). Enter the total on this line.
and you meet each of the following tests:              YOURSELF AND/OR YOUR SPOUSE. The                       Attach W-2(s).
                                                       individual(s) you can claim as dependent(s) are
1.   You were entitled to file MARRIED FILING          described on Page 9. (Attach schedule if more          Enter U.S. Military Compensation on Line 9.
     JOINTLY or MARRIED FILING SEPARATELY              than 5 dependents.)
     ON THE SAME RETURN with your spouse for
                                                                                                              Ministers Income:
     the year your spouse died. It does not matter     Add the number of dependents listed on Line            If you were a duly ordained or licensed minister,
     whether you actually filed a joint return.        7B. Write the total in the box provided. Multiply      you received a housing allowance from your
                                                       the number by $23 and write that amount in the         church, and you do not file a federal Schedule
2.   You did not remarry before the end of 2010.       space provided.                                        C or C-EZ, enter your gross compensation from
                                                                                                              the ministry less rental value of your home. The
3.   You had a child, stepchild, adopted child, or
                                                                                                              balance is subject to tax. The rental value of
     foster child who qualified as your dependent      LINE 7C. If one or more of your dependents were        your home must be shown on Form AR4,
     for the year.                                     developmentally disabled, enter his/her name(s) on     Part III on the line provided. Attach to
                                                       the line. Multiply $500 by number of developmen-       the AR1/ NR1. Attach W-2(s) if not using
4.   You paid more than half the cost of keeping       tally disabled dependents. Enter the total.            federal Schedule C or C-EZ.
     a home, which was the main home of that
     child for the entire year except for temporary    NOTE:     You must attach a cer tified
     absences.                                                   AR1000RC5 to your return if                  LINE 9A. If you had U.S. Military Compen-
                                                                 this is the first year you claim             sation, enter gross income in space provided.
                                                                 the Developmentally Disabled                 You are entitled to a $9,000 exemption
DEATH OF TAXPAYER                                                Individual Credit.                           from your gross income. The balance is taxable.
An Arkansas tax return should be filed for a tax-                                                             Attach W-2(s).
payer who died during the taxable year as if the       A certified AR1000RC5 must be filed with your
taxpayer had lived the entire year. The word “DE-      tax return every five (5) years. If credit was re-         Filing Status 2 (Mar ried Filing
CEASED” should appear after his/her name along         ceived on a prior year’s return, do not file another       Joint):
with the date of death.                                AR1000RC5 until the Individual Income Tax Section          If you and your spouse both had U.S. Military
                                                       notifies you.                                              Compensation, enter your total gross income
                                                                                                                  in the appropriate space provided on Line
                                                                                                                  9A. You and your spouse are each entitled
                                                       LINE 7D. Total the tax credits from Lines 7A,              to an exemption from your respective gross
                                                       7B, and 7C. Enter the total on this line and on            incomes.
                                                       Line 32.
                                                                                                              Enter U.S. Military Retirement on Line
                                                                                                                                                        Page 13
LINE 9B. (Filing Status 4 Only) If your                If, after the netting process, you had a capital gain     IRA distribution, enter the combined gross income
spouse had U.S. Military Compensation,                 or loss reported on the federal Schedule D or on          amount from Box 1 of your 1099-R(s). Enter the
enter gross income in the space provided. Your         Form 1040/1040A, use Arkansas Form AR1000D                combined federal taxable amount from Box 2a
spouse is entitled to a $9,000 exemption               to determine the taxable amount to enter on AR1/          of your 1099-R(s). If Box 2a is blank, use the
from his/her gross income. The balance is taxable.     NR1, Line 14. Attach federal Schedule D and               Simplified Method Worksheet in the federal 1040
Attach W-2(s).                                         Form AR1000D to your return.                              Instruction Booklet to calculate the taxable amount
                                                                                                                 of your distribution. Both you and your spouse are
                                                       The amount of capital loss that can be                    entitled to a $6,000 exemption from your respec-
Enter U.S. Military Retirement on Line                 deducted after offsetting capital gains is                tive taxable retirement plan income; the balance
17B.                                                   limited to $3,000 ($1,500 per taxpayer for                is taxable to Arkansas. Enter the balance on Line
                                                       filing Status 4 or 5). If your capital loss was           17A. Attach 1099-R(s).
HOME OF RECORD OTHER THAN ARKAN-                       more than the yearly limit on capital loss deduc-
SAS: If your Home of Record is not Arkansas,           tions, you can carry over the unused part to later
do not report to Arkansas your income or your          years until used up.
nonresident spouse’s income.                                                                                     LINE 17B. FILING STATUS 4 (Married
                                                       The gain on the sale of your personal residence
                                                                                                                 Filing Separately on the Same Return)
                                                       is exempt up to $250,000 per taxpayer ($500,000
Your spouse’s income is exempt from Arkansas                                                                     ONLY: If your spouse had income from an employ-
                                                       for married couples filing on the same return).
tax if your Home of Record is not Arkansas and                                                                   ment related pension plan or a qualified traditional
                                                       The property must, during the 5 year period end-
your spouse’s domicile is the same as your Home                                                                  IRA distribution, enter the gross income from Box
                                                       ing on the day of sale, be owned and used by the
of Record. Write the words “military spouse” at top                                                              1 of his or her 1099-R(s). Enter the federal taxable
                                                       taxpayer(s) as the principal residence for periods
of tax return and attach a completed Form AR-MS                                                                  amount from Box 2a of his or her 1099-R(s). If Box
                                                       aggregating 2 years or more.
(available at and                                                                    2a is blank, use the Simplified Method Worksheet
a copy of service member’s LES to verify Home                                                                    in the federal 1040 Instruction Booklet to calculate
of Record.                                             LINE 15. Enter the ordinary gain or (loss) from           the taxable amount of his or her distribution. Your
                                                       Part II of federal Form 4797. Adjust for any              spouse is entitled to a $6,000 exemption from
(For future tax purposes, your nonmilitary spouse
                                                       differences in Arkansas and federal de-                   the taxable amount; the balance is taxable to Ar-
must submit a new payroll withholding form, ARW-
                                                       preciation. The capital loss limit does not apply.        kansas. Enter the balance on Line 17B. Attach
4MS to his/her employer each year to exempt future
                                                       Attach federal Form 4797.                                 1099-R(s).
                                                                                                                 You are eligible for the $6,000 exemption for retire-
                                                       LINE 16. Use this line to report taxable lump-sum         ment or disability benefits provided the distribution
LINE 10. If you received interest from bank depos-
                                                       distributions, annuities, and traditional IRA distribu-   was from public or private employment-related
its, notes, mortgages, corporation bonds, savings
                                                       tions. Include early withdrawal of traditional IRA        retirement systems, plans, or programs. (The re-
and loan association deposits, and credit union
                                                       distributions on this line. List only the amount of       cipient need not be retired.) The method of
deposits, enter all interest received or credited to
                                                       withdrawal and attach the federal Schedule 5329           funding is irrelevant. The exemption may be taken
your account during the year. If the total is over
                                                       showing the tax on premature distribution. Also,          from either lump-sum or installment payments. The
$1,500, complete and attach Form AR4.
                                                       enter ten percent (10%) of the tax from the federal       early withdrawal penalty may be applicable even
                                                       Schedule 5329, Part I and Part II, on Line 30. If you     though the exemption is granted.
                                                       received a distribution which does not qualify for
LINE 11. If you received dividends and other
                                                       the Lump-Sum Distribution Averaging Schedule              If you received a traditional IRA distribution after
distributions, enter amounts received as dividends
                                                       (AR1000TD), list the total distribution received in       reaching the age of fifty-nine and one-half (59 1/2),
from stocks in any corporation. If the total is
                                                       2010. (See AR1000TD to determine if you qualify to        the first $6,000 is exempt from tax. Premature
over $1,500, complete and attach Form
                                                       use the averaging method.) Attach 1099-R(s).              distributions made on account of the participant’s
                                                                                                                 death or disability also qualify for the exemption.
                                                       Premature distributions are amounts you withdrew          All other premature distributions or early withdraw-
LINE 12. Enter alimony or separate maintenance         from your traditional IRA, deferred compensation,         als including, but not limited to, those taken for
received as the result of a court order.               or thrift savings plans before you were either age        medical expenses, higher education expenses,
                                                       59 ½ or disabled. Rollovers of premature distribu-        or a first-time home purchase do not qualify for
                                                       tions are tax exempt.                                     the exemption.
LINE 13. If you had business or professional in-
come and filed a federal Schedule C or C-EZ,                                                                     Note: If you made nondeductible contributions
enter the total dollar amount(s) of net income (or      McFadden and Maples Claimants: If you                    to your traditional IRA, enter taxable amount from
loss) from your federal Schedule C or C-EZ. If you      received a 1099-R and a claim was filed on your          federal Form 8606 in the space provided. Attach
did not file a federal Schedule C or C-EZ, submit       behalf under McFadden v. Weiss or Maples v.              federal Form 8606.
a similar schedule and enter the net income (or         Weiss your Arkansas basis (cost of contributions)
loss). If you filed a federal Schedule C or             may have been fully recovered for tax purposes.
                                                                                                                 LINE 18. If you had income from rents, royalties,
C-EZ, attach it to your return.                         If your basis has been fully recovered, enter
                                                        the amount from Box 1 of your 1099-R as the              estates or trusts, profits (whether received or not)
                                                                                                                 from partnerships, fiduciaries, small business cor-
Business income may not be split be-                    “Gross” and “Taxable Amount” on Line 17.
                                                                                                                 porations, etc., enter the amounts as reported on
tween you and your spouse unless a part-
                                                                                                                 your federal Schedule E. If you are filing a return
nership was legally established. Report                LINE 17A. If you had income from an employ-               for a taxable year that is not the same as the an-
Partnership Income on Form AR1050 and attach           ment-related pension plan or a qualified traditional      nual accounting period of your partnership or trust,
K-1(s) for each partner.                               IRA distribution, enter the gross amount(s) from Box      report your distributive share(s) of net profits in the
                                                       1 of your 1099-R(s) in the space provided. Enter          accounting period that ends in your taxable year.
Include on Line 20, Other Income, any                  the federal taxable amount from Box 2a of your            Attach federal Schedule E.
federal/state depreciation differences.                1099-R(s) in the space provided. If Box 2a is blank,
                                                       use the Simplified Method Worksheet in the federal        Nonresident beneficiaries pay tax only on Arkansas
                                                       1040 Instruction Booklet to calculate the taxable         income.
LINE 14. If you had gains or losses from the sale      amount of your distribution. You are entitled to a
of real estate, stocks or bonds, or gains or losses    $6,000 exemption from the taxable amount; the
from capital assets from Partnerships, S Corpora-      balance is taxable to Arkansas. Enter the balance         LINE 19. If you had farm income, enter the
tions, or Fiduciaries, enter your taxable share.       on Line 17A, Column A. Attach 1099-R(s).                  amount reported on your federal Schedule F.
Adjust the amount of gain or loss for any
                                                                                                                 Farm income may not be split between
federal/state depreciation differences.                FILING STATUS 2 (Married Filing Joint)                    you and your spouse unless a partnership
                                                       ONLY: If you and your spouse both had income              was legally established. Partnership income
                                                       from a retirement plan and/or qualified traditional
Page 14
must be reported on Form AR1050, with K-1(s) for
each partner. Attach federal Schedule F.
                                                                 ADJUSTMENTS                                     Standard Deduction:

                                                                                                                 The Standard Deduction for your filing status is
                                                         LINE 23. If you are claiming an adjustment
                                                                                                                 the amount shown below. (If the amount on Line
LINE 20. Enter type (depreciation, NOLs, foreign         from the list below, use Form AR1000ADJ and
                                                                                                                 24 is less than the Standard Deduction, enter the
earned income exclusion, or contest winnings) and        include the total on this line. Attach Form
                                                                                                                 amount from Line 24 on Line 25.
amount of all taxable income for which no other          AR1000ADJ.
place is provided on the return. (If necessary provide
                                                         Border city exemption                                    Filing                             Standard
additional information on an attached statement.)
                                                         Arkansas Tax Deferred Tuition Savings Program            Status                             Deduction
                                                         Payments to IRA                                          1 Single                             $2,000
Gambling winnings of any type should be
                                                         Payments to MSA                                          2 Married Filing Joint               $4,000
entered here, with the following excep-
                                                         Payments to HSA                                          3 Head of Household                  $2,000
tion: Gambling winnings from Arkansas electronic
                                                         Deduction for interest paid on student loans             4 Married Filing Separately        $2,000 each
games of skill are not included as income and the
                                                         Contributions to Intergenerational Trust                    on Same Return
3% tax withheld is excluded from Line 37.
                                                         Moving expenses                                          5 Married Filing Separately           $2,000
                                                         Self-employed health insurance deduction                    on Different Returns
You must report reimbursement of medical expens-
                                                         KEOGH, Self-employed SEP and Simple Plans                6 Qualifying Widow(er)                $2,000
es from a previous year if you itemized deductions
                                                         Forfeited interest penalty for premature with-
in that year and it reduced your tax.
                                                         drawal                                                  NOTE:      The $2,000 Standard Deduction does
                                                         Alimony/Separate Maintenance Paid                                  not apply to taxpayer’s dependent(s).
Include amounts recovered on bad debts that you
                                                         Support for permanently disabled individual
deducted in an earlier year.
                                                         Organ Donor Deduction                                   LINE 26. Subtract Line 25 from Line 24. This is
                                                                                                                 your Net Taxable Income.
Include any adjustment that arises from
federal/state depreciation differences.
                                                         LINE 24. Subtract the total on Line 23, from the
                                                         total on Line 22, Total Income. Enter balance           LINE 27. Using the appropriate tax table locate
If you had a net operating loss (NOL) in an
                                                         on this line. This is your Adjusted Gross In-           the tax for your income and enter here.
earlier year to carry forward to 2010, enter it as a
                                                         come (AGI).
negative amount on this line. Attach a state-
ment showing how you calculated the
                                                                                                                 LINE 28. Add Lines 27(A) and 27(B) and enter
amount of loss and the year the loss
occurred. A net operating loss may be carried               TAX COMPUTATION                                      the total.
forward for five (5) years. (NOL carrybacks not
allowed.)                                                LINE 25. SELECT THE PROPER TAX TABLE                    LINE 29. If you received a lump-sum (total) distri-
                                                         and check the appropriate box. You will be in one       bution from a qualified retirement plan during 2010,
Scholarships, fellowships, and stipends:                 of the following categories:                            you may be eligible to use the averaging method
                                                                                                                 to figure some of your tax at a lower rate. Read
A scholarship or fellowship is exempt from tax            1)    You qualify for a Low Income Table, or           the instructions on the back of Form AR1000TD to
only if:                                                  2)    You must use the Regular Tax Table               determine if you are eligible to use this method. If
                                                                                                                 so, complete Form AR1000TD and enter amount
 1)    You were a candidate for a degree at              See tax tables and qualifications for each              here. Attach Form AR1000TD.
       an educational institution, and                   table on pages 26-30.
 2)    The grant was a qualified scholarship             If you use an exclusion for military compensation,      LINE 30. Taxpayers subject to traditional IRA or
       or fellowship.                                    employer sponsored pension income, or a quali-          employer qualified retirement plan penalties and tax
                                                         fied traditional IRA distribution, you do not qualify   on their federal return are subject to penalties and
A qualified scholarship or fellowship is any amount      for a Low Income Tax Table. You may elect NOT           tax on their state return. Enter ten percent (10%)
you received as a scholarship or fellowship grant        TO USE the exclusion(s) to which you are entitled       of the federal penalty amount from Part I of federal
that was used under the terms of the grant for:          and use a Low Income Tax Table if you fall within       Form 5329. Be sure to enter total distribution(s)
                                                         the income limits.                                      from Part I, Form 5329, on Line 16 or 17, page
 1)    Tuition and fees required for enrollment, or
 2)    Fees, books, supplies and equipment
       required for the course(s) at the educational     Caution: If you qualify to use a Low                    If you are subject to a penalty on a distribution from
       institution. (These items must have been                   Income Tax Table, enter zero                   a Coverdell Education Savings Account, include
       required of all students in that course.)                  (0) on Line 25A. (The Standard                 ten percent (10%) of the federal penalty amount
                                                                  Deduction is already built into                from Part II of federal Form 5329 on this line. Be
Foreign students who are exempt from federal                      the table.)                                    sure to include the taxable amount of the Coverdell
taxes because of a tax treaty must file and pay tax
                                                                                                                 Education Savings Account distribution on Line 20,
on all income including non-qualified scholarship        If you use the regular tax table, enter the larger of   page AR1/NR1 (Other Income).
or fellowship income.                                    your itemized deductions (from Form AR3) or your
                                                         Standard Deduction on Line 25.
Stipends are taxable.
                                                                                                                 LINE 31. Add Lines 28 through 30 and enter
                                                         Itemized Deductions:                                    the total.
LINE 21. Add Lines 8 through 20 and enter total          To compute your itemized deductions, complete
in the appropriate columns on this line. This is your    Form AR3. Make sure that your total itemized de-
Total Income.                                            ductions exceed the Standard Deduction. (For Form                 TAX CREDITS
                                                         AR3 instructions see pages 17-19 of this booklet.)
                                                                                                                 LINE 32. Enter the total personal tax credits
LINE 22. Enter the amounts from Line 21, page                                                                    from Line 7D.
AR1/NR1 (Adjusted Gross Income) on this line.            NOTE:     If you are filing Status 4 or 5 and one
                                                                   spouse itemizes, then both spouses
                                                                   must itemize.                                 LINE 33. The Child Care Credit allowed is
                                                                                                                 twenty percent (20%) of the amount allowed on
                                                                                                                 your federal return. A copy of federal Form
                                                                                                                 2441, “Credit for Child and Dependent

                                                                                                                                                            Page 15
Care Expenses” must be attached to                                                                              early childhood program as defined by Arkansas
your Arkansas return. (If this credit is                   If you did not receive (or lost) your W-             law.) Enter the certification number and
for Approved Early Childhood Credit, see                   2(s) and Arkansas tax was withheld from your         attach federal Form 2441 and Certifica-
instructions for Line 41.)                                 income, you should take the following steps IN       tion Form AR1000EC. Contact your child
                                                           THE ORDER LISTED BELOW:                              care facility for Form AR1000EC.

LINE 34. Complete Form AR1000TC if you are                   1) Ask your employer for copies of your
eligible for any credit(s) listed below and include the         W-2(s). If you cannot obtain them from          LINE 42. Add the amounts on Lines 37,38,39,40
total on this line. Attach Form AR1000TC.                       your employer you should                        and 41. This is your TOTAL PAYMENTS.
                                                             2) Contact the Social Security
State Political Contribution Credit                             Administration at (800) 772-1213.
Other State Tax Credit                                          Only if you cannot obtain your W-2(s) from      LINE 43. PREVIOUS REFUND: This line is
Credit for Adoption Expenses                                    your employer or SSA you may                    for amended returns only. Enter the amount of your
Phenylketonuria Disorder Credit                              3) Complete federal Form 4852 and                  previous refund(s) from your original return and
Business Incentive Tax Credit(s)                                attach a copy of your final pay stub to         amended return(s).
                                                                support your amounts.
                                                                                                                LINE 44. Subtract Line 43 from Line 42. This is
LINE 35. Add Lines 32 through 34 and enter                CAUTION: You WILL NOT receive credit for              your ADJUSTED TOTAL PAYMENTS.
the total.                                                         tax withheld or receive a tax refund,
                                                                   unless you attach CORRECT AND
                                                                   LEGIBLE W-2(s) or other approved
                                                                   documentation to your tax return.
LINE 36. Subtract Line 35 from Line 31. This is
                                                          DO NOT include FICA, federal income tax, tax paid
                                                                                                                 REFUND OR TAX DUE
your Net Tax. If Line 35 is greater than Line 31,
                                                          to another state or 3% tax withheld from winnings     LINE 45. If Line 44 is more than Line 36 on the
enter zero (0).
                                                          on electronic games of skill. Gambling winnings       AR2 or Line 36D on the NR2, you overpaid your
                                                          from Arkansas electronic games of skill are not       tax. Write the difference on Line 45. If you want
                                                          included as income and the 3% tax withheld is         a refund only, skip Lines 46 and 47 and enter the
             PRORATION                                    excluded from Line 37.                                amount of your refund on Line 48.

IF FILING A FULL YEAR RESIDENT RE-                        DO NOT correct a W-2 yourself. Your em-
TURN, go to instructions for Line 37. The                 ployer must issue you a corrected W-2.                LINE 46. You can apply part or all of the tax you
instructions for Line 36A through Line                                                                          OVERPAID in 2010 to your tax in 2011. Enter the
36D apply only to nonresidents and part                   LINE 38. If you made an Estimated Declaration         amount you would like to have carried forward. The
year residents.                                           and paid estimated tax payments on 2010 income        overpayment will be applied directly to your 2011
                                                          OTHER THAN wages, salaries, tips, etc., write the     estimated account. If you wish to apply only part of
                                                          amounts paid in this space. The only amounts to       Line 45 to pay 2011 tax, you will be issued a refund
DENTS ONLY, read the following instructions
                                                          enter here are payments you made on a 2010 Dec-       for the balance of your overpayment.
to determine your correct Arkansas tax liability.
Attach a complete copy of your federal                    laration of Estimated Income Tax (includes January
                                                          15, 2011 installment and/or credit brought forward    NOTE:     The amount you carry over to pay 2011
                                                          from 2009 tax return).                                          taxes will only be credited to the
                                                                                                                          primary filer. It cannot be divided
                                                          DO NOT include PENALTIES OR INTEREST as                         between the primary filer and spouse.
LINE 36A. Enter adjusted gross income from
Line 24, Column C.                                        part of the amount paid.

                                                          If you and your spouse filed a JOINT dec-             LINE 47. If you wish to contribute a portion
                                                          laration and you and your spouse choose               or all of your overpayment to one or more of
LINE 36B. Enter total of Columns A and B from
                                                          to file your tax returns on separate forms            the programs listed below, complete Schedule
Line 24.
                                                          this year, payments made under the joint              AR1000-CO and enter total amount of your dona-
                                                          declaration of estimate will be credited              tion. Attach Schedule AR1000-CO after
LINE 36C. Divide amount on Line 36A by amount             to the primary filer.                                 the AR2/NR2.
on Line 36B to arrive at your Arkansas percentage
of income. Enter percentage as a decimal rounded          If you are filing prior year tax returns
                                                                                                                Area Agencies on Aging Program
to six places.                                            past the due date of the tax return,
                                                                                                                Arkansas Disaster Relief Program
                                                          the refund/overpayment from those tax
     Example: $2,500/$525,000 = 0.004762                                                                        Arkansas Schools for the Blind and Deaf
                                                          returns cannot be carried forward as
                      or                                                                                        Arkansas Tax Deferred Tuition Savings Program
                                                          estimated tax.
         $10,000/$60,000 = 0.166667                                                                             Baby Sharon’s Children’s Catastrophic Illness Program
                                                                                                                Military Family Relief Program
                                                                                                                Newborn Umbilical Cord Blood Initiative
                                                          LINE 39. If you filed an extension request with
LINE 36D. Multiply amount on Line 36 by decimal                                                                 Organ Donor Awareness Education Program
                                                          the state and paid tax with your request, enter the
on Line 36C for Arkansas apportioned tax liability.                                                             U.S. Olympic Committee Program
                                                          amount paid.

              PAYMENTS                                    LINE 40. PREVIOUS PAYMENTS: This line is              LINE 48. Subtract Lines 46 and 47 from Line 45.
                                                          for amended returns only. Enter the amount of your    This is the amount of your REFUND.
LINE 37. Enter Arkansas tax withheld from your            previous payment(s) made with your original return
W-2(s)/1099R(s). You have already paid this               and/or billing notices and amended return(s).         The Director is allowed 90 days from the
amount of tax during the year. If you have MORE                                                                 return due date or the date the return was
THAN ONE W-2, be sure to add the Arkansas                                                                       filed, whichever occurs later, to refund an
Income Tax withheld from all W-2(s). Enter the            LINE 41. Enter the APPROVED early child-              overpayment of tax without interest (Act
total withheld.                                           hood credit (20% of the federal Child Care Credit)    262 of 2005).
                                                          for individuals with a dependent child placed in
IF YOU AND YOUR SPOUSE ARE FILING ON                      an APPROVED child care facility while the par-
THE SAME RETURN, add the Arkansas state                   ent or guardian worked or pursued employment.
income tax withheld from all your W-2(s). Enter           (Facility must be approved by the Arkansas De-
the combined total withheld.                              partment of Education as having an appropriate
Page 16
SET OFF REFUNDS                                                PAYMENT INFORMATION                                         INSTRUCTIONS FOR
If you, your spouse, or former spouse owes a debt to one
                                                               Complete Form AR1000V (available at www.arkan-
                                                      and attach a check or money
of the agencies below, all or part of your refund is subject
to being withheld to satisfy the debt. You will receive a
                                                               order to your return. Write your Social Security
                                                               Number on the check or money order, and make
letter advising which agency has claimed your refund.
                                                               your check payable in U.S. Dollars to the Depart-               (FORM AR3)
                                                               ment of Finance and Administration. Mail on or be-
Any housing authority
                                                               fore April 18, 2011.If the payment is for an amended
Arkansas circuit, county, district, or city courts
AR colleges, universities, and technical institutes
                                                               return, mark the box yes on Form AR1000V for “Is          MEDICAL AND DENTAL EXPENSES
                                                               Payment for an Amended Return”.
County tax collectors or treasurers
                                                                                                                         List only amounts you paid and for which you were
Department of Finance and Administration
                                                               Credit card payments may be made by calling               not reimbursed.
Department of Higher Education
                                                               1-800-2PAY-TAXSM (1-800-272-9829), or by visit-
Department of Human Services
                                                               ing and clicking
Employee Benefits Division of DFA
                                                               on the “Payment Center” link.                             LINE 1. Enter total medical and dental expenses,
Internal Revenue Service
                                                                                                                         less reimbursements from insurance or other
Office of Child Support Enforcement
                                                               Both options will be processed by Official Payments       sources. See chart on Page 19 for examples of
Office of Personnel Management of DFA
                                                               Corporation, a private credit card payment services       deductible and nondeductible expenses.
                                                               provider. A convenience fee will be charged to your
It is the agency’s responsibility to refund any
                                                               credit card for the use of this service. The State
set off amount paid to the agency in error.                                                                              LINE 2. Enter total amount from Form AR2/NR2,
                                                               of Arkansas does not receive this fee.
                                                                                                                         Lines 24A and 24B.
If you owe a debt for Arkansas income                          You will be informed of the exact amount of the
tax, your federal refund may be captured                       fee before you complete your transaction. After
to satisfy your state income tax debt.                         you complete your transaction you will be given a
                                                                                                                         LINE 3. Multiply Line 2 by 7.5% (.075).
                                                               confirmation number to keep with your records.
If only one of the married taxpayers owes the debt,            NOTE:      Do not send currency or coin by mail.          LINE 4. Subtract Line 3 from Line 1.
the taxpayer who is not liable can avoid having his/her
refund applied to the debt if both taxpayers file Status                                                                 TAXES
5, Married Filing Separately on Different Returns.
                                                                                                                         LINE 5. You may deduct real estate taxes you
                                                                                                                         paid on property you own that was not used for
LINE 49. If Line 36 of the AR2 or Line 36D of the                                                                        business. Do not include any special assessments
NR2 is more than Line 44, you owe additional tax.                                                                        or levy taxes.
Subtract Line 44 from Line 36 of the AR2 or Line
36D of the NR2. Enter amount on Line 49. This is                                                                         Some taxes you cannot deduct are:
                                                                                                                              Arkansas income taxes
If you owe additional tax in excess of $1,000,                                                                                Car tags
and failed to make a declaration of Estimated                                                                                 Cigarette and beverage taxes
Tax (Form AR1000ES, Voucher 1), a penalty                                                                                     Dog licenses
of ten percent (10%) will be assessed. See in-                                                                                Estate taxes
structions for Lines 50A and 50B for more information.                                                                        Federal income taxes
                                                                                                                              Federal Social Security taxes
                                                               PENALTIES & INTEREST                                           Hunting and fishing licenses
LINE 50A and 50B. Enter the exception number                                                                                  Improvement taxes
from Part 3 of the AR2210, or the computed penalty             If you owe additional tax, you must mail your tax              Sales taxes
from Line 18 of AR2210 in the appropriate box. If              return by April 18, 2011. Any return not postmarked
you completed AR2210A, enter “6” in box 50A.                   by April 18, 2011 (unless you have an extension)
Enter amount from Line 46 of AR2210A in box 50B.               will be delinquent. A penalty of one percent (1%)         LINE 6. You may deduct on this line:
Form AR2210 or AR2210A must be attached                        per month for failure to pay and five percent (5%)
and the exception number entered in box 50A to                 per month for failure to file, a maximum of thirty-five        City income taxes
claim any exclusion from the Underestimate Penalty.            percent (35%) will be assessed on the amount of                Mississippi gambling taxes
                                                               tax due on an original return. Interest of ten percent         Personal property taxes
LINE 50C. Add Lines 49 and 50B. Enter total                    (10%) per year will also be assessed on any ad-                Taxes paid to a foreign country on income
on this line.                                                  ditional tax due, calculated from the original due             taxed on this return
                                                               date to the date you paid the tax due on an original
LINE 51. Enter the total amount from Form AR4,                 or amended return.
Part III in the space provided.                                                                                          LINE 7. Add the amounts on Lines 5 and 6.
                                                               An extension to file is not an extension
Your tax return will not be legal and can-                     to pay. If you have not paid the amount due by
not be processed unless you SIGN IT.                           the original due date you will be subject to a failure
                                                               to pay penalty of one percent (1%) per month of
                                                                                                                         INTEREST EXPENSE
Write in the DATE. If you and your spouse are filing           the unpaid balance.
                                                                                                                         LINE 8A. You may deduct the home mortgage in-
a joint tax return or filing separately on the same                                                                      terest paid to a bank or other financial institution.
return, both of you must sign it.                              In addition to any other penalties assessed, a pen-
                                                               alty of $500 will be assessed, if any taxpayer files
                                                                                                                         The deduction is generally limited to interest at-
If someone else prepares your return, that person              what purports to be a return, but the return does not
                                                                                                                         tributable to a debt for not more than the cost
must sign and complete the Paid Preparer section               contain information on which the correctness of the
                                                                                                                         of the principal, and/or second residence, plus
on page AR2/NR2. If you prepare your own return,               return may be judged, and such conduct is due to
DO NOT use this section.                                       a position which is frivolous or an effort to delay or
                                                               impede the administration of any State law.
                                                                                                                         LINE 8B. Enter qualified mortgage insurance
                                                                                                                         premiums (PMI) paid in 2010. You cannot deduct

                                                                                                                                                                   Page 17
your mortgage insurance premiums if the amounts          4. The deduction for donated art work does              MISCELLANEOUS DEDUCTIONS
on Form AR2/NR2, Line 24 total more than                    not exceed fifteen percent (15%) of the              SUBJECT TO THE 2% AGI LIMI-
$109,000(54,500 if married filing separately). If the       donor’s gross income in the calendar year of
amounts on Form AR2/NR2, Line 24 total more than            donation.                                            TATION
$1000,000($50,000 if married filing separately),
your deduction is limited. (See worksheet on Page                                                                LINE 20. Enter unreimbursed employee busi-
20 to figure your deduction.)                            LINE 15. List other deductible contributions:           ness expenses. Arkansas recognizes the federal
                                                                                                                 mileage allowance for computing business travel
                                                         1.   Unreimbursed amounts spent to maintain an          expenses. Attach federal Form 2106.
LINE 9. Deduct home mortgage interest paid                    elementary or high school student (other than
to an individual on this line, and list that person’s         a dependent or relative) in a taxpayer’s home      LINE 21. Other deductions include:
name and address.                                             under a program sponsored by a charitable
                                                              organization.                                           Union or professional dues
                                                                                                                      Tax return preparation fees
LINE 10. Enter the amount of deductible points           2.   A gift of property to a non-profit organization.        Expenses for safety equipment
paid on this line. Deductible points are those that:          Attach a description of the property, date of           Expenses of entertaining customers
                                                              gift, and method of valuation. For each gift in         Tools and supplies
1.   Are incurred in the purchase or improvement              excess of $500, list any conditions attached            Fees paid to employment agencies
     of the taxpayer’s principal residence; and               to the gift, manner of acquisition, and cost
                                                              or basis if owned by you for less than five        Attach supporting schedule or statement.
2.   Reflect an established business practice                 (5) years. Attach a signed copy of ap-
     of charging points in the geographical area              praisal.
     where the loan is made; and                                                                                 LINE 22. Add Lines 20 and 21.
                                                         NOTE:     Payments to private academies or other
3.   Do not exceed the number of points generally                  schools for the education of dependents
     charged for the type of transaction. (Points                  are not deductible as contributions.          LINE 23. Enter combined amount from Form
     paid in refinancing a mortgage must be am-                                                                  AR2/NR2, Lines 24A and 24B.
     ortized over the life of the loan.)
                                                         LINE 16. If you made contributions in excess
NOTE:      In order to deduct the full amount of the                                                             LINE 24. Multiply Line 23 by 2% (.02).
                                                         of fifty percent (50%) of your adjusted gross
           points paid, payment of the points must
                                                         income, you may carry the excess deduction over
           be made from separate funds brought to                                                                LINE 25. Subtract Line 24 from Line 22. This is
                                                         for a period of five (5) years.
           the loan closing.                                                                                     your total allowable miscellaneous deductions.
                                                         If you are deducting an excess contribution from
                                                         a previous year, enter the amount and year of the       OTHER MISCELLANEOUS
LINE 11. Enter deductible investment interest.
The deduction is limited to the amount of invest-
                                                         original contribution.                                  DEDUCTIONS
ment income. Interest that is disallowed because of
the limitation can be carried forward to the next year                                                           LINE 26. Enter your miscellaneous deductions
                                                         LINE 17. Add lines 13, 14, 15, and 16.                  not subject to the 2% AGI limit. Attach detailed
and deducted to the extent of the limitation in the
carryover year. Attach federal Form 4952.                                                                        schedule of each deduction.

                                                         CASUALTY AND THEFT LOSSES
LINE 12. Add Lines 8A, 8B, 9, 10, and 11.
                                                                                                                 LINE 27. Add Lines 4,7,12,17,18,19, 25 and
                                                         LINE 18. The method of computing casualty or            26.
                                                         theft losses is the same as the federal method
CONTRIBUTIONS                                            with the $100 exclusion. The amount of each
                                                         loss must exceed ten percent (10%) of your              PRORATED ITEMIZED
LINE 13. Enter the total contributions you made          adjusted gross income. Attach federal Form
by cash or check. If you gave $3,000 or more to
                                                         4684 and provide necessary supporting
any one organization, list the donee and amount          documents.                                              LINE 28. If you are married filing separately,
given. If you have non-cash contributions of $500
                                                                                                                 Status 4 or 5, you must prorate your itemized de-
or more, attach Federal Form 8283.                       If you have a Disaster Loss in 2011 on property in      ductions between spouses. Enter your AGI from
                                                         a federal disaster area, you may elect to deduct the    Line 24, Column A and your spouse’s AGI from
                                                         loss as an itemized deduction in 2010. If you elect     Line 24, Column B of the AR2/NR2.
LINE 14. In addition to other contributions, a de-       to report the loss on your 2010 return, you cannot
duction is allowed for the donated value of artistic,    report the loss on your 2011 return.
literary, and musical creations if the following
                                                                                                                 LINE 29. Add Lines 28A and 28B.
qualifications are met:                                  A disaster loss is the only loss which may be car-
                                                         ried back. You may amend your 2009 return to            LINE 30. Divide Line 28A by Line 29 and enter
                                                         report a disaster loss incurred in 2010. If you elect   the percentage here. Round to the nearest
1. The taxpayer making the donation derived at           to amend your 2009 return, you cannot report the        whole percent.
   least fifty percent (50%) of his/her current          loss on your 2010 return. If loss in federal disaster
   or prior year income from an art related profes-      area, list location on Line 18.
                                                                                                                 LINE 31. Multiply the total itemized deductions
                                                                                                                 reported on Line 27 by your percentage on Line
2. The fair market value of the art work has been        LINE 19. Enter your Post-Secondary Edu-                 30. Enter result here and on AR2/NR2, Line 25,
   verified by an approved independent ap-               cation Tuition Deduction and attach Form                Column A.
   praiser, and a copy of the appraisal is               AR1075(s).
                                                                                                                 LINE 32. Subtract Line 31 from Line 27. Enter
3. The artwork was donated to a museum, art gal-
                                                                                                                 result here and on AR2/NR2, Line 25, Column B. If
   lery, or nonprofit charitable organization quali-
                                                                                                                 you and your spouse are using Filing Status 5, this
   fied under Internal Revenue Code § 501(C)(3)
                                                                                                                 is the amount of the total itemized deductions your
   and located in the State of Arkansas; and
                                                                                                                 spouse is allowed to claim on his/her tax return.

Page 18
                           Deductible vs. Non-deductible
                                Medical Expenses
The chart below lists specific types of expenses and whether or not a deduction for the ex-
pense is permitted.
              Deductible                               Non-deductible
              Alcoholism, Treatment of                 Anticipated medical expenses
              Ambulance hire                           Baby-sitting expenses to enable
              Attendant to accompany blind               parent to see doctor
                 or deaf student                       Cosmetic surgery, unnecessary
              Chiropractor                             Diaper Service
              Contact lenses                           Ear piercing
              Contraceptives, prescription             Electrolysis
              Dental fees                              Funeral expenses
              Drug addiction, recovery from            Gravestone
              Drugs, prescription                      Hair transplants, surgical
              Eye examinations and glasses             Health club dues
              Hearing aids                             Hygienic supplies
              Insulin                                  Insurance premiums-loss of income
              Laser eye surgery                        Insurance premiums-loss of limb
              Long-term care expenses                  Marriage counseling
              Orthopedic shoes                         Maternity clothes
              Psychiatric care                         Spiritual guidance
              Psychologist                             Tattoos
              Smoking, program to stop                 Teeth, whitening
              Wheelchair                               Toilet articles
              X-rays                                   Trips, general health improvement

                                                                                              Page 19

Some taxpayers may not be able to deduct all of their mortgage insurance premiums. If the combined AGI amount on Form
AR2/NR2, Lines 24A and 24B, is more than $109,000 ($54,500 if filing status 5) you cannot deduct your mortgage insurance
premiums. If the combined AGI amount on Form AR2/NR2, Lines 24A and 24B, is more than $100,000 ($50,000 if married
filing separately), use the worksheet below to figure the amount you may deduct.

1.   Enter the total premiums you paid in 2010 for
     qualified mortgage insurance for a contract issued after December 31, 2006 ...................................1 ______________

2.   Enter the combined amount on Form AR2/NR2, Line 24A and 24B ..................................................2 ______________

3.   Enter $100,000 ($50,000 if married filing separately) ........................................................................3 ______________

4.   Is the amount on Line 2 more than the amount on Line 3?
         NO. Your deduction is not limited. Enter the amount from Line 1 above on Form AR3, Line 8B.
         YES. Subtract Line 3 from Line 2. If the result is not a multiple of $1,000 ($500 if married filing
              separately), increase it to the next multiple of $1,000 ($500 if married filing separately).
              For example, increase $425 to $1,000, increase $2,025 to $3,000; or if married filing
              separately, increase $425 to $500, increase $2,025 to $2,500, etc .......................................4 ______________

5.   Divide Line 4 by $10,000 ($5,000 if married filing separately).
     Enter the result as a decimal. If the result is 1.0 or more enter 1.0...................................................5 ______________

6.   Multiply Line 1 by Line 5.....................................................................................................................6 ______________

7.   Qualified mortgage insurance premiums deduction.
     Subtract Line 6 from Line 1. Enter the result here and on Form AR3 Line 8B ..................................7 ______________

Page 20
                                   STUDENT LOAN INTEREST WORKSHEET

1.     Enter the total interest you paid in 2010 on qualified student loans ....................................... 1 _____________

2.     Enter the smaller of Line 1 above or $2,500. .......................................................................... 2 _____________

3.     Enter the amount(s) from AR2/NR2, Line(s) 22A and 22B ..................................................... 3 _____________

4.     Enter total adjustments not including the deduction for interest paid
       on student loans, Line 6, AR1000ADJ .................................................................................... 4 _____________

5.     Modified AGI. Subtract Line 4 from Line 3 .............................................................................. 5 _____________

       Note: If line 5 is $75,000 or more and you are filing Status 1, 3, or 6 or $150,000 or more
             and you are filing Status 2 or 4, STOP HERE, you cannot take the deduction.

6.     Enter: $60,000 if filing Status 1, 3, or 6; $120,000 if filing Status 2 or 4 ................................. 6 _____________

7.     Subtract Line 6 from Line 5.
       If zero or less, enter -0- here and on Line 9, skip Line 8, and go to Line 10 ..................... 7 _____________

8.     Divide Line 7 by $15,000 ($30,000 if filing status 2 or 4.)
       Enter result as a decimal (rounded to at least three places) .................................................. 8 _____________

9.     Multiply Line 2 by Line 8 ......................................................................................................... 9 _____________

10.    Allowable Deduction: Subtract Line 9 from Line 2.
       Enter result here and on Form AR1000ADJ, Line 6 ............................................................. 10 _____________

                                                                                            Yours                                       Spouse
11.    Enter the total interest for each spouse
       up to the combined amount on Line 1 ......................................... 11A _____________                        11B _____________

12.    Total amount paid from Line 1 ....................................................... 12 _____________

13.    Divide Line 11A by Line 12
       Enter result as a decimal (rounded to at least three places) ......... 13 _____________

14.    Multiply Line 10 by the amount on Line 13.
       Enter here and on AR1000ADJ, Line 6, Column A ........................ 14 _____________

15.    Subtract Line 14 from Line 10. Enter here and on AR1000ADJ, Line 6, Column B ............. 15 _____________

                                                    IRA PHASE OUT CHART

                                                                                             YOUR ALLOWABLE
                              IF YOUR FILING                                             TRADITIONAL IRA DEDUCTION
                                 STATUS IS:                                     Phases Out When                    Will Be Zero When
                                                                              Arkansas AGI Exceeds:                Arkansas AGI Is:
            Head of Household                                                           $56,000                          $66,000

            Married Filing on Same
            Return (Status 2 or 4), or Qualifying Widow(er)                             $89,000                         $109,000

            Married Filing on Separate Returns                                             $0                            $10,000

            Nonactive Spouse
            (Income Computed Jointly)                                                  $167,000                         $177,000

     If your Arkansas AGI is within one of the above phaseout ranges, see IRS Publication 590
     to figure your allowable IRA deduction.
                                                                                                                                                     Page 21

1.   Enter the amount you paid in 2010 for health insurance for you, your spouse, and your dependents. ............. 1 ______________

2.   Enter your net profit and any other earned income* from the business under which the
     insurance plan was established, less any deductions on Form AR1000ADJ, Line 10. .............................. 2 ______________

3.   Enter the smaller of Line 1 or Line 2 here and on Form AR1000ADJ, Line 9.
     (Do not include this amount in figuring your medical expense deduction on the Itemized Deduction Schedule.) ... 3 ______________

     *Earned income includes net earnings and gains from the sale, transfer, or licensing of property you created. It does not include
     capital gain income. If you were more than a 2% shareholder in an S Corporation, earned income is your wages from that

                                   MILEAGE AND DEPLETION ALLOWANCES

                                   Mileage Allowance
                                             Business.......................................50 cents per mile
                                             Charitable .....................................14 cents per mile
                                             Medical/Moving .........................16.5 cents per mile
                                             Mail Carrier (rural) ........... Reimbursement received

                                   Depletion Allowance
                                              Depletion (gas and oil) .................Same as federal
                                                          (15% for most gas and oil production)

                                            DEPRECIATION INFORMATION

                                                       Section 179 Facts

          Arkansas adopted IRC §179 as in effect on January 1, 2009, allowing greater dollar limits
          and phase out thresholds.

             	 Deduction Limit $133,000

             	 Cost of qualifying property limit $530,000

             	 No deduction allowed above $663,000

             	 More than one property placed in service limit $133,000 deduction per
                    taxpayer per year

             	 Any cost not deducted in one year may be carried forward to next year

             	 Deduction may not be used to reduce taxable income below zero

          Note: Arkansas has not yet adopted the most recent federal changes.
Page 22
                           HOW TO FILL OUT YOUR CHECK

                                                                 Date and mail payment on
              Make your check payable to                         or before April 18th, 2011.
              "Dept. of Finance and Ad-

        Erin Taxpayer                                                           0201

        1000 Plaza
        Home, AR 11122                                        Date April 18, 2011
        Phone (501) 555-7222

        PAY TO THE
                                                                        $   125.00
        ORDER OF: Dept. of Finance and Administration

         One hundred twenty five and no/100                          DOLLARS

                Tax year 2010
        MEMO: SSN 000-00-0000                        Erin Taxpayer


                                                          Don't forget to sign your check!
Include your Social Security Number
and the tax year on the memo line.

                          PRESERVATION OF TAX RECORDS

  A taxpayer who files an Arkansas income tax return is required to retain records to prove
  the accuracy of that return. The records must be retained for at least six years (unless oth-
  erwise provided by law) and are subject to examination by the director at any reasonable
  time during that period.

  When a taxpayer fails to preserve and maintain the required records, the director may make
  an estimated assessment based upon any available information as to the amount of tax due
  by the taxpayer. Per ACA 26-18-506, the burden of proof of refuting this estimated assess-
  ment is upon the taxpayer.

                                                                                               Page 23
                                        IF THE IRS AUDITS YOU

          If the Internal Revenue Service examines your return for any tax year and changes your
          net taxable income, you must report the changes to the Arkansas Department of Finance
          and Administration within ninety (90) days from the receipt of the notice and demand
          for payment from the Internal Revenue Service.

          File Arkansas Form AR1000F/AR1000NR Amended Individual Income Tax Return, re-
          porting the changes to your state return for the year(s) in question. Attach a copy
          of the federal changes.

          If you fail to notify this Department within ninety (90) days and do not file the required
          amended return, the statue of limitations will remain open for eight (8) years on the
          year(s) in question. Additional interest will be calculated on any tax you owe the State
          of Arkansas.


          Under authorization of Internal Revenue Code Section 6103(D) the State of Arkansas par-
          ticipates in several information exchange programs with the Internal Revenue Service:

          	CP2000:
            The IRS matches income reported on a taxpayer’s federal income tax return with
            documents (W-2s, 1099s, etc.) provided to the IRS by the payer to determine whether
            income was omitted from the taxpayer’s return. If unreported income is discovered,
            the IRS assesses additional federal tax on the omitted income then notifies the State
            of Arkansas. The taxpayer’s state tax return is then reviewed for unreported income.
            (Some examples of commonly omitted income include wages, pensions, and cancel-
            lation of debt.)

           Revenue Agent Reports “RARs”:
            When the IRS adjusts a taxpayer’s federal income tax return as the result of an audit,
            details are provided to the State of Arkansas. The taxpayer’s state tax return is then
            reviewed and adjusted if appropriate. (Some examples of RAR adjustments include
            disallowance of deductions, expenses, or dependents and assessment of early with-
            drawal penalties.)

          	Non-filer Identification:
            The IRS provides the Arkansas Department of Finance and Administration with a list
            of taxpayers who filed federal returns using Arkansas addresses. This information
            is then compared with Arkansas income tax records to identify individuals who filed
            federal returns using Arkansas addresses but did not file Arkansas returns. Letters
            are sent inquiring whether the taxpayer is required to file. The taxpayer should file
            the return in question or provide documentation why he/she is not required to file. If
            a sufficient response is not received, state tax is assessed using amounts reported
            on the taxpayer’s federal return, and the taxpayer is mailed a Notice of Tax Adjust-
Page 24
                                               TAXPAYER BILL OF RIGHTS
You have the right to full explanation of all actions by any agent of the Commissioner of Revenue both during an audit and during collection activities.

● All tax information contained in the records and files of the Commissioner of Revenue (hereinafter “Commissioner”) pertaining to you or your
  business is confidential.

● You may represent yourself in any proceeding or interview before the Commissioner or you may be represented by anyone whom you authorize
  in writing to be your representative.

● You have the right to consult with a lawyer, accountant, or other representative at any time during an interview with an agent of the Commis-
  sioner. The Commissioner shall terminate the interview to allow you to consult with your representative.

● You may record any interview with the Commissioner or his agent at your own expense. You should let the Commissioner or his agent know
  in advance of your intention to record the interview. The Commissioner may likewise record an interview, and a copy may be obtained within a
  reasonable time at your expense.

● You may request an administrative review of any proposed assessment of tax. You must request this review within 60 days of your receipt of a
  proposed assessment. The administrative review may be based on a court hearing, a telephone hearing, or consideration of written documents.
  If you do not request an administrative hearing, you may still pursue your judicial remedies by filing an action in the circuit court.

● If you receive an unfavorable decision from your administrative review, then you may request a review of the decision by the Commissioner.
  This review should be requested within 20 days of your receipt of the administrative decision. If you receive an unfavorable decision from the
  Commissioner on any issue, you may pursue judicial remedies as discussed below.

● After the issuance of the final assessment and demand for payment, you may appeal the tax assessment to circuit court, regardless of whether you
  protested the assessment and requested an administrative review. To pursue your appeal of a tax assessment to circuit court you must either:

  (a)   pay the entire amount of tax due for any taxable period(s) covered by the final assessment within one year of the date of the final assessment or

  (b)   file a bond for double the amount of the tax deficiency within 30 days of the issuance of the final assessment. You must file your lawsuit within
        one year from the date of paying or within 30 days of filing a bond. Within 30 days of the final assessment, the Revenue Division may proceed
        with collection activities, including the filing of a lien, for any tax, penalty, or interest that is unpaid or not covered by a bond.

● A taxpayer may file an amended return or a verified claim for credit or refund of an overpayment of any State tax within three years of the time
  the return was filed or two years from the date the tax was paid, whichever is later. Any amended return or claim for refund should be filed with
  the office of the Revenue Division which administers the type of tax in question.

● If the Commissioner disallows the refund claim either in whole or in part, the Commissioner will issue a proposed notice of refund claim disal-
  lowance. You may request an administrative review of the refund disallowance. This request must be made within 60 days of your receipt of
  the proposed notice. If you receive an unfavorable decision from your administrative review, you may request a review of the decision by the
  Commissioner. This request must be made within 20 days of your receipt of the administrative decision.

● Following an administrative review, the Commissioner will issue a final notice of refund claim disallowance. After the issuance of the final notice of claim
  disallowance, you may appeal the decision to circuit court. Judicial review is available whether or not you requested an administrative review. To pursue
  your appeal of a claim disallowance to circuit court, you must file suit within one year of the date of the final notice of claim disallowance. If the director
  fails to issue a written decision within six months of the date a claim for refund is filed, the taxpayer may then file suit to recover the amount claimed.

Any taxpayer who wishes to file a complaint regarding any activity concerning the administration or collection of any State tax by the Revenue
Division should make the complaint in writing to:

    Commissioner of Revenues
    Ledbetter Building, Room 2440
    PO Box 1272
    Little Rock, Arkansas 72203-1272

● In administering the State tax laws, the Commissioner is authorized by law to make an examination or investigation of the business, books, and
  records of the taxpayer. If the Commissioner determines that an additional amount of tax is due, then a proposed assessment shall be issued
  to the taxpayer. The taxpayer may seek relief from the proposed assessment as outlined above. If the taxpayer fails to preserve and maintain
  records suitable to determine the amount of tax due or to prove accuracy of any return, the Commissioner may make an estimated assessment
  based upon the best information available as to the amount of tax due by the taxpayer.

● The Commissioner may issue a jeopardy assessment against any taxpayer (1) whose tax liability exceeds any bond on file indemnifying the
  State for the payment of a State tax, (2) who intends to leave the State, remove his property, or conceal himself or his property, (3) who intends
  to discontinue his business without making adequate provisions for payment of State taxes or, (4) who does any other act tending to prejudice
  or jeopardize the Commissioner’s ability to compute, assess, or collect any State tax. Any taxpayer seeking relief from a jeopardy assessment
  must request an administrative hearing within five days from the receipt of the notice of jeopardy assessment.

● When collecting any State tax due from a taxpayer, the Commissioner is authorized to file a certificate of indebtedness with the circuit clerk of
  any county of this State certifying that the person named therein is indebted to the State for the amount of tax due as established by the Com-
  missioner. The certificate of indebtedness shall have the same force and effect as the entry of a judgment rendered by a circuit court and shall
  constitute a lien upon the title of any real and personal property of the taxpayer in the county where the certificate of indebtedness is recorded.

● After the filing of the certificate of indebtedness, the Commissioner may take all steps authorized by law for the collection of the tax, including
  the issuance of a writ of execution, garnishment, and cancellation of any State tax permits or registrations.

Any court costs or sheriff’s fees which result from the Commissioner’s attempt to collect delinquent taxes shall be collected from the taxpayer in
addition to the tax, interest, and penalties included in the certificate of indebtedness.

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