An official website of the Alabama State government.

The .gov means it's official

Government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on an official government site.

The site is secure

The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Frequently Asked Questions

Filter FAQs

Category /Tax
Showing (51) FAQs
QuestionCategoryRead More
If property is transferred to a relocation company, is the relocation company subject to the withholding requirements of Section 40-18-86, Code of Alabama 1975?
Is a buyer required to inquire as to whether a LLC-seller is a “disregarded” entity?
Is a single-member limited liability company (SMLLC) whose status is disregarded for federal income tax purposes considered to be the seller for purposes of Section 40-18-86, Code of Alabama 1975?
One of the conditions for a nonresident seller to be considered a deemed resident under Section 40-18-86, Code of Alabama 1975, is that the seller has filed Alabama income tax returns, or appropriate extensions, for the two income tax years immediately preceding the year of the sale. What if the sale occurs before the due date for the previous year’s income tax return?
Can a nonresident seller qualify as a deemed resident in order to be exempt from withholding, if he satisfies some, but not all of the listed conditions?
If the seller is a corporation, how does it claim the withholding credit since the corporation income tax return does not have a line for tax withheld?
If tax is withheld from a nonresident seller who is a partnership, S corporation, or limited liability company, how does the seller claim credit for the withholding?
Does the withholding required under Code of Alabama 1975, Section 40-18-86, apply to the sale or transfer of timber located in Alabama by a nonresident of Alabama?
If the seller is a financial institution, is the sale subject to withholding?
If the seller is an insurance company, is the sale subject to withholding?
If the seller of the property is an exempt organization, is the sale subject to withholding?
If an Alabama resident relocates to another state and buys another residence, does his Alabama residence cease to be his principal residence for purposes of Alabama law?
Is withholding required on a transaction that qualifies as a Section 1031 exchange under the Internal Revenue Code? What if the transaction is a “deferred” Section 1031 exchange?
Is withholding required on a like-kind exchange of property?
Must a certificate of exemption (Form NR-AF3) be filed when the seller is exempt by law from the withholding requirement?
If the seller is an Alabama resident, must he provide the buyer with a sworn affidavit Form NR-AF1 (or for deemed residency)?
If a buyer reasonably relies on a seller’s sworn affidavit of residency, will the buyer be liable if it later turns out that the seller does not meet the conditions of deemed residency?
Is withholding required when there are several owners, and some of the owners are nonresidents?
Are only transactions which result in taxable income to the seller subject to withholding?
How is the amount to be withheld determined?
So the nonresident seller is still required to file an Alabama income tax return, even with the withholding?
What kind of tax is this? Sales tax? Real estate transfer tax?
Are there any other exemptions allowed?
Does the new fee apply to employees leased from an employee staffing or leasing agency?
Does the fee apply to the wages of employees working on a project who are not directly on site, such as the employees of manufacturers, engineering firms or fabricators?
Will the new fee apply to the wages of employees performing routine maintenance of a commercial or industrial nature at an Alabama jobsite?
Are all wages included?
Is this fee withheld from the wages of employees?
Can this fee be paid with my withholding tax return?
Is there a contract amount?
Does this fee include all contractors?
What employees are included in the Act?
When is this fee due?
How is the fee paid?
How is the fee calculated?
What kind of fee is this?
What is the purpose of the new fee?
Section 40-18-2, Code of Alabama 1975, imposes a tax on every nonresident individual receiving income from property owned or business transacted in Alabama. Also, Section 40-18-14 states that the taxable income of a nonresident individual includes only income from property owned or business transacted in Alabama. An installment note, held by someone who is not in the business of holding installment notes, derived from the sale of investment real property or rental real property by a nonresident individual, would be intangible property that was acquired as income from property held in this state or as a result of business done in this state. “Business income” is defined in Section 40-27-1, Code of Alabama 1975, as income arising from transactions and activities in the regular course of the taxpayer’s trade or business and includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer’s regular trade of business operations. Accordingly, interest that is attributable to the installment note in this situation is taxable for Alabama purposes. Is the interest from the installment note subject to the withholding requirements of Section 40-18-86, Code of Alabama 1975?
Is property that is sold or transferred by a nonresident as part of an installment transaction subject to the withholding requirements of Section 40-18-86, Code of Alabama 1975, and if so, how is withholding on the installment sale handled?
Is a contribution to an Alabama 529 Savings Plan with a December 2010 postmark deductible on my 2010 Alabama tax return, or does it have to be received by the plan before December 31st to be deductible on my Alabama tax return?
Is the money from my ” Florida 529 Savings Plan” taxable if it is used to pay for my son’s higher education expenses?
If the money from my Alabama 529 Savings Plan is used to pay for my son’s expenses at an out of state college, will it be considered taxable?
What are the tax consequences on 529 plans that are purchased outside of Alabama?
Does Alabama income tax law recapture previously deducted contributions when withdrawing money from my Alabama 529 Savings Plan for non‐qualified reasons?
When rolling over an out of state 529 plan to an Alabama qualifying plan, is the roll over into the Alabama qualifying plan (both the contributions and earnings portion) exempt from any current year Alabama income tax?
If I roll $7,500 into the Alabama 529 Savings Plan (contributions/basis equals $6,000 and the earnings portion equals $1,500), can I deduct the full $7,500 on my tax return or only the amount I contributed?
Is a rollover from an out‐of‐state qualified 529 plan into another qualifying Alabama 529 plan by an individual that files a joint Alabama State income tax return eligible for an Alabama State income tax deduction of up to a $5,000 or $10,000?
If I roll my money from a qualified 529 plan into another qualifying Alabama 529 plan, is the money exempt from Alabama taxes?
What is a non‐qualified withdrawal from an Alabama 529 Savings Plan?
Are qualified 529 Saving Plan withdrawals exempt from Alabama income tax?
I understand that under Alabama Income Tax Law an amount up to $10,000 for taxpayers filing Married filing Joint can be deducted on your Alabama tax return if you contribute to a College Counts Alabama 529 Savings Plan, but does each taxpayer have to write a check for $5,000, or is one check for $10,000 from either spouse acceptable?