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Category: New Mexico

New Mexico Credit for Taxes Paid to Other State

A resident of New Mexico who must pay tax to another state on income that is also taxable in New Mexico may take a credit against New Mexico tax for tax paid to the other state.

This credit is for tax that another state imposes on any portion of income that by law is included in New Mexico net income. Do not include tax withheld when calculating the allowable credit. If the specific item of income is not subject to taxation in both states, no credit is available. The credit may not be more than the New Mexico tax liability, the sum of lines 16 and 17, on Form PIT-1, or more than 5-1/2% of the income taxable in the other state. Also, the amount of the credit may not exceed the amount of tax paid to the other state. Attach a copy of the complete income tax return(s) from the other state(s).

Income that is allocated or apportioned outside New Mexico on Schedule PIT-B does not qualify for credit for taxes paid to another state on that same income. For example: Rental income from property located outside of New Mexico is allocated outside New Mexico on Schedule PIT-B, credit for tax paid to another state cannot be claimed. Income tax you paid to any municipality, county, or other political subdivision of a state or to any central government of a foreign country does not count toward the credit.

TaxSlayer will automatically calculate this credit for your New Mexico Resident return if you have a Nonresident return created in your account. If you have a Part-Year New Mexico return, you will need to manually enter the information asked within the New Mexico state program.