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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.

 

IMPORTANT: This credit is for tax that another state imposes on any portion of income that by law is included in New Mexico net income. When calculating the allowable credit, do not include tax withheld. 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 due on your PIT-1,

* The tax you paid to the other state, and

* The amount of New Mexico income tax liability calculated on the part of income taxes in both states.

 

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.