How to File Your Arizona Tax Return for 2016: Step-by-Step Guide for Individuals and Small Businesses

Filing your Arizona state income tax return for 2016 may feel challenging, especially if you're doing it late or unsure where to start. This guide is designed to help you understand how to file your Arizona tax return for 2016, whether you’re an individual taxpayer, sole proprietor, or small business owner. We’ll walk through each step so you can prepare your return accurately and avoid common mistakes.

It’s important to know that this guide applies specifically to Tax Year 2016, which was filed in 2017. Arizona’s tax deadlines, forms, and credit amounts may have changed in later years, so always check the current instructions if you're filing for a different year. However, the basic structure and filing process have mainly remained the same.

Whether catching up on missed returns or simply verifying your past filings, following the correct procedure can help you avoid unnecessary penalties, access eligible refunds, and stay in good standing with the Arizona Department of Revenue and the IRS. Let’s begin by checking if you were required to file a state return for 2016.

Do You Need to File an Arizona State Tax Return for 2016?

Whether you needed to file an Arizona state income tax return for 2016 depends on your residency status, total income, and specific tax-related conditions. Whether you were a full-time resident, part-year resident, or nonresident with Arizona-sourced income, reviewing the state’s filing requirements before proceeding is essential.

Filing Based on Residency and Income

Arizona full-year residents were required to file a 2016 return if their gross income met the following thresholds:

• Single, Head of Household, or Married Filing Separately: Required if gross income was $5,500 or more and Arizona adjusted gross income (AZ AGI) was at least $15,000.
  
  
• Married Filing Jointly: Required if gross income was $11,000 or more and AZ AGI was at least $15,000.

For part-year residents and nonresidents, filing was required if you earned income in Arizona that met the state’s filing rules. These distinctions are vital to maintaining an accurate tax connection between federal and Arizona returns.

Other Situations That May Require Filing

Even if your income fell below the standard threshold, you may still have needed to take action by filing if:

• Arizona tax was withheld from your wages or other income; filing is the only way to receive a refund.
  
  
• You made estimated tax payments to Arizona during 2016 and need to reconcile or claim an overpayment.
  
  
• You were eligible for refundable or nonrefundable tax credits, such as the family income credit, property tax credit, or charitable contribution credits.

Filing ensures you can respond appropriately to any withholdings or credit eligibility, even if your income was modest.

Income Not Taxed by Arizona

Certain types of income were exempt from Arizona taxation in 2016, even if they were reported on your federal return. These include:

• Social Security benefits under Title II
  
  
• Interest from U.S. government obligations (e.g., Treasury bonds)
  
  
• Railroad Retirement benefits
  
  
• Active duty military pay for members of the U.S. Armed Forces, Reserves, or National Guard

If your income consisted solely of these exempt sources, you likely weren’t required to file, but it’s always wise to review your eligibility and documentation before skipping the filing process.

Common Misconceptions

One of the most common mistakes is assuming that low federal income means you don’t need to file in Arizona. However, the state applies its income thresholds and calculates Arizona gross income, starting with your federal AGI and then applying state-specific additions and subtractions. Filing helps you meet your obligations, protects any refunds due, and strengthens your tax security by maintaining up-to-date, accurate records with the Arizona Department of Revenue.

Key Deadlines and Changes for 2016 Returns

Understanding the original deadlines and legislative updates for Tax Year 2016 is essential, especially if you complete the return late. Filing on time can help you avoid penalties, recover any refund owed, and maintain a clear connection with the Arizona Department of Revenue.

Filing Deadline for 2016 Returns

The standard filing deadline for 2016 Arizona tax returns was April 18, 2017. Although the typical due date is April 15, the IRS and Arizona extended the deadline because April 15 fell on a Saturday and April 17 was observed as Emancipation Day in Washington, D.C.

If you missed this deadline, you should still file your return immediately. Doing so is the first action toward reducing penalties and stopping additional interest from accruing on unpaid tax.

Penalties for Missing the Deadline

Late filers may face several penalties that increase the longer you wait to file:

• Late filing penalty: Arizona charges 4.5% of the tax owed for each month your return is late, up to a maximum of 25%. This penalty applies even if you’re due a refund and fail to file on time.
  
  
• Late payment penalty: If you file but don’t pay the full amount due, a 0.5% penalty is added each month, up to 10% of the unpaid tax. This penalty continues until the full amount is paid.
  
  
• Interest on unpaid balances: Arizona also charges interest on any unpaid tax starting from the original due date (April 18, 2017) until the balance is paid in full. The interest rate is set by law and may vary by year.

Even if you can’t pay everything immediately, completing and submitting your return is a crucial first step. Filing shows that you take responsibility and helps reduce further penalties and enforcement actions.

What Changed for 2016

Arizona made several updates to its tax rules and credit structures for the 2016 tax year:

• Inflation-adjusted tax brackets: The income levels for each tax rate were increased to reflect inflation.
  
  
• Standard deduction increase: Single filers could claim $5,099 instead of the previous year’s amount.
  
  
• Charitable contribution credit changes: Donations to general charitable organizations and qualifying foster care charities had separate forms and limits.
  
  
• Bonus depreciation adjustment: Arizona allowed taxpayers to subtract 55% of the federal bonus depreciation for qualified assets.

If you're a small business owner or employer, these changes may have affected how you calculated deductions and credits. Review your records carefully to ensure your return reflects these updates accurately.

Which Arizona Tax Form Should You Use?

Choosing the proper Arizona tax form is one of the most essential steps in completing your 2016 return. Your choice depends on your filing status, income level, and whether your return includes adjustments, itemized deductions, or specific credits. Using the wrong form could delay processing or lead to errors that require further action.

Main Tax Forms for Arizona Residents

Arizona offered three primary forms for full-year residents in 2016. Each was tailored to different financial situations:

• Form 140: Use this form if you have Arizona taxable income of $50,000 or more, have made income adjustments, or have claimed credits beyond the basic ones, like the family income tax credit. This form is also used if you itemize deductions.
  
  
• Form 140A (Short Form): This form was designed for full-year residents with incomes under $50,000 who took the standard deduction and claimed only basic credits.
  
  
• Form 140EZ: This is the simplest form available to residents who were single or married, filed jointly, had no dependents, and claimed only standard deductions and credits, such as the increased excise tax credit.

You can review the complete instructions and find links to these forms on the Arizona Department of Revenue’s individual tax forms page.

Forms for Part-Year and Nonresidents

If you lived in Arizona part-time or earned income there while living elsewhere, you must use one of the following:

• Form 140PY: For part-year residents
  
  
• Form 140NR: For nonresidents

These forms allow you to allocate income properly between Arizona and other states. You’ll also need to include federal information, especially your IRS Form 1040, since Arizona’s return begins with your federal adjusted gross income (AGI).

For guidance on federal filing or to obtain your 2016 return transcript, visit the IRS Get Transcript page.

Understanding Arizona Tax Deductions and Credits

Applying all eligible deductions and tax credits is one of the most effective ways to lower your Arizona tax liability for 2016. These tools can reduce your taxable income or subtract directly from your debt. Knowing which options apply to you helps ensure you complete your return accurately and avoid leaving money on the table.

Standard vs. Itemized Deductions

For 2016, Arizona allowed taxpayers to choose between the standard deduction and itemized deductions:

• Standard deduction amounts:
  
  • $5,099 for single or married filing separately
    
  • $10,189 for married filing jointly or head of household
    
• Itemized deductions: If you itemized on your federal return, you could also itemize on your Arizona return using Schedule A. However, Arizona requires adjustments to some federal deductions.

Choosing between standard and itemized deductions should be based on which provides the greater benefit. Be sure to review your expense records before making a decision.

Exemptions Based on Household

In addition to deductions, you can claim exemptions that lower your taxable income. For 2016, Arizona allowed:

• $2,100 for each filer (varies by filing status)
  
  
• $2,300 for each person age 65 or older
  
  
• $1,500 for each blind person
  
  
• $2,300 per dependent
  
  
• $10,000 for each qualifying parent or grandparent

These amounts are subtracted from your income after deductions are applied.

Common Tax Credits in Arizona

Unlike deductions, credits reduce the tax you owe dollar for dollar. Some credits are refundable, while others are nonrefundable:

• Family income tax credit: Available to low- and moderate-income households
  
  
• Property tax credit: For residents age 65 and older who meet income limits
  
  
• Charitable tax credits:
  
  
  
  • Form 321: Contributions to qualifying charitable organizations
    
    
  • Form 352: Donations to qualifying foster care organizations
    
    
• School tax credits:
  
  
  
  • Form 322: Contributions to Arizona public schools
  • Form 323: Donations to private school tuition organizations
  • Form 309: Credit for taxes paid to another state

To claim most nonrefundable credits, you must also submit Form 301, which summarizes credit calculations and ensures accurate reporting.

Special Instructions for Sole Proprietors and Small Business Owners

If you were self-employed or operated a small business in 2016, you must report your business income on your Arizona return. Arizona starts with your federal adjusted gross income (AGI), which includes business profits or losses reported on Schedule C. Sole proprietors and single-member LLCs file everything on Form 140; no separate state business return is required.

If you received a K-1 from a partnership or S corporation, your share of income is reported on your return. The entity files its return (e.g., Form 165 for partnerships). Arizona may require state-specific AGI adjustments. These can include depreciation differences, non-Arizona municipal bond interest, or allowable military or retirement income subtractions. Use Form 140 and related schedules to apply these correctly.

You may also qualify for nonrefundable business tax credits, including those for research (Form 308-I), hiring TANF recipients (Form 320), or investing in small businesses (Form 338). Supporting documents are required. If your business sells taxable goods or services, you may need to file Transaction Privilege Tax (TPT) returns. TPT is Arizona’s version of a sales tax and is not part of your income tax return. You must file it separately based on your business activity, even if you’re behind on your income taxes.

Step-by-Step: How to Complete Arizona Form 140

Once you’ve gathered the necessary documents and selected the correct form, the next step is to complete Arizona Form 140, the standard individual income tax return for full-year residents. This form begins with your federal information and requires you to apply Arizona-specific deductions, exemptions, and credit rules. Filing accurately strengthens your connection to federal and state records, supporting proper processing and compliance.

Gather Required Documents

Before proceeding, make sure to gather the following items:

• Your completed IRS federal tax return (Form 1040), which provides your federal adjusted gross income (AGI)—the starting point for your Arizona return.
  
  
• All W-2 and 1099 forms showing income earned and any Arizona income tax withheld.
  
  
• Proof of estimated tax payments made to Arizona in 2016 to claim credits or reduce your balance due.
  
  
• Receipts or records for deductions and credits, such as charitable or school contributions.
  
  
• Your 2015 Arizona return (optional) may help reference carryovers or previous figures.
  
  
• Any K-1s, Arizona-specific schedules, or credit forms if you had business income or multi-state activity.

Organizing your records in advance enhances security and accuracy and helps prevent mistakes that could delay your return.

Complete Personal and Filing Information

At the top of Form 140, enter your identifying details:

• Full name, mailing address, and Social Security Number
  
  
• Filing status (e.g., single, married filing jointly)
  
  
• Number of exemptions for age, blindness, dependents, or qualifying parents/grandparents
  
  
• Spouse’s information, if applicable

This section forms the legal foundation of your return. Take the time to review all entries carefully before proceeding. Arizona’s original deadline for 2016 returns was April 18, 2017, but it was adjusted due to a legal holiday.

Enter Income, Deductions, and Adjustments

• Line 12: Start with your federal AGI
  
  
• Lines 13–17: Report any additions required by Arizona (e.g., non-Arizona municipal bond interest)
  
  
• Line 18: Add to calculate your Arizona gross income
  
  
• Lines 19–34: Enter applicable subtractions (e.g., Social Security benefits, active military pay)
  
  
• Line 36: Subtract total subtractions from gross income to get your Arizona adjusted gross income (AZ AGI)

Each step ensures your income is reported accurately under Arizona’s rules.

Calculate Your Tax and Apply Credits

• Line 37: Choose the standard deduction or itemize using Schedule A
  
  
• Lines 38–41: Claim personal exemptions based on age, dependents, or disability
  
  
• Line 42: Subtract deductions and exemptions to determine taxable income
  
  
• Line 43: Use the tax table to calculate your tax
  
  
• Lines 44–61: Apply eligible nonrefundable credits (via Forms 301, 321, 352, etc.)

If you’re unsure how to calculate a credit, you can respond to questions or submit a request through the Arizona Department of Revenue’s contact system.

Report Payments and Determine Refund or Balance Due

In the final section of the form:

• Lines 63–69: Report payments already made—Arizona tax withheld from W-2s and 1099s, estimated payments, and any extension payments submitted with Form 204
  
  
• Line 70: Add all payments and refundable credits
  
  
• Line 71: If total payments exceed your tax liability, this line shows your refund
  
  
• Line 78: If your liability exceeds payments, this line shows the amount you owe

Enter direct deposit information to receive your refund quickly. If paying by check, follow Arizona’s mailing instructions. Completing this final action ensures your return is filed correctly and you comply with state tax obligations.

How to File Your Arizona Return (E-File or Mail)

Once you’ve completed your Arizona Form 140 and double-checked for accuracy, the final step is submitting your return. Arizona allows electronic and paper filing, depending on your preference and eligibility.

E-File Options

Most taxpayers prefer to file electronically. It offers faster processing, quicker refunds, and greater security when submitting personal information.

You can e-file your 2016 Arizona return using one of the following methods:

• AZTaxes.gov: Arizona’s official portal allows you to file returns, make payments, and check refund status through a secure online connection.
  
  
• Authorized e-file providers: Many commercial tax software programs still support 2016 returns. You may need to download prior-year software or work with a tax professional who offers legacy filing.
  
  
• Free File Alliance: If you met income or age requirements, you may have qualified for free federal and state filing through this IRS-partnered program.

When proceeding with e-filing, follow all on-screen prompts carefully. Once submitted, you’ll receive a confirmation email or tracking number verifying that the Arizona Department of Revenue has accepted your return.

Paper Filing Instructions

If you’re filing a paper return for 2016, print and sign your completed Arizona Form 140. Attach all required documents, including W-2s, 1099s, and any applicable Arizona schedules or credit forms. If you owe tax, include a check or money order payable to “Arizona Department of Revenue” with your name, SSN, and “2016 tax return.”

Mail your return to:

• Expecting a refund or not having to pay anything:
  PO Box 52138, Phoenix, AZ 85072-2138
  
  
• Including a payment:
  PO Box 52016, Phoenix, AZ 85072-2016

Ensure all documents are complete and organized adequately before mailing.

Payment Options If You Owe Taxes

If your 2016 Arizona Form 140 shows a balance due, taking action as soon as possible is essential. Prompt payment helps reduce penalties and interest and reinforces your financial connection with the Arizona Department of Revenue.

Arizona offers several secure payment methods:

• eCheck via AZTaxes.gov: No processing fee
  
  
• Credit/debit card: Fees may apply
  
  
• Paper check or money order: Payable to “Arizona Department of Revenue,” including your name, Social Security Number, and “2016 tax return” on the memo line
  
  

Although the original due date was April 18, 2017, Arizona strongly encourages late filers to respond promptly. Interest continues to accrue monthly, and additional penalties may apply. Even if you cannot pay the full amount, a partial payment may reduce the financial burden.

If needed, request an installment plan by submitting Form 140-IA. You must file your return, propose a realistic monthly payment, and mail the form separately to qualify. While interest will continue to apply, a payment agreement can help you avoid enforced collections and preserve your standing with the state. Examine all payment instructions thoroughly before submitting, and keep a confirmation for your records to guarantee security and compliance.

How to Track Your Refund or Balance Due

After submitting your 2016 Arizona tax return, you can check your refund status or confirm that your payment was received.

To track a refund, visit AZTaxes.gov and select “Where’s My Refund?” You’ll need your Social Security Number, filing status, and ZIP Code. You can also call (602) 255-3381 or (800) 352-4090. E-filed returns are typically processed in 7–10 business days; paper returns may take 6–8 weeks.

To verify a payment, keep the confirmation number from your online payment. If you mailed a check, allow several weeks for processing, then call the department if needed. For the most detailed updates, log in to your account at AZTaxes.gov to view your balance, payment history, and notices. Tracking your return ensures timely updates, helps you respond to issues quickly, and gives you peace of mind that your filing is complete.

Final Filing Checklist and Recordkeeping Tips

Before submitting your 2016 Arizona return, review all Social Security Numbers, filing status, math calculations, and exemption totals. Be sure to attach W-2s, 1099s, and any Arizona credit forms. Sign and date your return. If filing jointly, both spouses must sign the return and use the correct mailing address. Include payment or direct deposit details, if needed.

After filing, keep a copy of your return and supporting documents for at least four years. This includes income forms, credit receipts, and confirmation of payments. Proper recordkeeping ensures you’re prepared for audits and helps with future filings.

Frequently Asked Questions (FAQs)

What would happen if I missed the deadline for April 18, 2017?

You should still file your return immediately if you missed the original deadline. Arizona charges monthly penalties and interest until your balance is paid. Filing now helps reduce late fees and prevents further enforcement. Even if you can’t pay in full, submitting your return shows good faith and may reduce additional penalties.

Can I still e-file a 2016 Arizona return today?

Most providers no longer support e-filing for 2016 returns. However, you can still complete and print Arizona Form 140 and file it by mail. Visit AZTaxes.gov to access the correct forms and instructions. Include all required documents and use the correct mailing address to avoid delays.

What tax credits are commonly overlooked?

Commonly missed Arizona credits include the family income tax credit, property tax credit, and charitable donation credits using Forms 321, 352, and 322. Some filers also forget to claim credits for school tuition donations. Reviewing Arizona's official instructions can help ensure you apply all eligible credits before filing.

Can I file jointly if only my spouse lives in Arizona?

If only one spouse is a full-year Arizona resident, you cannot file jointly using Form 140. Instead, file Form 140PY or 140NR to report your income separately and accurately. These forms are designed for part-year residents and nonresidents and allow proper income allocation between Arizona and other states.

Do sole proprietors need to file a separate business return?

Sole proprietors include their business income on their personal Arizona Form 140. You’ll report profits and losses on federal Schedule C, which carries over to your Arizona return. However, if your business collected Transaction Privilege Tax (TPT), you must file TPT reports separately with the Arizona Department of Revenue.