Arkansas Form Ar3 Instructions
MEDICAL AND DENTAL EXPENSES
List only amounts you paid and for which you were not reimbursed.
LINE 1. Enter total medical and dental expenses, less reimbursements from insurance or other sources. See chart on Page 19 for examples of deductible and nondeductible expenses.
LINE 2. Enter total amount from Form AR1000F/ AR1000NR, Lines 24A and 24B.
LINE 3A. If you and your spouse were under the age of 65 at the end of 2013, multiply Line 2 by 10% (.10). Otherwise enter zero (0).
LINE 3B. If either you or your spouse were age 65 or over at the end of 2013, multiply Line 2 by 7.5% (.075). Otherwise enter zero (0)
LINE 4. Subtract Lines 3A and 3B from Line 1.
LINE 5. You may deduct real estate taxes you paid on property you own that was not used for business. Do not include any special assessments or levy taxes.
Some taxes you cannot deduct are:
Arkansas income taxes
Cigarette and beverage taxes
Federal income taxes
Federal Social Security taxes
Hunting and fishing licenses
LINE 6. You may deduct on this line:
City income taxes
Mississippi gambling taxes
Personal property taxes
Taxes paid to a foreign country on income taxed on this return
LINE 7. Add the amounts on Lines 5 and 6.
LINE 8A. You may deduct the home mortgage interest paid to a bank or other financial institution.
The deduction is generally limited to interest attributable to a debt for not more than the cost of the principal, and/or second residence, plus improvements.
LINE 8B. Enter qualified mortgage insurance premiums (PMI) paid in 2013. You cannot deduct your mortgage insurance premiums if the amounts on Form AR1000F/AR1000NR, Line 24 total more than $109,000 ($54,500 if married filing separately). If the amounts on Form AR1000F/AR1000NR, Line 24 total more than $100,000 ($50,000 if married filing separately), your deduction is limited. See worksheet on Page 20 to figure your deduction.
LINE 9. Deduct home mortgage interest paid to an individual on this line, and list that person's name and address.
LINE 10. Enter the amount of deductible points paid on this line. Deductible points are those that:
- Are incurred in the purchase or improvement of the taxpayer's principal residence; and
- Reflect an established business practice of charging points in the geographical area where the loan is made; and
- Do not exceed the number of points generally charged for the type of transaction. (Points paid in refinancing a mortgage must be amortized over the life of the loan.)
NOTE: In order to deduct the full amount of the points paid, payment of the points must be made from separate funds brought to the loan closing.
LINE 11. Enter deductible investment interest. The deduction is limited to the amount of investment income. Interest that is disallowed because of the limitation can be carried forward to the next year and deducted to the extent of the limitation in the carryover year. Attach federal Form 4952.
LINE 12. Add Lines 8A, 8B, 9, 10, and 11.
LINE 13. Enter the total contributions you made by cash or check. If you gave $3,000 or more to any one organization, list the donee and amount given. If you have non-cash contributions of $500 or more, attach federal Form 8283.
LINE 14. In addition to other contributions, a deduction is allowed for the donated value of artistic, literary, and musical creations if the following qualifications are met:
- The taxpayer making the donation derived at least fifty percent (50%) of his/her current or prior year income from an art related profession;
- The fair market value of the art work has been verified by an approved independent appraiser, and a copy of the appraisal is attached;
- The artwork was donated to a museum, art gallery, or nonprofit charitable organization qualified under Internal Revenue Code § 501(C)(3) and located in the State of Arkansas; and
- The deduction for donated art work does not exceed fifteen percent (15%) of the donor's gross income in the calendar year of donation.
LINE 15. List other deductible contributions:
- Unreimbursed amounts spent to maintain an elementary or high school student (other than a dependent or relative) in a taxpayer's home under a program sponsored by a charitable organization.
- A gift of property to a non-profit organization. Attach a description of the property, date of gift, and method of valuation. For each gift in excess of $500, list any conditions attached to the gift, manner of acquisition, and cost or basis if owned by you for less than five (5) years.
NOTE: Payments to private academies or other schools for the education of dependents are not deductible as contributions.
LINE 16. If you made contributions in excess of fifty percent (50%) of your adjusted gross income, you may carry the excess deduction over for a period of five (5) years.
If you are deducting an excess contribution from a previous year, enter the amount and year of the original contribution.
LINE 17. Add lines 13, 14, 15, and 16.
CASUALTY AND THEFT LOSSES
LINE 18. The method of computing casualty or theft losses is the same as the federal method with the $100 exclusion. The amount of each loss must exceed ten percent (10%) of your adjusted gross income. Attach federal Form 4684 and provide necessary supporting documents.
If you have a Disaster Loss in 2014 on property in a federal disaster area, you may elect to deduct the loss as an itemized deduction in 2013. If you elect to report the loss on your 2013 return, you cannot report the loss on your 2014 return.
A disaster loss is the only loss which may be carried back. You may amend your 2012 return to report a disaster loss incurred in 2013. If you elect to amend your 2012 return, you cannot report the loss on your 2013 return. If loss in federal disaster area, list location on Line 18.
LINE 19. Enter your Post-Secondary Education Tuition Deduction and attach Form AR1075(s).
MISCELLANEOUS DEDUCTIONS SUBJECT TO THE 2% AGI LIMITATION
LINE 20. Enter unreimbursed employee business expenses. Arkansas recognizes the federal mileage allowance for computing business travel expenses. Attach federal Form 2106.
LINE 21. Other deductions include:
Union or professional dues
Tax return preparation fees
Expenses for safety equipment
Expenses of entertaining customers
Tools and supplies Fees paid to employment agencies
Attach supporting schedule or statement.
LINE 22. Add Lines 20 and 21.
LINE 23. Enter combined amount from Form AR1000F/AR1000NR, Lines 24A and 24B.
LINE 24. Multiply Line 23 by 2% (.02).
LINE 25. Subtract Line 24 from Line 22. This is your total allowable miscellaneous deductions.
OTHER MISCELLANEOUS DEDUCTIONS
LINE 26. Enter your miscellaneous deductions not subject to the 2% AGI limit. Attach detailed schedule of each deduction.
LINE 27. Add Lines 4,7,12,17,18,19, 25 and 26.
PRORATED ITEMIZED DEDUCTIONS
LINE 28. If you are married filing separately, Status 4 or 5, you must prorate your itemized deductions between spouses. Enter your AGI from Line 24, Column A and your spouse's AGI from Line 24, Column B of Form AR1000F/AR1000NR.
LINE 29. Add Lines 28A and 28B.
LINE 30. Divide Line 28A by Line 29 and enter the percentage here. Round to the nearest whole percent.
LINE 31. Multiply the total itemized deductions reported on Line 27 by your percentage on Line 30. Enter result here and on Form AR1000F/ AR1000NR, Line 25, Column A.
LINE 32. Subtract Line 31 from Line 27. Enter result here and on Form AR1000F/AR1000NR, Line 25, Column B. If you and your spouse are using Filing Status 5, this is the amount of the total itemized deductions your spouse is allowed to claim on his/her tax return.