Who Needs to File Idaho Form 43 and How to Complete It

Idaho Form 43 is used by part-year residents and nonresidents to report income earned in the state. Filing correctly ensures you pay the appropriate tax on Idaho-sourced income while avoiding penalties. Understanding when and how to file can prevent complications with the Idaho State Tax Commission.

This guide covers key aspects of filing, including reporting different types of income, deductions, tax allocation, and payment procedures.

Who Must File

Idaho Form 43 is for individuals who have a tax obligation to the state but do not qualify as full-year residents. This includes those who lived in Idaho for part of the year or earned income from Idaho sources while residing elsewhere. Filing requirements depend on residency status and income thresholds.

Part-year residents must file if they had income while living in Idaho or continued receiving Idaho-based earnings after moving out. For example, someone who moved to Idaho in June and worked there for the rest of the year would report wages earned during their residency. A person who moved away mid-year but still received rental income from an Idaho property would also need to file.

Nonresidents must file if they earned income from Idaho-based employment, business activities, or investments. This includes wages from an Idaho employer, profits from a business operating in the state, or rental income from Idaho real estate. Even if a person never physically entered Idaho, they may still owe taxes if they received income tied to the state.

Reporting Part-Year Income

Part-year residents must divide their income between the time spent living in Idaho and the period outside the state. Only earnings received while residing in Idaho or derived from Idaho sources should be reported. This requires careful documentation of wages, business profits, rental income, and other earnings.

Income spanning both residency periods, such as a salary from continuous employment before and after moving, must be allocated appropriately. Employers report total annual wages on a W-2, so taxpayers must determine the Idaho-specific portion using pay stubs or payroll records. Bonuses, commissions, and stock options granted before relocation but received later may also require proration if tied to Idaho-based work.

Investment income, such as dividends or interest, is generally taxable only if sourced from Idaho institutions or businesses during residency. Capital gains from selling assets follow different rules—if the sale occurs while living in Idaho, it is taxable, regardless of where the asset is located. Capital gains from Idaho real estate remain taxable even after moving out.

Reporting Nonresident Income

Nonresidents earning income from Idaho sources must determine what is taxable under state law. Idaho follows a source-based taxation system, meaning only income generated from in-state activities or assets is subject to tax. This includes wages earned while physically working in Idaho, profits from Idaho-based businesses, and returns on investments tied to the state.

For employees working remotely for an Idaho company while living elsewhere, wages are typically not taxable unless the work is performed within Idaho’s borders. However, independent contractors and business owners with operations in Idaho may still owe tax on income sourced from Idaho clients, even if they never physically enter the state. Business income allocation depends on factors such as where services are performed, where customers are located, and the use of Idaho-based assets.

Rental income from Idaho properties remains taxable regardless of the owner’s residency. This includes both short-term and long-term rentals, as well as capital gains from selling Idaho real estate. Additionally, partnerships, S corporations, and trusts operating in Idaho may distribute taxable income to nonresident members, requiring them to file Idaho Form 43 to report their share.

Deductions and Credits

Taxpayers filing Idaho Form 43 can reduce taxable income through deductions and offset tax liability using available credits. Part-year residents and nonresidents can claim certain deductions on a prorated basis to reflect their Idaho-sourced income.

The standard deduction aligns with federal amounts but must be adjusted for the portion of the year spent as an Idaho taxpayer. Those who itemize may deduct mortgage interest, medical expenses exceeding 7.5% of adjusted gross income, and state income taxes paid to another jurisdiction, provided these deductions are directly related to Idaho income.

Idaho offers refundable and nonrefundable tax credits. The grocery tax credit, designed to offset sales tax paid on food purchases, is available to part-year residents based on the number of months they lived in Idaho. Nonresidents do not qualify. The credit for taxes paid to another state applies to part-year residents taxed on the same income by both Idaho and another jurisdiction, preventing double taxation. Business owners and investors may also claim credits for research activities, renewable energy projects, and investments in qualifying Idaho businesses.

Allocation of Tax

Idaho Form 43 requires taxpayers to properly allocate income, deductions, and credits to ensure only Idaho-taxable amounts are reported. The Idaho State Tax Commission provides guidelines on how to apportion different types of income.

Wage allocation is typically based on the number of days worked in Idaho relative to total workdays in the year. For example, an employee who spent 120 out of 240 workdays in Idaho would report 50% of their salary as Idaho income. Business owners must use Idaho’s apportionment formula, which considers factors such as property, payroll, and sales within the state. Rental income is fully taxable if derived from Idaho properties, while capital gains on real estate follow state-specific sourcing rules. Deductions and credits must also be prorated based on the percentage of total income attributable to Idaho.

Filing and Payment Process

Submitting Idaho Form 43 on time is necessary to avoid penalties and interest on unpaid taxes. The form is due April 15, aligning with the federal tax deadline. Extensions are available for those needing additional time, but an extension to file does not grant an extension to pay. Taxes owed must still be submitted by the original due date to prevent late payment penalties.

Payments can be made electronically through the Idaho State Tax Commission’s online portal or by mailing a check with a payment voucher. Taxpayers expecting a refund can choose direct deposit for faster processing. If a balance is due and immediate payment is not feasible, Idaho offers installment agreements for qualifying taxpayers. Those who fail to file or pay on time may face penalties starting at 5% of the unpaid tax per month, up to a maximum of 25%, with additional interest accruing daily.