Mississippi offers a valuable tax credit known as the Mississippi Tax Credit For Income Tax Paid To One Or More Other States specifically for legal residents who earn income in another state, pay income tax there, and report that same income on their Mississippi return. This credit helps avoid double taxation by allowing you to offset your Mississippi income tax liability with the amount you paid to other states, but it comes with strict limitations and documentation requirements. Only legal Mississippi residents qualify, and you must attach copies of the other states’ income tax returns plus proof of actual tax payment to your Mississippi return; wage statements like W-2s showing withholding do not count as proof since they reflect withheld amounts rather than the final tax liability paid. The credit calculation involves comparing your total income earned everywhere against income earned in other specific states, applying deductions and exemptions as claimed on each return, determining taxable income ratios, and then applying Mississippi’s tax rates to the out-of-state portion while capping the credit at the lesser of the tax paid to other states, the tax computed under Mississippi rules, or your total Mississippi tax due. This ensures fairness by limiting the credit to what Mississippi would have taxed on that income, making it an essential tool for residents with multi-state income sources such as remote workers, business owners, or those with property and investments across state lines who want to maximize their refunds without overpaying.
How To File It?
Complete Form 80-160 and attach it to your Mississippi income tax return (Form 80-105 for individuals or Form 81-110 for corporations). Include copies of each other state’s income tax return and proof of tax payment. Submit everything with your Mississippi return by the due date.
How To Complete It?
Name: Enter your full name as it appears on your Mississippi tax return.
SSN: Provide your Social Security Number.
Taxpayer: Enter income amounts for the taxpayer only if filing single or separately.
Joint or Single Spouse: Enter income amounts for the spouse if filing jointly.
Column 1: Use this for Mississippi income summary (taxpayer portion).
Column 2: Use this for Mississippi income summary (spouse portion, if joint).
(Name of State) above Column 3: Write the name of the first other state.
Column 3: Enter income data for the first other state.
(Name of State) above Column 4: Write the name of the second other state.
Column 4: Enter income data for the second other state.
(Name of State) above Column 5: Write the name of the third other state.
Column 5: Enter income data for the third other state.
Column 6: This shows total out-of-state income (sum of line 4 in columns 3, 4, and 5).
Line 1 Total Income: Report total income earned everywhere in columns 1 and 2 (Mississippi return basis). Report income earned in each other state separately in columns 3, 4, and 5.
Line 2 Standard or Itemized Deduction(s): Enter standard or itemized deductions from your Mississippi return in columns 1 and 2. Enter deductions from each other state’s return in columns 3, 4, and 5.
Line 3 Exemption: Enter exemption amounts from your Mississippi return in columns 1 and 2. Enter exemptions from each other state’s return in columns 3, 4, and 5. Allocate between taxpayer and spouse matching the state returns.
Line 4 Taxable Income (line 1 minus line 2 and line 3): Calculate taxable income for columns 1 through 5 by subtracting line 2 and line 3 from line 1. Total out-of-state taxable income goes in column 6 (add columns 3, 4, and 5 from line 4).
Line 5 Ratio (divide amounts on line 4, columns 3, 4 and 5 by the amount on line 4, column 6): Compute the percentage ratio for each out-of-state column by dividing line 4 amounts in columns 3, 4, or 5 by the line 4 total in column 6. Enter as a percentage.
Enter amount from line 4, column 6: Copy the total out-of-state taxable income from line 4, column 6 here for the tax rate table.
Line 6 First $10,000 or part: Place the first $10,000 or part thereof of line 4, column 6 total into column A. Multiply by 0% in column B (result is $0). Apply the line 5 ratios to this $0 amount in columns 3, 4, and 5 (remains $0).
Line 7 Remaining Balance: Place the balance of taxable income over $10,000 from line 4, column 6 into column A. Multiply by 4.4% in column B to get total tax. Multiply that column B amount by each line 5 ratio in columns 3, 4, and 5.
Line 8 Tax credit computed (add lines 6 and 7 in columns 3, 4 and 5): Add the line 6 and line 7 amounts within each of columns 3, 4, and 5.
Line 9 Income tax due to other states (from other states return(s), attach other states return(s)): Enter the actual income tax paid to each other state from their returns in columns 3, 4, and 5.
Line 10 Enter the lesser of line 8 or line 9 (column 3 through column 5): For each column 3, 4, and 5, take the smaller amount between line 8 and line 9. Sum columns 3 through 5 in column 6.
Line 11 Enter amount of income tax due (from Form 80-105, page 1, line 17 or Form 81-110, page 1, line 2): Copy your total Mississippi income tax liability from the specified line on your main return.
Line 12 Allowable tax credit for tax paid to other states (the lesser of line 10, column 6 or line 11; enter here and on Form 80-105, page 1, line 18 or on Form 81-110, page 1, line 3): Take the smaller of line 10 column 6 total or line 11. Transfer this amount to line 18 of Form 80-105 or line 3 of Form 81-110.