Nonresident tax offset credits
The tax offset credit is a procedure used to give dollar-for-dollar credit to nonresident students who pay Missouri income tax. The credit is against the nonresident fee charged to the student account.
The student must be a nonresident of Missouri and the student must pay Missouri income tax. If the student is a dependent on another person's tax return, that person must live outside Missouri and that person must pay income tax to Missouri.
To find out if you are a nonresident student, please call the Residency Office at (573)882-3852.
More information concerning the credit is also available from this Missouri Department of Higher Education pdf concerning residency and Missouri income tax paid by non-Missouri residents. Scroll through the pages for the areas highlighted in yellow.
In order to claim the tax offset credit, a student (or person claiming the student as a dependent) will need to submit the following documentation:
- Completed and notarized application.
- A copy of the applicant's Missouri state income tax return (MO-1040), including the Nonresident Income Schedule (NRI).
- All W2s, 1099s, or schedules that show sources of Missouri income for the same year as the tax return.
- A person claiming a student as a dependent will also need to provide a copy of page 1 of their Federal 1040 form showing the student as a dependent.
- Applicants making payment to the Missouri Department of Revenue when filing Missouri state income taxes must submit a copy of the front and back of the canceled check.
You must reapply for the nonresident tax offset credit each year. Taxes from the previous year are used to calculate tax offset for the current year. For example, 2015 tax information would be used for Summer Semester 2016, Fall Semester 2016, and Spring Semester 2017. Tax credit not used during the academic year (Summer semester through Spring semester) cannot be carried forward to the next academic year.
How the nonresident tax offset credit is applied
The first step is to determine the amount of Missouri state income tax that was paid. This is the amount found on the Missouri state income tax form listed as "total tax."
The second step is to determine the amount of nonresident fees charged to the student. If the student is receiving a nonresident scholarship, the amount of the scholarship is subtracted from the nonresident fees charged to the student.
Example: A student has $5,000 of nonresident fees for Fall Semester. The student also has a $4,000 nonresident scholarship, which leaves the student owing $1,000 in nonresident fees. If $600 was paid in Missouri state income tax, then $600 nonresident tax offset credit would be applied to the student's account, and the student would then owe $400 in nonresident fees.
Example: If a student owes $1,000 in nonresident fees for Fall Semester and $1,700 was paid in Missouri state income tax, then $1,000 nonresident tax offset credit would be applied to the student's account, and $700 would be held pending for Spring Semester. If the student had nonresident fees of $700 or more for Spring Semester, then $700 tax offset credit would be applied. If the student had $300 in nonresident fees for Spring Semester, then $300 tax offset credit would be applied and the remaining $400 paid in Missouri state income tax would be "lost," since the academic year is Summer, Fall, then Spring. (See note above regarding annual reapplication for the credit.)
For more information about the nonresident tax offset credit, please contact our office.