INDIANA
separate property state

 

Military Income:  $5,000 is deductible, the rest is taxable ($10,000 if joint return and both taxpayers are military). 

NOTE:  For civilians working in Indiana -- city tax is taken from income but no city return is filed.

Military Spouse Residency Relief Act:  Service member in state in compliance with military orders. Spouse in state solely to be with service member and resides at the same address; or service member and spouse live together in a state other than Indiana and service member's spouse works in Indiana. Spouse is domiciled in a state other than Indiana. Spouse and service member both are able to claim the same domicile. Indiana-source income is included on Indiana Schedule A on line 1B, 2B and/or 7B. Enclose completed Schedule IN-2058SP.

Forms Used:           

Filing Status:  Same as federal.  If spouse is not a resident of Indiana, they file as nonresidents.  NOTE:  If filing a nonresident joint return because of spouse, the software program will not automatically give the $5,000 deduction for military income.  You must add a Schedule D and enter the $5,000 deduction on it. 

Attach Copy of Federal Return:  No

Not Taxed: 

Other State Tax Credit:   Available.  Must compute credit using state instructions.  Attach copy of other state return.  If filing as resident and taxpayer had income from Arizona, California, Oregon, or District of Columbia, taxpayer will have to claim the credit on a nonresident return filed with that state.  

Reciprocity StatesKentucky, Michigan, Ohio, Pennsylvania, and Wisconsin.

Where to Mail:
Indiana Department of Revenue
P O Box 40
Indianapolis, IN  46206-0040
 
Refund:  (317) 233-4018 (wait 12 weeks before calling) General Information (317) 232-2240
Forms:  (317) 615-2581 E-File Helpdesk:  (318) 615-2508
Other Info:   
Indiana Dept of Revenue
100 N. Senate Ave
Indianapolis, IN  46204-2253
Website:  www.in.gov/dor/
E-filing Info: Retain IT 8453 for 3 years.  The following CANNOT be filed electronically:
  • Nonresident and part year resident
Tax Form Instructions:
Resident Instructions Non-Resident Instructions
Military Specific

 

Filing Status Scenarios

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer)
2.  Taxpayer and Spouse Different States of Residence
3.  Taxpayer and Spouse Non-Residents
4.  Taxpayer Non-Resident - Spouse Part-Year Resident
5.  Taxpayer Married or Single - Resident but Income from Other State
6.  Amended Return

 

1.  Taxpayer and Spouse Residents (Use also for Single Taxpayer) - Taxpayer and spouse are both Indiana residents, lived at their present location all year, and one or both had income.

Main Info Screen.

W-2 Form.  Indiana grants a $5,000 exemption for military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Indiana IT-40 Form.  A joint resident Indiana income tax return is prepared.  You must complete the School District Number and County Codes.  Look up codes here.  If the Taxpayer and Spouse do not live in Indiana, their residence and employment county will be 00 for all states other than IL, KY, MI, OH, PA and WI.  Look up the state specific code if the individual is living in one of those listed states.

Indiana Schedule 2 - Deductions and Credits.  Indiana allows a $5,000 military service deduction.  You should review line 7 of Indiana Schedule 2 to ensure the $5,000 deduction is entered.

Complete all other fields and forms with red or required information.

2.  Taxpayer and Spouse - Different States of Residence - Taxpayer or spouse is a resident of Indiana, while the other member is a resident of a different state.  A Indiana income tax return must be prepared due to the taxpayer or spouse having Indiana earned income.

Main Info Screen.  If the spouse is a domicile (resident) of another state, the parties should file as nonresidents.  For this example, the taxpayer is a resident of  Indiana while the spouse is a resident of North Dakota.

W-2 Form.  Indiana grants a $5,000 exemption for military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Indiana IT-40PNR Form .   A joint non-resident Indiana income tax return should be prepared.  You must complete the School District Number and County Codes.  Look up codes here.   For non-residents the School District Number will be 9999.  If the Taxpayer and Spouse do not live in Indiana, their residence and employment county will be 00 for all states other than IL, KY, MI, OH, PA and WI.  Look up the state specific code if the individual is living in one of those listed states.

Indiana Schedule A - Section 1 Income or Loss and Adjustments will be generated.  This form is used to subtract out the other state's (North Dakota) income.

Indiana Schedule C - Deductions.  Indiana allows a $5,000 military service deduction.  For non-resident income tax returns you must enter the $5,000 deduction on line 7.  The software will not enter it automatically for you.

Review the remainder of the Indiana Form IT-40PNR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

3.  Taxpayer and Spouse Non-Residents - Taxpayer and spouse are residents of a different state.  The spouse and taxpayer must file a Indiana tax return due to one or both having Indiana earned income.

Main Info Screen.  If both members are residents of another state, the parties should file as nonresidents.  For this example, the taxpayer and spouse are both residents of Colorado but must file a Indiana income tax return because the spouse worked in Indiana.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Indiana IT-40PNR Form .   A joint non-resident Indiana income tax return should be prepared.  You must complete the School District Number and County Codes.  Use F1 - Help to view the options available.  For non-residents the School District Number will be 9999.  Look up codes for county of residence and for county of employment here.

Indiana Schedule A - Section 1 Income or Loss and Adjustments will be generated.  This form is used to subtract out the other state's (Wisconsin) income.

Indiana Schedule A, Page 2. - To comply with the provisions in the Service Member's Civil Relief Act, the military member's non-resident income must be taken off of the Indiana Schedule A. You must enter Nonresident military pay on line 21c in the Proration Section. 

Indiana Schedule 2058 - To comply with the provisions of the Military Spouse Residency Relief Act, you subtract the wages of a nonresident military spouse by entering it on Line 1. Answer the questions in Part 2.

Review the remainder of the Indiana Form IT-40PNR to ensure the other state income is being subtracted correctly.  Complete all other fields and forms with red or required information.

4.  Taxpayer Non-Resident - Spouse Part-Year Resident - Taxpayer and spouse moved to or from Indiana during the tax year.  The taxpayer is a resident of a different state.  The Spouse is a part-year resident of Indiana.  The Spouse and taxpayer must file a Indiana tax return due to one or both of them having Indiana earned income and possibly income from another state.

Main Info Screen.  For this example, the taxpayer is in the military and a resident of North Carolina.  The taxpayer and spouse moved from Indiana to North Dakota during the year.  The spouse was a resident of Indiana but now wishes to become a resident of North Dakota for tax purposes.  The spouse therefore was a part-year resident of both Indiana and North Dakota and must file a Indiana income tax return because the spouse worked in Indiana.

Part Year Resident States Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Indiana IT-40PNR Form.   A joint part-year resident Indiana income tax return should be prepared.  You must complete the School District Number and County Codes.  Look up codes here.  For non-residents the School District Number will be 9999.  If the Taxpayer and Spouse do not live in Indiana, their residence and employment county will be 00 for all states other than IL, KY, MI, OH, PA and WI.  Look up the state specific code if the individual is living in one of those listed states.

Indiana IN Sch H.  On page 1 of the IN Sch H form you will need to enter the dates of residency information.  For this example, the taxpayer was a resident of North Carolina.  Complete Taxpayer and Spouse Information fields as applicable.

Indiana Schedule A - Section 1 Income or Loss and Adjustments will be generated.  This form is used to subtract out the other state's (Indiana and North Dakota) income. 

Complete all other fields and forms with red or required information.

5.  Married or Single Military Resident of Indiana with Income from Another State  - Taxpayer is single.  The taxpayer must file a Indiana tax return due to him or her having Indiana earned income.

Main Info Screen.  For this example the taxpayer is a military member stationed in North Dakota but a resident of Indiana.  The taxpayer had a job in North Dakota therefore having North Dakota earned income.

W-2 Form.  Indiana grants a $5,000 exemption for military income.  To exclude the military income properly you must check the Military box on the bottom of the W-2 form for the military member's income.

Resident/Nonresident Worksheet.  Review form to ensure income is split correctly for the appropriate states.

Indiana IT-40 Form.  A resident Indiana income tax return is prepared.  Indiana taxes residents on income from all sources, even income earned while living in another state (North Dakota as in this example).  You must complete the School District Number and County Codes.  Look up codes here.  If the Taxpayer and Spouse do not live in Indiana, their residence and employment county will be 00 for all states other than IL, KY, MI, OH, PA and WI.   Look up the state specific code if the individual is living in one of those listed states.

Indiana Schedule 2 - Deductions.  Indiana allows a $5,000 military service deduction.  You should review line 7 of Indiana Schedule 2 to ensure the $5,000 deduction is entered.

Indiana Schedule 6 - Offset Credits is prepared to give a credit for taxes paid to another state (North Dakota). You must complete the other states tax return first. Link on Line 5 to IN Credit Wkt to compute the credit.

Enter the amount of taxes paid to the other state (North Dakota) and the amount of income taxable to the other state (North Dakota) as shown in the example.  A copy of the other state's return must be attached to the Indiana return if not e-filed.

Complete all other fields and forms with red or required information.

6.  Amended Return  - An amended Indiana return must be filed because the taxpayer received new tax information after their Indiana return was filed.
Federal 1040X Form.  Before making any changes to the tax return add the US 1040X form to the tax return.  You must check the box under Income and Deductions to lock in the entries in Column A - Original amount or as previously adjusted.

Indiana IT-40X - Amended Individual Income Tax.  Add the Indiana IT-40X Form to the return. Answer the question on filing an amended Federal return. You must check the box to lock in the entries in the As Shown on Original Return Column, before making any changes to the return.

Make whatever changes are required to the federal tax return.  For this example, a new W-2 was received.

Indiana IT-40X - Amended Individual Income Tax.  Return to the Indiana IT-40X form to determine if the taxpayer is receiving an additional refund or owes money. 

Indiana IT-40X - Amended Individual Income Tax, Page 2.  On Page 2 you must enter an explanation for why the Amended Return is being prepared.  Answer the questions as in the example.  Enter the current date in the Date field.

Amended returns can not be e-filed.  The taxpayer must mail the federal 1040X and any state amended returns if required to be filed.