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Category: Indiana

Indiana Credit for Taxes Paid to Other States

If you received income from another state while you were an Indiana resident, you must report that income on your Indiana income tax return. You may be able to take a credit for taxes paid to another state. If you had income from another state, and had to pay taxes to that state, read the following instructions carefully.

If you were an Indiana resident during 2013 and had income from any of the states listed in Group A below, you should first find out what the other state's rules are concerning the taxation of your income.

Group A - No Agreement (Credit taken on resident return)

AlabamaMaineNew York
ArkansasMarylandNorth Carolina
ColoradoMassachusettsNorth Dakota
ConnecticutMinnesotaOklahoma
DelawareMississippiRhode Island
GeorgiaMissouriSouth Carolina
HawaiiMontanaTennessee*
IdahoNebraskaUtah
IllinoisNew Hampshire*Vermont
IowaNew JerseyVirginia
KansasNew MexicoWest Virginia
LouisianaAny foreign countries or U.S. Possessions 

*(Capital gain, interest, and dividends only.)

You must enclose a copy of the income tax return (not just the W-2 forms) you filed with the other state to claim this credit. If the other state's return is not enclosed, the credit will not be allowed. Likewise, if you have a foreign tax credit, complete the Group A Worksheet and federal Form 1116. If Form 1116 was not required, enclose Forms 1099-INT and/or 1099-DIV (or a substitute statement) to verify the foreign tax and amount of income being taxed. Note: TaxSlayer will automatically calculate the Credit for Taxes Paid to Another State for your Resident return if you have a NonResident return created on your account. If the other state return is a Part-Year return, you will be required to manually enter the income taxed by Indiana and the other state as well as the "total tax" on the other state return.

Group B - Reciprocal Agreement (Wages, Salaries, Tips, and Commissions Only)

KentuckyMichiganOhio
PennsylvaniaWisconsin 

 

If you were an Indiana resident during 2011 and had income from one of the states listed in Group B, you are covered by a reciprocal agreement. However, this agreement only applies to income from wages, salaries, tips and commissions. If you had other types of income from these states (such as business income, farm income, etc.), use the Group A Worksheet to figure your credit.

Normally, employers in these states will withhold Indiana state tax from your wages because of the reciprocal agreement. However, if the state tax they withheld is not for Indiana, you must file a claim for refund with that state. You still have to include this income on your Indiana return and pay the Indiana tax. You will get some or all of the other state's taxes back by filing a refund claim with them.

Note: Winnings from Indiana riverboats are not eligible for the reciprocal agreement.

Caution: You may have to make estimated tax payments to Indiana. If the reciprocal state employer does not withhold Indiana withholding on your wage income, or does not withhold enough, see Page 10 of Form IT-40 Booklet for information on how to figure and pay estimated tax.

If you were a full-year resident of one of the reciprocal states and your income from Indiana was from wages, salaries, tips and commissions, you should file Form IT-40RNR, Reciprocal Nonresident Income Tax Return. If you were a resident of one of the reciprocal states and had other types of income from Indiana, or were a part-year Indiana resident, you will need to file Form IT-40PNR.

Group C - Reverse Credit (Credit taken on nonresident return)

ArizonaCaliforniaOregonWashington D.C.

 

If you were an Indiana resident during 2013 and had income from one of the states in Group C, you must pay Indiana tax on all of your income. You will also need to file a nonresident return with the other state and claim a credit on their tax return for the Indiana tax paid.

Group D - No State Income Tax (No credit allowed)

AlaskaFloridaNevada
South DakotaTexasWashington
Wyoming  

 

If you were an Indiana resident during 2013 and had income from one of the states in Group D, you are not allowed to claim this credit. These states do not have an income tax. You must file an Indiana resident return and pay Indiana tax on all your income.

For additional information pertaining to Credit for Taxes Paid to Another State, please see Page 44 Form IT-40 Booklet.