Indiana Military Filing Information
RESIDENCY and FILING REQUIREMENTS
If you were an Indiana resident when you enlisted, you remain an Indiana resident no matter where you are stationed. You must report all your income to Indiana on Form IT-40.
If you changed your legal residence (military home of record) during 2016, you are a part-year resident and should file Form IT-40PNR. You must also file a copy of Military Form DD-2058 with the return. As a Indiana part-year resident you will be taxed on the income you earned while you were a resident of Indiana, plus any income from Indiana sources.
If you are stationed in Indiana and you are a resident of another state, you won't need to file with Indiana unless you have non-military income from Indiana sources.
Example: Annie, who is a Kansas resident, is stationed in Indiana. She earned $1,300 for her Indiana part-time job. She'll need to report that income to Indiana on Form IT-40PNR.
If you are a full-year Indiana resident in the military, your spouse is a legal resident of another state and you filed a joint federal return, you will need to file Form IT-40NR.
NonResident Military Spouse Earned Income Deduction
A spouse of a NonResident military servicemember may not owe tax to Indiana on earned income from Indiana sources. The spouse may be eligible to claim a deduction if:
-Indiana is not the military servicmember's state of domicile as reported on the servicemember's Form DD-2058
-The military servicemember and spouse are domiciles of the same state
-The military servicemember is in Indiana in order to live with the servicemember, and resides at the same address; or
-The military servicemember and spouse live together in a state other than Indiana, but the servicemember's spouse works in Indiana; and
-The Indiana-source income is included on Indiana Schedule A on line 1B, 2B and/or 7B
DEDUCTIONS AVAILABLE TO INDIANA RESIDENTS FOR MILITARY SERVICE
The income on line 1 of Form IT-40 may include active or reserve military pay. If it does, you will be able to take a deduction (regardless of your age). Also, if you are retired from the military or are the surviving spouse of a person who was in the military, you may be able to take this deduction.
You will be eligible if:
-You were at least 60 years of age by Dec. 31, 2016
-You received military retirement or survivor's benefits in 2016, and
-The benefits received as retirement income were reported on your federal return.
Your deduction will be the actual amount of military income received (i.e. military pay, retirement pay and/or survivor's benefits) or $5,000, whichever is less. If both you and your spouse received military income, you may each claim the deduction for a maximum of $10,000.
Note: If you served in the Indiana National Guard or the reserve component of the armed forces during 2016 refer to the IT-40 instructions.
NOTE: Military income earned while in a combat zone is not taxable on your federal or state income tax returns. Since Indiana is not taxing this income, your combat zone income is not eligible for a deduction.
COUNTY INCOME TAXES
If you were stationed in Indiana, your county of residence is the county where you lived on January 1 of the year you entered the military service. If, on Jan.1, 2015, you were stationed outside Indiana and your family was with you, write county code "00" (out-of-state) in all the county boxes on the IT-40. (You won't owe county tax.)
If, however, you maintained your home in an Indiana county and/or your spouse and family were still living in an Indiana county on Jan. 1, 2015, you are considered to be a resident of that county and will be subject to county tax.
DUE DATES AND EXTENSION OF TIME FOR FILING
Filing due dates and extensions of time to file for military personnel serving in a combat zone
- Military personnel serving in a presidentially-declared combat zone have an automatic extension of time to file of 180 days after they leave the combat zone.
- If they are hospitalized outside the United States as a result of serving in a combat zone, the 180 day extension period begins after being released from the hospital.
- The spouse of a military person serving in a combat zone must file the Indiana return using the same filing status as was used when they filed their federal return:
If they file married filing joint for federal tax purposes, then they must file a married filing joint Indiana return. If they file married filing separate for federal tax purposes, then they must file a married filing separate Indiana return.
When filing the return, write "Combat Zone" across the top of the form (above your Social Security number).
Note: Valid extensions are only for filing purposes. Interest will be due on any tax that remains unpaid during the extension period.
Important: If you were an Indiana resident at the time you enlisted in the military service, Indiana will be your home of record; you are considered to be a full-year Indiana resident for state income tax purposes during your enlistment regardless of where you are stationed, and all of your income will be taxed by Indiana.
For further information click here for a direct link to the state site for Information for Military Personnel