Indiana Additions to Income
If you did not complete Federal Schedules C, C-EZ, E or F which include sole proprietorship income, farm income, rental partnership, S Corporation, and trust and estate income (or loss), then do not complete this line.
On the above schedules, you are allowed to claim a deduction for taxes paid which are:
- based on, or
- measured by income, and
- levied at a state level by any state in the United States.
If you claimed this kind of deductions on any of these schedules, then you must add it back to your Indiana income. Do not add back property taxes on this line.
Net Operating Loss Add-Back
Any net operating loss deduction taken on line 21 of your federal Form 1040 must be added back on this line. Write the amount as a positive figure. If your federal adjusted gross income this year is a loss, and you have not included a net operating loss as a deduction on line 21 of your 2014 federal Form 1040, then leave this line blank.
Income taxed on Federal Form 4972
If you completed federal Form 4972, add any capital gains reported on Part II and any ordinary income reported on Part III of federal Form 4972. Enter the total here as a positive amount.
Domestic Production Activities Add-Back
If you claimed a domestic production activities deductions on your Federal Form 1040, line 35, enter that amount here.
Section 179 Expense Excess Add-Back
You may have figured IRC Section 179 expense using a ceiling of more than $25,000 for federal tax purposes. Indiana allows you to figure IRC Section 179 expense using a ceiling of no more than $25,000.00 If you figured IRC Section 179 expenses using a ceiling amount of more than $25,000, you will need to add back the difference between it and $25,000 here.
For additional Add-Backs allowed by Indiana, please see Page 13 of Indiana IT-40 Instructions.
Note: The following are no longer required to be added back:
- Educator expense
- Employer-provided education expenses
- Qualified environmental remediation costs
- Oil and gas well depletion deduction
- Qualified electric utility amortization
- RIC dividends to nonresident aliens
- Start-up expenditures
- Student loan interest deduction