Indiana IT-40 Income Tax Instruction Booklet
Extracted from PDF file 2020-indiana-it-40-booklet.pdf, last modified January 2021
IT-40 Income Tax Instruction BookletINDIANA 2 0 2 0 IT-40 Full-Year Resident Individual Income Tax Booklet freefile.dor.in.gov FAST • FRIENDLY • FREE 12/20 Update • See Returned Checks and Other Types of Payments penalty update on page 11. • See updated Schedule 7, Line 5 instructions beginning on page 54. • The Deferral of Business Indebtedness Discharge and Reacquisition add-back, code 107, is no longer required. WAIT! YOU MAY QUALIFY FOR FREE ONLINE TAX FILING! More than 85 percent of Indiana taxpayers filed electronically in 2019. Consider the benefits of filing electronically: • Faster Refund. Electronic filing reduces errors and expedites refund time – within 10 to 14 days (compared with 10 to 12 weeks for a paper return). • Fewer Errors. Up to 20 percent of paper-filed returns have errors, which can result in delays and possible penalty and/or interest for the taxpayer. Returns filed electronically, however, are 98 percent accurate. • Easier Filing. You won’t have to complete the many complicated forms in this booklet. Instead, you go online, answer some easy questions, and before you know it your taxes are complete. You may be eligible to file your taxes online for FREE with INfreefile. Go to www.freefile.dor.in.gov to see if you qualify or learn more about INfreefile on page 4. SP 265 (R18 / 9-20) Which Indiana Tax Form Should You File? Indiana has three different individual income tax returns. Read the following to find the right one for you to file. Credits • • Form IT-40 for Full-Year Residents Use Form IT-40 if you (and your spouse, if married filing jointly) were full-year Indiana residents. • Form IT-40PNR for Part-Year and Full-Year Nonresidents Use Form IT-40PNR if you (and your spouse, if married filing jointly): • Were Indiana residents for less than a full-year or not at all, or • Are filing jointly and one was a full-year Indiana resident and the other was not a full-year Indiana resident, and • Do not qualify to file Form IT-40RNR. • Deductions • Form IT-40RNR for Full-Year Residents of Reciprocal States Use Form IT-40RNR if you (and your spouse, if married filing jointly) were: • Full-year residents of Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin, and • The only type of income from Indiana was from wage, tip, salary or other compensation.* *You are required to file Form IT-40PNR if you have any other kind of Indiana-source income. Note. If you have income that is being taxed by both Indiana and another state, you may have to file a tax return with the other state. Military Personnel See the instructions on page 7 to determine which form to file. Military personnel stationed in a combat zone should see the instructions on page 8 for extension of time to file procedures. 2020 Changes Update: Line 1 of Form IT-40 assumes conformity with the Internal Revenue Code for federal changes adopted after Jan. 1, 2020. If the 2021 Indiana General Assembly does not conform to the most current changes to the Internal Revenue Code, you may have to amend your tax return at a later date to reflect any differences between Indiana and federal law. You may wish to periodically check the department’s homepage at www.in.gov/dor for updates. Add-backs • • • The portion of wagering taxes required to be added back as a tax based on or measured by income is being phased out. See page 12 for more information. The deferral of business indebtedness discharge and reacquisition add-back (107) is no longer available. A new conformity add-back (147) is available for negative entries. See page 13 for more information. Married individuals who file separately are now eligible to claim Indiana’s CollegeChoice 529 Educational Savings Plan credit. See Schedule IN-529 for more information. Redevelopment Tax Credit. You may be eligible for a credit if you made a qualified investment for the redevelopment or rehabilitation of real property located within a qualified redevelopment site. See page 53 for more information. School Scholarship Tax Credit Contribution Ceiling Increased. The total of allowable net contributions to the program has increased to $16.5 million for the program’s fiscal year of July 1, 2020 through June 30, 2021. Venture Capital Investment Credit reporting change. This credit must be reported on Schedule IN-OCC. See instructions. Tax on the Military Retirement Income and/or Survivor’s Benefits is being phased out. See instructions on page 20 to figure your deduction. Miscellaneous • • Amended check box added. See the instructions on page 4 if you are amending (changing) your 2020 individual income tax return. Injured spouse or spouse who claims to not be liable for all or part of a tax liability. if you are married filing jointly and want to file with one of these designations, see Schedule 7, line 5 instructions on page 54. Need Tax Forms or Information Bulletins? Use Your Personal Computer Visit our website and download the forms you need. Our address for tax forms is www.in.gov/dor/tax-forms/. Visit a District Office Some tax forms are available at district offices located throughout the state. These offices are open Monday - Friday, 8 a.m. to 4:30 p.m. local time. Visit www.in.gov/dor/contact-us/district-office-contact-info/ for a list of these offices, including addresses and telephone numbers. Need Help With Your Return? Local Help You may be eligible to take advantage of the IRS Volunteer Return Preparation Program (VRPP). This program offers free tax return help to low income, elderly and special needs individuals. Volunteers will fill out federal and state forms for those who qualify. Call the IRS at 1-800-829-1040 to find the nearest VRPP location. Be sure to take your W-2s, 1099s and a copy of last year’s state and federal tax returns. IT-40 Booklet 2020 Page 3 Automated Information Line Call the automated information line at (317) 233-4018 to get the status of your refund, billing and payment plan information, a copy of your tax return, or prerecorded tax topics. If you wish to check for billing information, be sure to have a copy of your tax notice. The system will ask you to enter the tax identification number shown on the notice. If you have a rotary phone, please call (317) 232-2240, 8 a.m. to 4:30 p.m., Monday - Friday, and a representative will help you. Internet Address • • • Fax your request, including your Social Security number, old address, new address and signature, to 317-615-2608. Mail the request, including your Social Security number, old address, new address and signature, to Indiana Department of Revenue, P.O. Box 6197, Indianapolis, IN 46206-6197. Visit one of our District Offices (find locations here: www.in.gov/ dor/contact-us/district-office-contact-info/) in person. Make sure to bring your Social Security number, old address, and new address with you. If you need help deciding which form to file, or need to get information bulletins or policy directives on specific topics, visit our website at www.in.gov/dor. Filing an Amended (Corrected) Tax Return Telephone If you need to amend (correct) your 2020 tax return: • Complete a corrected 2020 Form IT-40, including those schedules that have changed, • Place an X in the box if amending (located in the upper righthand corner of the Form IT-40), and • Attach a completed Form IT-40 X. Call us at (317) 232-2240 Monday - Friday, 8 a.m. to 4:30 p.m., for help with basic tax questions. Ready to File Your Return? Use an Electronic Filing Program More than 85% of Hoosier taxpayers used an electronic filing program to file their 2019 state and federal individual income tax returns. Electronic filing provides Indiana taxpayers the opportunity to file their federal and state tax returns immediately, and receive their Indiana refunds in about half the time it takes to process a paper return. It takes even less time if you use direct deposit, which deposits your refund directly into your bank account. Even if there is an amount due on either return, Indiana taxpayers can still file electronically and feel comfortable knowing that the returns were received by the IRS and the Indiana Department of Revenue (DOR). Use an electronic vendor or contact your tax preparer to see if he or she provides this service. INfreefile This tax season Indiana continues to offer a free tax filing service through the cooperation of the Free File Alliance. Eligible Indiana taxpayers can file both the federal and Indiana individual tax returns using highly interactive and easy-to-use web-based applications that speed both returns and refunds. You can choose from a list of multiple vendors that provide this free service. DOR estimates nearly 2 million Indiana taxpayers are eligible for this free service. See if you are eligible by visiting www.freefile.dor.in.gov. Our Website Our website offers tax filing options, a Spanish version of the IT-40 booklet with forms, downloadable blank forms and instructions, information bulletins, an online helpdesk, helpful email links and a calendar with filing due dates. Visit the department’s website at www. in.gov/dor. Moving? You need to notify the department if you move to a new address after filing your tax return. Change your address with us by doing one of the following: Page 4 IT-40 Booklet 2020 Did you receive a lateW-2 or other kind of income statement after you filed? Did you forget to claim an exemption or deduction? The Form IT-40, IT-40X and supporting schedules are located at www. in.gov/dor/tax-forms/2020-individual-income-tax-forms. Annual Public Hearing In accordance with the Indiana Taxpayer Bill of Rights, the department will conduct an annual public hearing in Indianapolis in June of 2021. Event details will be listed at www.in.gov/dor/ news-media-and-publications/dor-public-events/annual-publichearings/. Please come and share feedback or comments about how the department can better administer Indiana tax laws. If not able to attend, please submit feedback or comments in writing to: Indiana Department of Revenue, Commissioner’s Office, MS# 101, 100 N. Senate Avenue, Indianapolis, IN 46204. Our homepage provides access to forms, information bulletins and directives, tax publications, email, and various filing options. Visit www.in.gov/dor. Before You Begin Important. You must complete your federal tax return first. Filling in the Boxes – Please Use Ink If you are filling out the form by hand, please use black or blue ink and print your letters and numbers neatly. If you do not have an entry for a particular line, leave it blank. Do not use dashes, zeros or other symbols to indicate that you have no entry for that line. Social Security Number Be sure to enter your full 9-digit Social Security number in the boxes at the top of the form. If filing a joint return, enter your Social Security number in the first set of boxes and your spouse’s full 9-digit Social Security number in the second set of boxes. An incorrect or missing Social Security number can increase your tax due, reduce your refund, or delay timely processing of your filing. Individual Taxpayer Identification Number (ITIN) If you already have an ITIN, enter it wherever your Social Security number is requested on your tax return. If you are in the process of applying for an ITIN, check the box located directly beneath the Social Security number area at the top of the form. For information on how to get an ITIN, contact the IRS at 1-800-829-3676 and request federal Form W-7, or find it online at www.irs.gov. Name and Suffix Please use all capital letters when entering your information. For example, Jim Smith Junior should be entered as JIM SMITH JR. Name. If your last name includes an apostrophe, do not use it. For example, enter O’Shea as OSHEA. If your name includes a hyphen, use it. For example, enter SMITH-JONES. Suffix. Enter the suffix associated with your name in the appropriate box. • Use JR for junior and SR for senior. • Numeric characters must be replaced by alphabetic Roman Numerals. For example, if your last name is Charles 3rd, do not use 3rd; instead, enter III in the suffix field. • Do not enter any titles or designations, such as M.D., Ph. D., RET., Minor or DEC’D. Married Filing Requirements • • • • Married Filing Jointly If you filed your federal income tax return as married filing jointly, you also must file married filing jointly with Indiana. Married Filing Separately If you file your federal income tax return as married filing separately, you must also file as married filing separately with Indiana. Enter both of your Social Security numbers in the boxes on the top of the form, and then check the box directly to the right of those boxes. Enter the name of the person filing the return on the top line, but do not enter the spouse’s name on the second name line. Married Persons Who Live Apart Filing Status If you were not divorced or legally separated in 2020 you may have qualified for and filed as ‘head of household’ on your federal income tax return. If you did, do not check the married filing separately box. Also, do not enter either your spouse’s name or Social Security number Same-Sex Marriage Tax Filing Guidelines Couples in same-sex marriages should file with Indiana using the same married filing status as they used for federal tax filing purposes. Military Address Overseas military addresses must contain the APO, FPO designation in the “city field” along with a two-character “state” abbreviation of AE, AP, or AA and the zip code. Place these two- and three-letter designations in the city name area. Zip/Postal Code Enter your five- or nine-digit Zip code (do not use a dash). For example, enter 46217 or 462174540. If filing with a foreign address, enter the associated postal code. Foreign Country Code Complete this area if the address you are using is located in a foreign country. Enter the 2-character foreign country code, which may be found online at www.in.gov/dor/legal-resources/tax-library/foreigncountry-code-listing. County Information Enter the two-digit code numbers for the county(s) where you and your spouse, if filing jointly, lived and worked on Jan. 1, 2020. You can find these code numbers on the chart found on the back of Schedule CT-40. See the instructions beginning on page 56 for more information, including the definitions of the county where you live and work, details for military personnel, retired individuals, homemakers, unemployed individuals, out-of-state filers, etc. Refund Check Address Your refund check will be issued in the name(s), address and Social Security number(s) shown on your tax return. It is very important that this information is correct and legible. Any wrong information will delay your refund. Rounding Required Each line on which an amount can be entered has “.00” already filled in. This is to let you know that rounding is required when completing your tax return. You must round your amounts to the nearest whole dollar. To do this, drop amounts of less than $0.50. Example. $432.49 rounds down to $432.00. Increase amounts of $0.50 or more to the next higher dollar. Example. $432.50 rounds up to $433.00. Losses or Negative Entries When reporting a loss or negative entry, use a negative sign. Example. Write a $125 loss as -125. Commas Do not use commas when entering amounts. For instance, express 1,000 as 1000. Enclosing Schedules, W-2s, Etc. You will find an enclosure sequence number in the upper right-hand corner of each schedule. Make sure to put your completed schedules in sequential order behind the IT-40 when assembling your tax return. Do not staple or paper clip your enclosures. If you have a schedule on which you’ve made no entry, do not enclose it unless you have completed information on the back of it. IT-40 Booklet 2020 Page 5 Also, enclose: • All W-2s, 1099s, Forms IN-MSID-A and IN K-1s on which Indiana state and/or county tax withholding amounts appear • All 1099Gs showing unemployment compensation • A check/money order, if applicable If your gross income is less than your total exemptions figured above, you are not required to file. However, you may want to file a return to get a refund of any state and/or county tax withheld by your employer, or other refundable credits, such as an earned income credit or estimated tax payment. A note about your W-2s. It is important that your W-2 form is readable. The income and state and county tax amounts withheld are verified on every W-2 form that comes in with your tax return. We encourage you to enclose the best copy available when you file. Part-Year Residents and Full-Year Nonresidents Who Should File? You may need to file an Indiana income tax return if: • You lived in Indiana and received income, or • You lived outside Indiana and had any income from Indiana. Filing Status Requirement. If you and your spouse file a joint federal tax return, you must file a joint tax return with Indiana. If you and your spouse file separate federal tax returns, you must file separate tax returns with Indiana. Note. There are three types of Indiana tax returns available. The type you need to file is generally based on your residency status. Read the following to decide if you are a full-year resident, part-year resident, or nonresident of Indiana, and which type of return you should file. Full-Year Residents If you were a full-year resident of Indiana and your gross income (the total of all your income before deductions) was greater than certain exemptions*, you must file an Indiana tax return. Full-year residents must file Form IT-40, Indiana Full-Year Resident Individual Income Tax. You are a full-year Indiana resident if you maintain your legal residence in Indiana from Jan. 1 – Dec. 31 of the tax year. You do not have to be physically present in Indiana the entire year to be considered a full-year resident. Residents, including military personnel, who leave Indiana for a temporary stay, are considered residents during their absence. If you were a part-year resident and received income while you lived in Indiana, you must file Indiana Form IT-40PNR, Part-Year Resident or Nonresident Individual Income Tax Return. If you were a legal resident of another state(s) (exception: see next paragraph) and had income from Indiana (except certain interest, dividends, or retirement income), you must file Form IT-40PNR. Full-Year Residents of Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin If you were a full-year resident of Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin, and your only income from Indiana was from wages, salaries, tips or commissions, then you need to file Form IT-40RNR, Indiana Reciprocal Nonresident Individual Income Tax Return. Deceased Taxpayers If an individual died during 2020, or died after Dec. 31, 2020, but before filing his/her tax return, the executor, administrator or surviving spouse must file a tax return for the individual if: • The deceased was under the age of 65 and had gross income more than $1,000 • The deceased was age 65 or older and had gross income more than $2,000, or • The deceased was a nonresident and had gross income from Indiana. Be sure to enter the month and day of death for the taxpayer or spouse in the appropriate box located on Schedule 7. For example, a date of death of Jan. 9, 2020, would be entered as 01/09/2020. Note. The date of death should not be entered here if the individual died after Dec. 31, 2020, but before filing the tax return. The date of death information will be shown on the individual’s 2021 tax return. Retired persons spending the winter months in another state may still be full-year residents if: • They maintain their legal residence in Indiana and intend to return to Indiana during part of the taxable year • They retain their Indiana driver’s license • They retain their Indiana voting rights • They claim a homestead deduction on their Indiana home for property tax purposes Signing the Deceased Individual’s Tax Return *To figure your exemptions for filing requirement purposes, Indiana allows a $1,000 exemption for you and a $1,000 exemption for your spouse (if married filing jointly). You also get a $1,000 exemption for each dependent you are eligible to claim. See page 23 for additional information concerning how to figure your dependents. If there is no executor, or if an administrator has not been appointed, the person filing the return should sign and give their relationship to the deceased (e.g. “John Doe, nephew”). Only one tax return should be filed on behalf of the deceased. Page 6 IT-40 Booklet 2020 If a joint return is filed by the surviving spouse, the surviving spouse should sign his or her own name and after the signature write: “Filing as Surviving Spouse.” An executor or administrator appointed to the deceased’s estate must file and sign the return (even if this isn’t the final return), indicating their relationship after their signature (e.g. administrator). Note. The department may ask for a copy of the death certificate, so please keep a copy with your records. Note. Indiana’s extension of time to file, Form IT-9, extends the filing date to Nov. 14, 2021. Refund Check for a Deceased Individual If You Owe… If you (the surviving spouse, administrator, executor or other) have received a refund check and cannot cash it, contact the State Auditor’s Office at www.in.gov/auditor/924.htm to get a widow’s affidavit (POA30) or a distributee’s affidavit (POA-20). Send the completed affidavit, the refund check and a copy of the death certificate to the State Auditor’s Office so a refund check can be issued to you. Military Personnel — Residency 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 the tax year, you are a part-year resident and should file Form IT-40PNR. You must also enclose a copy of Military Form DD-2058 with the tax return. As an 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 from her Indiana part-time job. She will 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-40PNR. Option 1. File Indiana’s extension of time to file, Form IT-9. This must be filed by April 15, 2021, for the extension request to be valid. In order to avoid paying a penalty, you should send at least 90% of the amount expected to be due with the Form IT-9. Then, make sure to file your tax return by Nov. 14, 2021, paying any remaining balance due with that filing. While interest is due on any amount paid after April 15, penalty will be waived if both of the following conditions are met: • The remaining balance due is paid in full by Nov. 14, 2021, and • You paid at least 90% of the tax expected to be owed by the original April 15 due date. Note. You may file for a state extension of time to file online if you make a payment with it. Access the department’s online payment system at www.in.gov/dor/online-services/dorpay-tax-and-billpayment/ by April 15, and follow the directions for making an extension payment. Option 2. Filing for a federal extension of time to file with the IRS will automatically provide for a state extension of time to file. You must file your state tax return by Nov. 14, 2021, paying any balance due with that filing. While interest is due on any amount paid after the original April 15 due date, penalty will be waived if both of the following conditions are met: • The remaining balance due is paid in full by Nov. 14, 2021, and • You paid at least 90% of the tax expected to be owed by the original April 15 due date. Important. Refer to the instructions on page 56 for an explanation of county of residence for military personnel. If You Don’t Owe… When Should You File? You’ll need to file for an extension if: • You are due a refund, or • You don’t expect to owe any tax when filing your tax return, and • You are unable to file your return by April 15, 2021. Fiscal year tax returns are due by the fifteenth (15) day of the fourth (4th) month after the close of the fiscal year. You must complete the fiscal year filing period information at the top of the Form IT-40. There are two ways to accomplish this: • If you have a federal extension (you filed Form 4868, or made an extension payment via an electronic filing method), you automatically have an extension with Indiana and do not have to file for a separate state extension (Form IT-9). • If you do not have a federal extension, file Form IT-9 by April 15, 2021. Your tax return is due April 15, 2021. If you file after this date and owe tax, you will owe interest on the unpaid amount and you may owe penalty, too. See page 11 for more information. Extension of Time to File — What if You Can’t File on Time? You must get an extension of time to file if you: • Are required to file, and • You cannot file your tax return by the April 15, 2021 due date. Extension Filing Deadline. Both state Form IT-9 and federal Form 4868 extend your state filing time to Nov. 14, 2021. Whether you owe additional tax, are due a refund, or are breaking even, you still need to get an extension if filing after April 15, 2021. IT-40 Booklet 2020 Page 7 Will You Owe Penalty and/or Interest? Penalty will not be owed if you have: • Paid 90% of the tax you expect to owe by April 15, 2021, • Filed your tax return by Nov. 14, 2021, and • Paid any remaining amount due (including interest) with that filing. Interest is owed on all amounts paid after April 15, 2021. See page 11 for instructions on how to figure interest. Indiana’s Extension of Time to File, Form IT-9 You may get Form IT-9 online at www.in.gov/dor/tax-forms/2020individual-income-tax-forms/. You may also file for an extension online (if making a payment) at www.in.gov/dor/online-services/ dorpay-tax-and-bill-payment/ (make sure to do this by April 15, 2021). Where to Report Your Extension Payment. Add your state extension payment to any estimated tax paid. Report the total on Schedule 5, line 3. Military personnel on duty outside of the United States and Puerto Rico on the filing due date are allowed an automatic 60 day extension of time to file. A statement must be enclosed with the return verifying that you were outside of the United States or Puerto Rico on April 15, 2021. Military personnel in a presidentially declared combat zone have an automatic extension of 180 days after they leave the combat zone. In addition, if they are hospitalized outside the United States because of such service, the 180-day extension period begins after being released from the hospital. The spouse of such service member must use the same method of filing for both federal and Indiana (e.g. single or joint). When filing the return, write “Combat Zone” across the top of the form (above your Social Security number). Form IT-40: Line-by-line instructions Important. You must complete your federal income tax return, Form 1040/1040-SR, before starting your Indiana income tax return. Line numbers from your federal income tax return are referenced in many of the following instructions. While every effort has been made to make the instructions as clear as possible, sometimes the line numbers change on the federal income tax return after the Indiana forms are finalized. Please contact us if you are unsure as to whether or not you are looking at the correct line on your federal income tax return (see page 4 of this booklet for contact information). When Not to Fill In a Line If you do not have an entry for a particular line, leave it blank. Do not use dashes, zeros or other symbols to indicate that you have no entry for that line. Page 8 IT-40 Booklet 2020 Line 1 – Federal Adjusted Gross Income Enter the adjusted gross income from your federal Form 1040/1040SR, line 11. If you were not required to file a federal return, complete a “sample” federal return and report the amount you would have shown on your federal return if you had been required to file. When reporting a loss or negative entry, use a negative sign. Example. Write a $125 loss as -125. Line 2 – Add-Backs Enter on this line any add-backs from Schedule 1: Add-Backs. Instructions for Schedule 1 begin on page 12. Make sure to enclose Schedule 1 when filing. Line 4 – Deductions Enter on this line any deductions from Schedule 2: Deductions. Instructions for Schedule 2 begin on page 15. Make sure to enclose Schedule 2 when filing. Line 6 – Exemptions Enter any exemptions from Schedule 3: Exemptions on this line. Instructions for Schedule 3 begin on page 23. Make sure to enclose Schedule 3 when filing. Line 9 – County Tax Complete Schedule CT-40 to figure your county tax. Instructions for Schedule CT-40 begin on page 56. Line 10 – Other Taxes Enter any other taxes from Schedule 4: Other Taxes on this line. Instructions for Schedule 4 begin on page 28. Make sure to enclose Schedule 4 when filing. Line 12 – Credits Enter your credits from Schedule 5: Credits on this line. Instructions for Schedule 5 begin on page 29. Make sure to enclose Schedule 5 when filing. Line 13 – Offset Credits Enter the total of any offset credits reported on Schedule 6: Offset Credits on this line. Instructions for Schedule 6 begin on page 44. Make sure to enclose Schedule 6 when filing. Line 17 – Donation Check-Offs Enter on this line the total of any donations made on Schedule INDONATE. Make sure to enclose Schedule IN-DONATE, which is located at the bottom of Schedule 5: Credits, when filing. See page 43 for more information. Line 19 – Amount to be Applied as a 2021 Estimated Tax Installment Payment You should pay estimated tax if you expect to have income during the 2021 tax year that: • • • Will not have Indiana income taxes withheld, or You think the amount withheld will not be enough to pay your tax liability, and You expect to owe more than $1,000 when you file your tax return. There are several ways you can make estimated tax payments. First, visit our website at www.in.gov/dor/tax-forms/2020-individualincome-tax-forms/ to get Form ES-40. Use the worksheet on Form ES40 to see how much you will owe. Then, if you have an overpayment showing on line 18 of your tax return, you can have some or all of the overpayment applied to next year’s estimated tax account. To do so, enter any portion of the overpayment: • On line a, if you want to apply an amount to offset estimated county tax due (from Form ES-40 worksheet, line K). Also, enter the 2-digit county code from line K; and/or • On line b, if your spouse lived in a different county than you did on Jan. 1, 2021, and you want to apply an amount to offset your spouse’s estimated county tax due (from Form ES-40 worksheet, line L). Also, enter the 2-digit county code from line L; and/or • On line c, if you want to apply an amount to offset your estimated state tax due (from Form ES-40 worksheet, line J). Example. Mark and Megan have a $420 overpayment, and want to apply $300 of it to their 2021 estimated tax account. Their worksheet from Form ES-40 has the following breakdown: • Line I (each installment payment) is $300; • Line J (portion that represents state tax due) is $270; and • Line K (portion that represents county tax due) is $30. They will enter $30 on line 19a (along with their 2-digit county code), $270 on line 19c, and the $300 total amount to be applied will be entered on line 19d. They will get a $120 refund ($420 overpayment minus $300 applied to their 2021 estimated tax account). Example. Stu wants to pay $500 in estimated tax for each installment period. He has a $30 overpayment on his tax return. He chooses to enter the full $30 overpayment on line 19c (Indiana adjusted gross income tax amount), and carries it to line 19d. (He will pay the $470 additional amount by filing the Form ES-40.) Important. Estimated tax installment payments made for the 2021 tax year are due by: • April 15, 2021 (1st installment) • June 15, 2021 (2nd installment) • Sept. 15, 2021 (3rd installment) • Jan. 18, 2022 (4th installment) Any installment payment amount entered on line 19d will be considered to be paid on the day your tax return is filed (postmarked). For instance, an installment payment shown on a return filed on: April 15, 2021, will be considered to be a 2021 first installment payment; June 3, 2021, will be considered to be a 2021 second installment payment; and July 22, 2021, will be considered to be a 2021 third installment payment. Note. You may use Form ES-40 to make a payment by check or money order. Estimated tax payments may also be made online, via credit card or check, at www.in.gov/dor/online-services/dorpay-tax-andbill-payment/. See line 26 instructions on page 11 for details about payment options. See Income Tax Information Bulletin #3 at www.in.gov/dor/files/ reference/ib03.pdf for additional information about estimated taxes. Line 20 – Penalty for Underpayment of Estimated Tax You might owe a penalty for the underpayment of estimated tax if you did not have taxes withheld from your income and/or you did not pay enough estimated tax throughout the year. In fact, not properly paying estimated tax is one of the most common errors made in filing Indiana tax returns. Generally, if you owe $1,000 or more in state and county tax for the year that’s not covered by withholding taxes, you need to be making estimated tax payments. You might owe this penalty if: • The total of your credits, including timely made estimated tax payments, is less than 90% of this year’s tax due or 100% of last year’s tax due, ** or • You underpaid the minimum amount due for one or more of the installment periods. If either of these cases apply to you, you must complete Schedule IT-2210 or IT-2210A to see if you owe a penalty or if you meet an exception. • If you owe this penalty, complete Schedule IT-2210 or IT-2210A and write the penalty amount on Form IT-40, line 20. • If you meet an exception, complete Schedule IT-2210 or IT-2210A to show which exception was met. Keep the completed form with your records as the department may request it at a later date. *You must have timely paid 100% of lines 8 and 9 of your 2019 IT-40 or IT-40PNR. Note: If last year’s Indiana adjusted gross income was more than $150,000 ($75,000 for married filing separately), you must pay 110% of last year’s tax (instead of 100%) to meet this exception. **Farmers and fishermen should see the special instructions on page 10. Important. The department will automatically assess an underpayment penalty if it looks like you owe a penalty for the underpayment of estimated tax. Should You Use Schedule IT-2210 or Schedule IT2210A? Schedule IT-2210 should be used by individuals who receive income (not subject to withholding tax) on a fairly even basis throughout the year. This schedule will help determine whether a penalty is due, or whether an exception to the penalty has been met. IT-40 Booklet 2020 Page 9 Example. Jim and Sarah together received $4,500 in pension income each month. Since their income is received on a fairly even basis, they’ll use Schedule IT-2210 to figure their penalty or exception to the penalty. Farmers and fishermen have special filing considerations. If at least two-thirds of your gross income is from farming or fishing, complete Schedule IT-2210, using the Section D Short Method. Schedule IT-2210A may be used by individuals who receive income (not subject to withholding tax) unevenly during the year. This schedule will help determine whether a penalty is due, or whether an exception to the penalty has been met. Example. Bill’s income is from selling fireworks in June and July. He will want to figure any penalty due on Schedule IT-2210A, which may exempt him from having had to pay estimated tax on the April 15, 2020 first installment due date. Example. Rachael received a sizeable lump sum distribution in December of 2020. She figured how much estimated tax was due, and paid it in full by the Jan. 15, 2021, fourth period installment due date. By completing Schedule IT-2210A, she shows she owes no penalty for the first three installment periods, and that a proper payment was made for the fourth installment period. She will owe no penalty. Farmers and Fishermen. Special options are available if more than two-thirds of your gross income for 2019 and/or 2020 was from farming or fishing. Option 1. Pay your estimated tax in one payment on or before Jan. 15, 2021, and file your tax return by April 15, 2021; or Option 2. Make no estimated tax payment and file your tax return and pay all the tax due by March 1, 2021. Example. More than two-thirds of Henry’s gross income is from farming. He should complete Schedule IT-2210. Henry will be able to use the Section D Short Method to figure his penalty or to show he meets an exception to owing a penalty. Visit our website at www.in.gov/dor/tax-forms/2020-individualincome-tax-forms/ to get Schedule IT-2210 or Schedule IT-2210A. Line 21 – Refund You have a refund if line 18 is greater than the combined amounts entered on lines 19d and 20. Important. If the combination of line 19d plus line 20 is greater than the amount on line 18, you must make an adjustment. The estimated tax carryover amount on line 19d is limited; it cannot be greater than the remainder of line 18 minus line 20. See the second example about Stu under the Line 19 instructions on page 9. A Note About Refund Offsets Indiana law requires that money you owe to the state, its agencies, and certain federal agencies, be deducted from your refund or credit before a refund is issued. This includes money owed for past-due taxes, student loans, child support, food stamps or an IRS levy. If the department applies your refund to any of these debts, you will receive a letter explaining the situation. When to Expect Your Refund Generally, 10 to 14 business days is the average wait for a refund if the tax return is electronically filed; it can take up to 10 to 12 weeks for the refund to be issued if you mail in your tax return. Where’s Your Refund? There are several ways to check the status of your refund. You will need to know the exact amount of your refund, and a Social Security number entered on your tax return. Then, do one of the following: • Go to www.in.gov/dor/individual-income-taxes/check-the-statusof-your-refund/ and click Check the Status of Your Refund. • Call (317) 233-4018 for automated refund information. • Call (317) 232-2240 from 8 a.m. to 4:30 p.m. Monday - Friday, and a representative will help you. A refund directly deposited to your bank account may be listed on your bank statement as a credit, deposit, etc. If you have received information from the department that your refund has been issued, and you are not sure if it has been deposited in your bank account, call the ACH Section of your bank or financial institution for clarification. Important. If we are unable to deposit your refund to the listed account (incorrect/incomplete account numbers; account closed; refund to go to an account outside the United States; etc.), the department will mail a paper check to the address on the front of the tax form. Note. A refund deposited directly to your Hoosier MasterCard account will appear on your monthly statement. Statute of Limitations for Refund Claims There is a statute of limitations when filing for a refund of overpaid taxes for tax year 2020. In general, a claim for refund must be made by April 15, 2024 (Nov. 14, 2024 if filing under extension). The claim for refund is considered to be made on the day your tax return is postmarked. If you file your 2020 tax return after the statute of limitations has expired, no refund will be issued. Line 22 – Direct Deposit You may choose to have your refund deposited in your checking, savings or Hoosier Works Master Card account. If you want your refund directed into your checking or savings account, complete lines 22 a, b, c and d. Caution. If you choose this option, make sure to verify the account information after you have entered it. This will help ensure your refund is deposited into your desired account. Page 10 IT-40 Booklet 2020 The routing number is nine digits, with the first two digits of the number beginning with 01 through 12 or 21 through 32. Do not use a deposit slip to verify the number because it may have internal codes as part of the actual routing number. The account number can be up to 17 digits. Omit any hyphens, accents and special symbols. Enter the number from left to right and leave any unused boxes blank. Check the appropriate box for the type of account you are making your deposit to: either a checking account or savings account. To comply with banking rules, you must place an X in the box on line d if your refund is going to an account outside the United States. If you check the box, we will mail you a paper check. If you currently have a Hoosier Works MasterCard and wish to have your refund directly deposited in your account, enter your 12-digit account number on line 22b, where it says “Account Number” (do not write anything on line 22a “Routing Number”). You can find your 12-digit account number in the upper right-hand corner of your account monthly statement. Note. DO NOT use your MasterCard 16-digit number. Make sure to check the “Hoosier Works MC” box on line 22c. For more information on direct deposit, please see “Where’s Your Refund?” in the left-hand column. Line 23 If line 21 is less than zero, you have an amount due. Enter here as a positive number and skip to line 24. OR If line 15 is greater than line 14, complete the following steps: Subtract line 14 from line 15 and enter the total here... A___________ Enter any amount from line 20......................................... B___________ Add lines A + B. Enter total here and on line 23............ C___________ Line 24 – Penalty You may owe a penalty if your tax return is filed after the April 15, 2021 due date and you have an amount due. Penalty is 10% of the amount due (line 23 minus line 20) or $5, whichever is greater. Exception. No penalty will be due if you have: • An extension of time to file, • Are filing and paying the remaining tax due by the extended filing due date, and • Have prepaid at least 90% of the amount due by April 15, 2021. Line 25 – Interest Line 26 – Amount Due – Payment Options There are several ways to pay the amount you owe. Make your check, money order or cashier’s check payable to: Indiana Department of Revenue. Just include the payment loose in the envelope. Do not staple it to the return. Do not send cash. You may also pay using the electronic eCheck payment method. This service uses a paperless check and may be used to pay the tax due with your Indiana individual income tax return, as well as any billings issued by the Indiana Department of Revenue for any tax type. To pay, go to www.in.gov/dor/online-services/dorpay-tax-and-billpayment/and follow the step-by-step instructions. You will receive a confirmation number and should keep this with your tax filing records. The fee for using this service is $1. Note. All payments made to the Indiana Department of Revenue must be made with U.S. funds. You may also pay by using your MasterCard® or VISA® by logging on to www.in.gov/dor/online-services/dorpay-tax-and-bill-payment/. A convenience fee will be charged by the credit card processor based on the amount you are paying. You will be told what the fee is and you will have the option to either cancel or continue the credit card transaction. Payment plan option. If you cannot pay the full amount due at the time you file, you may be eligible to set up a payment plan online. After you get a tax bill, log on to www.intaxpay.in.gov and select the Individual Eligibility tab. Important. If using the payment plan option, penalty and interest will be due on all amounts paid after the April 15, 2021 due date. Returned Checks and Other Types of Payments If you make a tax payment with a check, credit card, debit card, electronic funds transfer, or any other instrument in payment by any commercially allowable means, and the department is unable to obtain payment for its full amount when it is presented for payment through normal banking channels, a $35 penalty will be assessed. The assessed amount will be due immediately upon receipt of the tax due notice and must be paid by certified check, bank draft or money order. Note. Any permits and/or licenses issued by the department may be revoked if the assessed amount is not paid immediately. Signatures and Signing Dates First, read the Authorization area on Schedule 7. Then, sign and date the tax return. If this is a jointly filed tax return, both you and your spouse must sign and date it. Make sure to enclose the completed Schedule 7 when filing. You will owe interest (even if you have an extension of time to file) if your tax return is filed after the April 15, 2021 due date and you have an amount due. Interest should be figured on the sum of line 23 minus line 20. Contact the department at (317) 232-2240 or visit our website at www.in.gov/dor/files/reference/dn03.pdf to get Departmental Notice #3 for the current interest rate. IT-40 Booklet 2020 Page 11 Taxpayer Advocate As prescribed by the Taxpayer Bill of Rights, the department has an appointed Taxpayer Advocate whose purpose is to facilitate the resolution of taxpayer complaints and complex tax issues. If you have a complex tax issue, you must first pursue resolution through normal channels, such as contacting the customer service division at (317) 232-2240. If you are still unable to resolve your tax issue, or a tax assessment places an undue hardship on you, you may receive assistance from the Office of the Taxpayer Advocate. For more information, and to get required schedules if filing for an offer in compromise or a hardship case, visit our website at: www.in.gov/dor/contact-us/taxpayer-advocate-office/. You may also contact the Office of the Taxpayer Advocate directly at [email protected], or by telephone at (317) 2324692. Submit supporting information and documents to: Indiana Department of Revenue, Office of the Taxpayer Advocate, P.O. Box 6155, Indianapolis, IN 46206-6155. Where to Mail Your Tax Return If you are enclosing a payment, please mail your tax return with all enclosures to: Indiana Department of Revenue P.O. Box 7224 Indianapolis, IN 46207-7224 For all other filings, please mail your tax return with all enclosures to: Indiana Department of Revenue P.O. Box 40 Indianapolis, IN 46206-0040 Schedule 1: Add-Backs Some amounts reported on your federal tax return may require different treatment for Indiana income tax purposes. Listed in this area are those items that may need to be added back on your Indiana tax return. Please review the list carefully. When reporting these addbacks, maintain with your records the corresponding federal tax forms and schedules as the department can require you to provide them at a later date. Important Information About Possible Year-End Federal Legislation This publication was finalized before all year-end federal legislative changes were complete. Therefore, some of these add-backs may need to be adjusted. You may wish to periodically check the department’s homepage at www.in.gov/dor for updates about any impact of late federal legislation. Treatment of Previously Discontinued Add-Back Several discontinued add-backs were created as a result of timing differences between federal and Indiana allowable expenses. See Certain Discontinued Add-Backs: How and When to Report a Final Catch-Up Modification on page 14 for information about these add-backs. Page 12 IT-40 Booklet 2020 Line 1 – Tax Add-Back 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 those 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 deduction on any of these schedules, then you must add it back to your Indiana income. Do not add back property taxes on this line. Wagering Taxes. The portion of wagering taxes required to be added back as a tax based on or measured by income is being reduced (phased out). The percentage of taxes required to be added back is determined by the first date of the taxpayer’s taxable year, and is determined as follows: 2020 – 75%; 2021 – 62.5%; 2022 – 50%; 2023 – 37.5% 2024 – 25.0%; 2025 – 12.5%; 2026 and later – no add back required For example, Casino X remits $10,000,000 in riverboat wagering taxes in 2020. Individual owns 10% of Casino X. Individual’s share of Casino X’s in-come taxes is $1,000,000. Instead of individual adding back the full $1,000,000, Individual will add back $750,000. Note. Income, losses and/or expenses from other schedules and forms may flow through to federal Schedules C, E and F. For example, partnership income from federal Schedule K-1 (Form 1065) may be included on federal Schedule E, while expenses from federal Form 8829 may be included on federal Schedule C. Make sure to check these schedules and forms for any deduction that needs to be added back. Line 2 – Net Operating Loss Add-Back Any net operating loss (NOL) deduction reported on line 8 of your federal Schedule 1 must be added back on this line. Write the amount of the net operating loss as a positive figure. (You may be eligible to claim an Indiana net operating loss deduction on Schedule 2, under line 11.) Note. Leave this line blank if you did not report a net operating loss deduction on line 8 of your federal Schedule 1. Line 3 – OOS Municipal Obligation Interest Add-Back Interest earned from a direct obligation of a state or political subdivision other than Indiana (out of state, or OOS) is taxable by Indiana if the obligation is acquired after Dec. 31, 2011. Interest earned from obligations held or acquired before Jan. 1, 2012, is not subject to Indiana income tax and should not be reported as an add back. Schedule 1: Add-Backs Continued Line 6 – Other Add-Backs Note. Interest earned from obligations of Puerto Rico, Guam, Virgin Islands, American Samoa, or Northern Mariana is not included in federal gross income and is exempt under federal law. There is no addback for interest earned on these obligations. Conformity Add-Back For more information about this add-back, see Income Tax Information Bulletin #19 at www.in.gov/dor/files/reference/ib19.pdf. Line 4 – Bonus Depreciation Add-Back You must make an exception for any bonus depreciation deduction used for property placed in service after Sept. 11, 2001. Bonus depreciation is the additional first-year special depreciation deduction allowed under Section 168(k) of the Internal Revenue Code (IRC). Figure the net income (or loss) that would have been included in federal adjusted gross income had the bonus depreciation method not been used. Then, enter the difference, which may be a positive or negative amount, on line 5. Example. Mack used the bonus depreciation method for federal income tax purposes. After refiguring the depreciation without using the bonus method, he has to add back $1,500 on his Indiana tax return. Note. After making an initial adjustment for bonus depreciation you will need to refigure the amount of depreciation available for state tax purposes for subsequent years. Example. Ann made an initial adjustment for bonus depreciation on last year’s Indiana tax return. This year she figures she is entitled to a $150 additional depreciation amount for state tax purposes. She should enter that amount as a negative entry, or -150, on line 4. New. Special rules may apply if the bonus depreciation is taken against property acquired in a like-kind exchange. See Information Bulletin #118 at www.in.gov/dor/files/reference/ib118.pdf for additional information. Line 5 – Section 179 Expense Add-Back You may have figured an 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. If you figured IRC Section 179 expense using a ceiling amount of more than $25,000, you will need to add back the difference between it and $25,000 on line 6. New. Special rules may apply if the Section 179 expensing is taken against property acquired in a like-kind exchange. See Information Bulletin #118 at www.in.gov/dor/files/reference/ib118.pdf for additional information. Each of the following add-backs has been assigned a 3-digit code number. When reporting the add-back, write its name, the associated 3-digit number and the amount. Before this publication was finalized Indiana had not conformed to any changes to the Internal Revenue Code (IRC) that may have become law after Jan. 1, 2020. Therefore, the IRC used to figure Indiana income may not wind up being the same as the IRC used to figure federal income. This add-back is specific to these annual current year conformity issues. If uncertainty exists as to whether or not Indiana will adopt some or all of the federal legislation passed after Jan. 1, 2020, that acts to modify federal AGI, you may add-back those items as an “other” add-back. In the event those items are adopted, an amended return should be filed to recoup the add-back(s). • Conformity Add-Back – Positive Entry 120 This add-back is only for current year conformity issues. Conformity issues for preceding tax years must be addressed on the add-back line specific to the item in question. If the state legislature does not conform to federal code changes enacted after Jan. 1, 2020, you may have to amend your return at a later date to reflect any differences between Indiana and federal law. You may wish to periodically check the department’s homepage at www.in.gov/dor for updates. Enter code 120 on Schedule 1 under line 6 if reporting this add-back. • Conformity Add-Back – Negative Entry 147 This add-back generally is based on conformity issues arising from a previous year. However, in rare cases this can arise from conformity issues arising in the current year where the IRC treats an item as taxable or nondeductible that was previously exempt or deductible. One example that occurs periodically is when there is a federal disaster. Congress will amend the IRC to permit IRA withdrawals to be included over three years (e.g., a 2020 withdrawal would be included one-third in 2020, one-third in 2021, and one-third in 2022). If Indiana decoupled from the IRC, the whole amount would be included in 2020, none in 2021, and none in 2022. The Code 120 would be for the two-thirds addback in 2020, the Code 147 would be for the one-third deduction in 2021 and 2022. These have occurred from time to time but (1) did not affect Indiana because of the specific disaster and (2) the IRC conformity date was updated in time. Enter code 147 on Schedule 1 under line 6 if reporting this add-back. IT-40 Booklet 2020 Page 13 Schedule 1: Add-Backs continued Excess Federal Interest Deduction Modification 142 IRC Section 163(j) limits the federal interest deduction for most business interest to 30% of adjusted taxable income plus business interest. However, Indiana has decoupled from this provision. Subtract an amount equal to the amount as a deduction for excess business interest under IRC Section 163(j) in the year in which the interest was first paid or accrued. If you are deducting any business interest carried over from a previous year, add the amount of this interest deducted. Enter code 142 on Schedule 1 under line 6 if reporting this add-back. Qualified Preferred Stock 113 If an individual: • had losses from the sale or exchange of preferred stock in either Federal National Mortgage Association or Federal Home Loan Mortgage Corporation; • treated the loss from the sale or exchange as ordinary income for federal income tax purposes in the year the loss had been incurred; and • had any amount previously added back that not been allowed as a deduction, the individual is permitted to continue deducting the loss not previously allowed as a capital loss. However, the amount allowable as a capital loss must be computed in accordance with federal limitations on allowable capital losses. See IRC sections 1211 and 121 for further details on federal limitations. Enter code 113 on Schedule 1 under line 6 if reporting this add-back. Certain Discontinued Add-Backs: How and When to Report a Final Catch-Up Modification. Required add-backs for the following modifications have been eliminated, effective Jan. 1, 2013: • Motorsports Entertainment Complex, Code 130 • Qualified Advance Mining Safety Equipment, Code 126 • Qualified Electric Utility Amortization, Code 135 • Qualified Environmental Remediation Costs, Code 121 • Qualified Leasehold Improvement Property, Code 129 • Qualified Restaurant Improvement Property, Code 108 • Qualified Retail Improvement Property, Code 109 • Start-Up Expenditures, Code 131 Required add-backs for the following modifications have been eliminated, effective Jan. 1, 2016: • Qualified Disaster Assistance Property, Code 110 • Qualified Refinery Property, Code 111 • Qualified Film or Television Production, Code 112 If you previously reported any of these add-backs, see the following example for guidance as to how to figure and report a final catch-up modification. Page 14 IT-40 Booklet 2020 Example. Grant has qualified restaurant equipment. For federal tax purposes he used the accelerated 15-year recovery period for an asset placed in service since 2009. Since 2009 Grant had been adding back the depreciation expense taken for federal purposes that exceeded the amount allowable for Indiana purposes. The accumulated depreciation on such an asset through 2012 was, therefore, different for federal and state purposes. This difference will remain until the asset is fully depreciated or until the time of its disposition. A simple illustration: Asset – acquired January, 2009 – qualified restaurant property – purchase price $120,000. This normally would have had a 39-year recovery period; IRC Sec. 168 allows for a 15-year recovery period. Asset acquired Jan. 2009 Federal Add$120,000 purchase price Depreciation Back Year 1 (2009) 8,000 4,924 Year 2 (2010) 8,000 4,924 Year 3 (2011) 8,000 4,924 Year 4 (2012) 8,000 4,924 Year 5 (2013) 8,000 0 Accumulated Depreciation 40,000 Year 6 – 15 80,000 0 Accumulated Depreciation 120,000 Year 16 – 38 0 0 Accumulated Depreciation Year 39 (or year of 0 -19,696 disposition) Add-back Indiana Depreciation 3,076 3,076 3,076 3,076 8,000 20,304 80,000 100,304 0 19,696 Tax year 2012 is the last year Grant reported an add-back until the end of the recovery period. Had this asset been sold before being fully depreciated, the catch-up modification would be reflected in the year of the sale. If this property is held through 2048 (the 39th year of depreciation), Grant will report a negative $19,696 catch-up add-back on his 2048 state tax return. Enter the associated 3-digit code on Schedule 1 under line 6 if reporting a final catch-up modification. Schedule 2: Deductions Line 2 – Homeowner’s Residential Property Tax Deduction You may be able to take the renter’s deduction if: • You paid rent on your principal place of residence, and • You rented a place that was subject to Indiana property tax. You may be able to take a deduction of up to $2,500 of the Indiana property taxes (residential real estate taxes) paid on your principal place of residence. Your principal place of residence is the place where you have your true, fixed home and where you intend to return after being absent. Your “principal place of residence” is the place where you have your true, fixed, permanent home and where you intend to return after being absent. Note. Property tax paid for summer homes or vacation homes is not deductible. Line 1 – Renter’s Deduction If you rented a manufactured home or paid rent for your manufactured home lot, you may claim the renter’s deduction if the above requirements are met. Rent paid for summer homes or vacation homes is not deductible. You cannot claim the renter’s deduction if the rental property was not subject to Indiana property tax. Examples of this type of property are: • Government owned housing, • Property owned by a nonprofit organization, • Student housing, • Property owned by a cooperative association, and • Property located outside of Indiana. How do I report my deduction? First, complete the information area by entering: • The address where rented if it’s different from the address on the front of the return (leave blank if it is not different), • The landlord’s name and address, • The total amount of rent paid, and • The number of months you lived there. If you moved during the year or had more than one landlord, you must list the same information for each place that you rented. Enclose additional pages if necessary. How much rent can I deduct? You can deduct up to $3,000 or the amount of rent paid, whichever is less. Example. Emily paid $4,800 in rent on her principal place of residence. She will claim a $3,000 renter’s deduction. Example. Bill paid $400 rent for his first apartment. He moved to another location during the year and paid $2,800 rent for the rest of the year. His deduction will be limited to $3,000, even though he paid $3,200 altogether. Important. Keep copies of your rental receipts, landlord identifying information and lease agreements as the department can require you to provide this information. For more information about this deduction, see Income Tax Information Bulletin #38 at www.in.gov/dor/files/reference/ib38.pdf. Important. You cannot claim this deduction for property tax paid in 2020 if you are claiming the Lake County residential income tax credit on Schedule 5, line 6. How do I claim my deduction? Complete the information area on Schedule 2, line 2. Enter the address of your principal residence where the Indiana property tax was paid if it is different from the address on the front of the return. If you had more than one principal residence during the year, and you paid Indiana property tax on both residences, list the additional residence on a separate piece of paper. Example. Jamie and Ella each owned their own home; they married in 2020. They sold both of their homes during the year and began renting. They are eligible to claim a property tax deduction on the combined property taxes paid on both homes if they are filing a joint return (limited to $2,500 altogether). • • • Enter the number of months you lived there. If you claim more than one residence, enter the number of months lived at the other residence(s) on a separate sheet of paper. Enter the amount of Indiana property tax paid. If you lived in more than one residence during the year, enter the combined amount of Indiana property tax paid on all principal residences. Enter the smaller of $2,500 or the amount of Indiana property tax paid. No double benefit allowed. If any portion of property taxes paid on your principal residence was deducted as an expense on federal Schedule C, C-EZ, E or F, then do not deduct that amount on this line. Example. Jean paid $1,200 in Indiana property tax on her home. She used one room of her home for her business, and deducted $200 Indiana property tax as an expense on her federal Schedule C. Jean is allowed a deduction of $1,000 ($1,200 minus the $200 deduction already taken on federal Schedule C). How do I find out how much I paid in Indiana property tax on my principal residence? Indiana counties send statements to homeowners showing how much property tax is due on their property. Add together the 2020 spring and fall installments, if you paid both of them. If you received just one installment statement this year for your 2020 property taxes, use the amount paid for that installment. IT-40 Booklet 2020 Page 15 Schedule 2: Deductions continued Sometimes mortgage companies pay the Indiana property tax from an escrow account. If your mortgage company pays it, they should send yo
More about the Indiana IT-40 Booklet Individual Income Tax TY 2020
This booklet includes instructions for filling out and filing your IT-40 income tax return. Does not include tax forms or schedules.
We last updated the IT-40 Income Tax Instruction Booklet in January 2021, so this is the latest version of IT-40 Booklet, fully updated for tax year 2020. You can download or print current or past-year PDFs of IT-40 Booklet directly from TaxFormFinder. You can print other Indiana tax forms here.
Related Indiana Individual Income Tax Forms:
|Form Code||Form Name|
|IT-40 Form||IT-40 Income Tax Form|
|IT-40PNR Form||Part-Year or Full-Year Nonresident Individual Income Tax Return|
|IT-40RNR Form||Reciprocal State Nonresident Individual Tax Form|
|IT-40PNR Booklet||Part-Year and Full-Year Nonresident Income Tax Instruction Booklet|
|Form IT-40X||Amended Individual Income Tax Return|
|IT-40EZ Form||IT-40EZ Income Tax Form (OBSOLETE)|
|Form IT-40PNRA||Indiana Apportionment Schedule for Nonresident Individuals|
|Form IT-40NOL||Net Operating Loss Computation for Individuals|
Indiana usually releases forms for the current tax year between January and April. We last updated Indiana IT-40 Booklet from the Department of Revenue in January 2021.
About the Individual Income Tax
The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.
Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!
Historical Past-Year Versions of Indiana IT-40 Booklet
We have a total of ten past-year versions of IT-40 Booklet in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
While we do our best to keep our list of Indiana Income Tax Forms up to date and complete, we cannot be held liable for errors or omissions. Is the form on this page out-of-date or not working? Please let us know and we will fix it ASAP.