Key Takeaways

  • Indiana requires residents and part-year residents with income above exemptions to file state returns, typically using Form IT-40.
  • Filing deadlines follow the federal April 15 date, but extensions are possible with Form IT-9 or federal Form 4868 (payment deadlines remain unchanged).
  • Indiana has a flat state income tax rate, plus county-level taxes that vary by location.
  • Reciprocal agreements with neighboring states (Ohio, Kentucky, Pennsylvania, Michigan, and Wisconsin) prevent double taxation for residents working across borders.
  • Self-employed individuals must pay estimated taxes quarterly using Form ES-40.
  • Businesses operating in Indiana must comply with federal Corporate Transparency Act (CTA) beneficial ownership reporting requirements in addition to state filings.

According to Indiana filing requirements, all state income tax returns must be filed by April 15. In 2018, this would have been applicable to your 2017 Indiana State Income tax return.

You can get an automatic 60-day grace period by completing and filing Form IT-9, as long as you do so before the deadline. It is important to note that this does not extend the time you have to pay the taxes you owe to the state. Even if you have filed an Indiana state tax extension, you need to make sure you've paid 90 percent or more of the applicable taxes by the deadline. Failure to do so could result in penalties. If you owe Indiana state tax, you will need to fill out Form ES-40.

If you have paid 90 percent or more of the taxes you owe and have filed federal tax extension Form 4868, then you automatically get an extension of the deadline to file your state tax return. In this case, you don't need to submit Form IT-9.

Whether you filed Form 4868 or Form IT-9, your updated income tax return deadline in Indiana is Nov. 15, 2018. This particular state collects a flat tax of 3.4 percent of one's federal adjusted gross income with modification. In addition, most counties in Indiana have tax rates and collect income tax.

Requirements of Being Classified as a Resident of Indiana

If you have lived in Indiana for the entire tax year, then you are an Indiana resident. However, you can also leave the state temporarily and still retain your status as a resident. Retirees, for example, can retain full residency status even if they spent several months of the year out of state. The only conditions are:

  • That they intend to return to Indiana.
  • They retain their voting rights in the state.
  • They keep their Indiana driver's license.

As an Indiana resident with a gross income that exceeds your total exemptions, you are required to file your tax return with the state. You will typically need to fill out Form IT-40. In certain circumstances, you might be able to file Form IT-40EZ. This applies in the following circumstances:

  • If your income tax comes exclusively from Indiana.
  • If you have no withholding credits.
  • If you have no children or other dependents.

If you have moved to Indiana within the past year, or if you are a former Indiana resident who has permanently departed within the 12 months of the previous tax year, you are considered a part-time resident.

Indiana Income Tax Rates and County Taxes

Indiana imposes a flat state income tax rate, which applies equally to all taxable income regardless of income bracket. In addition, each Indiana county may levy its own local income tax. These county rates vary and are determined by where you live on January 1 of the tax year. For example, a taxpayer living in Marion County may pay a different rate than someone in Hamilton County.

Taxpayers must calculate both their state liability and any county liability on their return. Since county taxes are based on residency, even those who move during the year are taxed by the county where they resided at the beginning of the year.

Out-of-State Earnings

If you have made money from an Indiana-based company while living out of state or earned income while previously living in Indiana, you will need to submit Form IT-40PNR. You can also use this form if you were a resident of Indiana for a brief time during the year and are not able to meet the criteria to file your tax return with Form IT-40 RNR. This also applies to married couples filing their tax returns jointly.

If you have been living in another state while retaining your Indiana residency and have been taxed by that state, then you can claim tax credits from Indiana.

This applies to two types of credits:

  • Any local taxes you were required to pay to a town, city, county, or any other local authority.
  • Taxes you paid to a different state.

If you are applying for local credits, you must complete line 1. If you are applying for state credits, then you must complete line 5.

If you, as a resident of Indiana, have been working in Ohio, Kentucky, Pennsylvania, Wisconsin, or Michigan, you don't need to file a tax return with these states. This is thanks to reciprocal agreements these states have with Indiana. This is the why Indiana will not refund taxes paid on any income earned in those five states. If, for whatever reason, your employer holds back taxes payable in another state, you need to make sure they release this income.

Business Filing Requirements and Federal Reporting

In addition to individual filing rules, businesses operating in Indiana must meet both state and federal reporting obligations. Corporations, LLCs, and partnerships registered in Indiana must file annual business entity reports with the Indiana Secretary of State. These reports ensure the state has updated ownership and contact information.

Separately, under the Corporate Transparency Act (CTA), many Indiana businesses are required to submit Beneficial Ownership Information (BOI) reports to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement, effective January 1, 2024, applies to most small and medium-sized entities unless exempt. Failure to comply can result in substantial civil penalties.

Deductions and Credits Available in Indiana

Indiana offers several deductions and credits that may reduce tax liability. Common deductions include:

  • Retirement income deductions for qualified pensions and Social Security.
  • CollegeChoice 529 plan contributions for education savings.
  • Rent and homeowner deductions for those meeting eligibility requirements.

Credits can further reduce tax owed, such as credits for taxes paid to other states, earned income credits, and credits for adopting a child. Taxpayers should review the Indiana Department of Revenue’s full list of credits to ensure they claim all applicable savings.

Filing Requirements for Self-Employed Individuals

Indiana self-employed workers—including freelancers, gig economy workers, and small business owners—must follow special filing requirements. Because taxes are not withheld from self-employment income, individuals are required to make quarterly estimated tax payments using Form ES-40.

Failure to pay sufficient estimated tax throughout the year can lead to penalties and interest. Self-employed individuals must also pay self-employment taxes to the IRS, which cover Social Security and Medicare, in addition to Indiana income tax.

Frequently Asked Questions

  1. When are Indiana state tax returns due?
    Indiana state returns are due April 15, the same as the federal deadline. Extensions may be requested, but taxes must still be paid on time.
  2. Do Indiana counties charge extra income taxes?
    Yes. Each county sets its own tax rate, applied based on where you live on January 1 of the tax year.
  3. How do self-employed taxpayers in Indiana pay taxes?
    They must file quarterly estimated payments using Form ES-40 and include income on their annual return.
  4. What deductions and credits are available in Indiana?
    Common deductions include retirement income, rent, and 529 contributions. Credits include adoption, earned income, and taxes paid to other states.
  5. What are Indiana business filing requirements under federal law?
    Businesses must file state entity reports and, under the Corporate Transparency Act, submit beneficial ownership reports to FinCEN.

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