Form It-40 - Indiana Full-Year Resident Individual Income Tax Booklet - 2012 Page 44
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64Combined Limitation:
If you were an Indiana resident during 2012 and had income from any
There is one final limitation if you claim
of the states listed in Group A below, you should first find out what the
more than one credit on lines 1 through 3 of Schedule 6. These credits,
other state’s rules are concerning the taxation of your income.
when combined, cannot be greater than the county tax shown on Form
IT-40 line 9; if they are, adjust the amounts before you enter them. See
Group A
the following Order of Application and example for guidance.
No Agreement (Credit taken on resident return)
Order of Application
First, use the credits which cannot be carried over and applied against
Alabama
Maine
New York
your county tax in another year. These credits include the county cred-
Arkansas
Maryland
North Carolina
it for the elderly and the credit for local taxes paid outside Indiana.
Colorado
Massachusetts
North Dakota
Connecticut
Minnesota
Oklahoma
Second, use any community revitalization enhancement district credit;
Delaware
Mississippi
Rhode Island
then, use any voluntary remediation credit.
Georgia
Missouri
South Carolina
Hawaii
Montana
Tennessee*
How to adjust the amount of credit to be entered
Idaho
Nebraska
Utah
(example)
Illinois
New Hampshire*
Vermont
Example. Megan is eligible to claim a $100 credit for local taxes paid
Iowa
New Jersey
Virginia
outside Indiana plus a $200 voluntary remediation credit, for a $300
Kansas
New Mexico
West Virginia
total amount in offset credits. Her county tax due (IT-40, line 9) is
Louisiana
Any foreign countries or U.S. possessions
$160. Since her combined credits are more than her county tax due,
she should reduce the last entry (the $200 voluntary remediation
*(Capital gain, interest, and dividends only.)
credit) by the $140 difference to $60. She will enter the full $200 credit
for local taxes paid outside Indiana on Schedule 6, line 1, and the $60
Group A Worksheet
limited voluntary remediation credit on line 3a. Note: Megan may use
the $140 remaining voluntary remediation credit to offset any state
A. Enter the amount of tax paid to the
adjusted gross income tax due on this year’s tax return (IT-40, line 8).
other state. (This does not mean the
See additional instructions for the voluntary remediation credit on
tax withheld from your wages, but
page 51.
the actual tax figured on the other
state’s return) .................................................A ___________
Line 4 - College credit
B. Multiply the amount of income from the
If you donated money or property to an Indiana college or university,
other state (that is subject to Indiana tax)
you may be able to take a credit of up to $100 on a single return or
by 3.4% (.034) ...............................................B ___________
$200 on a joint return. To claim this credit you must complete and
C. Enter the amount of Indiana state income
enclose Schedule CC-40. For additional information see Schedule
tax shown on Form IT-40 line 8 .................C ___________
CC-40 at
and Income Tax Information Bul-
letin #14 at
The lesser of the amounts on A, B or C is your allowable credit for
taxes paid to other states.
Important. You must maintain documentation of your contributions.
The Department can require you to provide this information at a later
You must enclose a copy of the income tax return (not just the W-2
date.
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,
Note. Tuition paid to a college or university is not a contribution, and
if you have a foreign tax credit, complete the Group A Worksheet and
does not qualify for this credit.
federal Form 1116. If Form 1116 was not required, enclose Forms
1099-INT and/or 1099-DIV (or a substitute statement) to verify the
See the Combined Limitation on page 51.
foreign tax and amount of income being taxed.
Line 5 - Credit for taxes paid to other states
Example. Ryan reported $10,000 Illinois-source wage income on the
If you received income from another state while you were an Indiana
Illinois nonresident individual income tax return, and paid $300 tax
resident, you must report that income on your Indiana income tax re-
to Illinois on that income. His Indiana state tax liability from line 8 of
turn. You may be able to take a credit for taxes paid to another state. If
Form IT-40 is $870.
you had income from another state, and had to pay taxes to that state,
read the following instructions carefully.
Page 44
IT-40 Booklet 2012
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