Screen INSTCr - Indiana Credit for Taxes Paid to Other States (1040)

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See also: 1040 Indiana frequently asked questions

Overview

Use this screen to complete the Indiana Other State Credit Worksheet. This screen is a multi-unit input screen. If federal Form 1116 is not being filed, enter information in this screen to calculate the credit for taxes paid to foreign country.

Traditional Agreement (States other than AZ or OR):

Typically, when Indiana is the resident state and income is taxable to both Indiana and another state, the credit is claimed on the Indiana resident return, Form IT-40, Schedule 6. When Indiana is the resident state, information from the other state nonresident return transfers to Screen INStCr where it’s used to calculate the Indiana Other State Credit Worksheet. Therefore, if you are using UltraTax CS to file the nonresident return(s), process the nonresident return(s) first, followed by the Indiana return.

If you are not using UltraTax CS to prepare the nonresident return, you may enter data manually on Screen INStCr. For example, if the taxpayer was a composite filer for the nonresident state return, enter information from the nonresident state manually on Screen INStCr in order to calculate the credit on the Indiana return.

Likewise, you may enter data manually on Screen INStCr for taxes paid to a foreign country if you are not using Screen IN1116 to calculate the Indiana Foreign Tax Credit Worksheet for credit for taxes paid to a foreign country.

Note: When Indiana is the resident state and the nonresident state is Arizona or Oregon, the credit for taxes paid on double-taxed income is claimed on the AZ or OR nonresident return per "Reverse" agreement. In this scenario, information transfers from the Indiana resident return to Screen AZSTCr or Screen ORSTCr.

Part-Year returns:

If income is taxed simultaneously to Indiana and another state and the taxpayer is a part-year resident of at least one of those two states, UltraTax CS does not transfer information to Screen INSTCr. In this scenario, you must manually enter information on the screen in order to calculate the credit.

Reverse Agreement (AZ, OR, and DC):

When income is taxed by both the resident state and the nonresident state, typically the credit for taxes paid to another state is claimed on the resident return. However, Indiana has a reverse agreement with Arizona, District of Columbia, and Oregon. If income is taxed to both Indiana and AZ, DC, or OR, the credit is claimed on the nonresident state return. When Indiana is the resident state and the reverse agreement state is the nonresident state, information from the Indiana resident return transfers to Screen AZSTCr, or Screen ORSTCr. Likewise, if AZ, or OR is the resident state and Indiana is the nonresident state, information from the resident return transfers to Screen INSTCr. In this scenario, the credit is claimed on the Indiana nonresident return, Form IT-40PNR, Schedule G.

Notes
  • When taxpayer is a resident of the District of Columbia and has nonresident Indiana income which is double-taxed, you must manually enter information on Screen INStCr in order to calculate the credit for taxes paid to DC on the Indiana nonresident return.
  • The District of Columbia does not tax nonresident income. Thus, when taxpayer has DC nonresident income, there is no double-taxed income and therefore no credit is applicable.
  • Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin do not tax wage income of Indiana residents per "Reciprocal" agreement. Thus, taxable income for those nonresident states omits income from wages when transferring the amount for taxable income to Screen INSTCr.

State Income and Tax Information

Use this section to complete the Indiana Other State Credit Worksheet. If you are using UltraTax CS to file a nonresident return for a qualifying state, process the nonresident state(s) first, followed by the Indiana resident return. UltraTax CS transfers information from the nonresident return(s) to the resident return, which is necessary to complete the credit for taxes paid to other states.

Indiana has a reverse agreement with Arizona, District of Columbia, and Oregon for credit for taxes paid to another state. When income is taxable to both Indiana and one of these jurisdictions, the credit for taxes paid is taken on the nonresident return.

UltraTax/1040-IN prints a copy of the other state returns with the Indiana return if credit for taxes paid to the other state has been calculated.

Enter the postal code of the state for which credit for taxes paid is being claimed. For credit for taxes paid to a foreign country, enter a period (".") in the Postal code field and enter the name of country. If federal Form 1116 is present, UltraTax/1040-IN automatically attaches the federal form to the Indiana return when a period appears in this field and Schedule 6 or Schedule G reflects a credit for taxes paid to other state or foreign country.

If you are using UltraTax CS to complete a nonresident return or to complete a resident return for Arizona, or Oregon, UltraTax/1040-IN completes these fields. Use the Force field to enter these amounts if they are different from the calculated amount. If you are not using UltraTax CS to file a return and want to claim this credit, enter the amounts from that state’s return in the Force field.

If you are using UltraTax CS to complete a nonresident return or to complete a resident return for Arizona, or Oregon, UltraTax/1040-IN completes these fields. Use the Force field to enter these amounts if they are different from the calculated amount. If you are not using UltraTax CS to file a return and want to claim this credit, enter the amounts from that state’s return in the Force field.

Enter the portion of Other state equivalent of Indiana adjusted gross income (as determined under Indiana tax law) received while a resident of other state that is attributable to Indiana sources. This field applies only to states with the reverse agreement (Arizona, District of Columbia, Oregon) for other state credit.

Enter the Indiana state income tax paid on the Indiana source income attributable to other state residency period. This field applies only to states with the reverse agreement (Arizona, District of Columbia, Oregon) for other state credit.

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