Screen INAdj - Indiana Adjustments to Income (1040)

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See also: 1040 Indiana frequently asked questions

Overview

Use this screen to complete Form IT-40, Schedule 1, Form IT-40PNR, Schedule B, and the Taxable Income Worksheet.

Add-Backs

Use this section to enter add-backs reported on Schedule 1, Schedule B, and the Indiana Taxable Income Worksheet.

Deductions

Use this section to enter deductions reported on Schedule 2, Schedule C, and the Indiana Taxable Income Worksheet.

Military Service Deduction

Indiana allows a deduction on Schedule 2 or Schedule C for wages or retirement pension attributable to military service. The deductions are limited to the extent that the amounts are included in federal AGI and are capped at a combined limit (for wages and retirement) of $5,000 per qualifying person.

Enter data in federal screens as follows:

Military Wages: Use the appropriate wage code on federal Screen W2, in the Income folder, to indicate military wages. There is no age restriction for the deduction on the Indiana return, but wages must be reflected in Federal AGI in order to take the deduction.

Military Retirement Pension: Use state postal code IN and State use Code 24 - Military Retirement on federal Screen 1099R, located under the Retirement folder, to indicate that a pension qualifies for the military retirement deduction on the Indiana return. The pension income must be reflected in federal AGI to take the deduction. The deduction is allowed only for those taxpayers who were at least 60 years old by the end of the tax year.

Unemployment compensation deductions

Indiana allows deductions on Schedule 2 or Schedule C for certain unemployment compensation included in federal AGI.

Railroad Unemployment: The full amount of Unemployment compensation received entered on federal Screen Income (Income folder) with IN postal code and State Use code 2 (Railroad Unemployment) is reported as a code 624 deduction on Schedule 2 or Schedule C.

Non-Railroad Unemployment: For Unemployment compensation received entered on federal Screen Income that does not have State Use Code 2, UltraTax CS calculates the Indiana Unemployment Compensation Worksheet. The allowable deduction calculated by the worksheet is reported as Nontaxable portion of unemployment compensation on Schedule 2 or Schedule C.

Civil Service Annuity Deduction

Indiana allows a deduction on Schedule 2 or Schedule C for certain pension income attributable to Civil Service Annuity included in federal AGI. For qualifying payments received by the taxpayer or spouse, the Civil Service Annuity Deduction Worksheet uses amounts of pension income included in federal AGI that are attributable to data entry on units of federal Screen 1099R with Indiana State use code 60 (Qualifying Civil Service Annuity amount subject to Age 62 restriction) and Indiana State use code 66 (Qualifying Civil Service Annuity amount under the Deceased Spouse rule, not subject to age restriction).

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