Screen INCr - Indiana Credits (1040)

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See also: 1040 Indiana frequently asked questions

Overview

Use this screen to complete Forms IT-40, IT-40PNR, and SC-40 as well as Schedules 5, F, 6, G, and CC-40.

Refundable Credits

Use this section to enter information about refundable credits.

UltraTax/1040-IN uses date of birth, date of death, income, residency status, and date return filed to determine the allowable Unified Tax Credit for the Elderly, if any. If other factors preclude the taxpayer from qualifying for the credit, mark this field to suppress the calculation of the Unified Tax Credit.

UltraTax/1040-IN uses amounts which include both Code 1 (Principal residence) and State Use code 1 (Payment qualifies for Lake County property tax credit) in the Real estate statement dialog in the Tax Expenses section of federal Screen A to determine qualifying payments for the Lake County property tax credit. Use this field to enter an amount different than the calculated amount.

If claiming the Lake County property tax credit, taxpayer may not claim the Homeowner’s residential property tax deduction.

In order to claim the Lake County property tax credit, Modified Indiana Adjusted Gross Income (as calculated by the Lake County Credit Worksheet) must not exceed $18,600. UltraTax CS calculates the Indiana Lake County Credit Worksheet per guidance from the Indiana Department of Revenue. If data entry includes payments of real estate taxes, UltraTax CS excludes the amount when determining Modified Indiana AGI. For more information, see 1040-IN: Lake County Refundable Property Tax Credit.

Earned Income Credit

Use this section is to calculate Schedule IN-EIC and the various applicable worksheets.

Dependents entered on federal Screen 1040 transfer to this statement dialog for Schedule IN-EIC purposes. A dependent with a "Months in Home" code 77 or 88 that qualify for Indiana EIC, may require a manual entry in even or odd years. The child months in the home are considered to be 12 when codes 77 or 88 are present. Enter the actual number of months in home if less than 12. Use the Relation Code drop-down list for a qualifying relative or unrelated foster child when applicable. UltraTax CS uses the information in this statement dialog to determine if the child is a qualifying child for Indiana EIC purposes. Use the Qualifies for EIC (Force) column if you otherwise determine the child does or does not qualify.

UltraTax CS uses the available dependent information to determine a child lived with you. Use this field to force a child did or did not live with you.

Nontaxable combat pay may increase or decrease the amount of Indiana earned income credit. Mark this box if nontaxable combat pay is elected to be included in earned income.

UltraTax CS uses local wages amounts with State Use code 18 from federal Screen W2 Box 18 to calculate the Non-Indiana Locality Earnings Deduction on Schedule 2 or Schedule C as well as for the Indiana Credit for Local Taxes Paid Outside Indiana Worksheet. Use these fields to force the taxpayer and spouse amounts of non-Indiana locality earnings to use in the calculations.

These amounts are also reported in Section 1 of Schedule CT-40 and Schedule CT-40PNR when taxpayer and/or spouse are subject to income tax in the county of residence.

UltraTax CS uses the federal information to determine if any of these conditions exist. Use this field to enter an answer different than the calculated one.

Nonrefundable Credits

Use this section to calculate Schedule 6, Schedule G, Schedule IN-OCC, and Schedule CC-40.

When calculating Schedule 6 or Schedule G credits against state income tax, UltraTax CS calculates credits in the following order:

The calculation of nonrefundable credits is limited to the amount of state income tax available after consideration of previous credits. If taxpayer has credits eligible for carryover to future years, it may be helpful to sort the credits in the Other credits statement dialog by the Expiration Year. To do so, click on the "Expiration Year" column heading.

Note: In certain circumstances, certain credits are required to be used before other credits. Use the Amt to use Sch 6/G column of the Other Credits statement dialog to change the amount of credit used on the current year return and to track carryover to next year.

Schedule IN-529 - Education Savings Plan Credit

To calculate Schedule IN-529, Indiana’s CollegeChoice 529 Education Savings Plan Credit, enter the following data in federal Screen 1099Q, in the Educate folder:

State postal code = IN Amount contributed in current year State use code 16 Account number (All numeric - 11 digits starting with 61 or 62, 10 digits starting with 200, 201, or 208, or 16 digits starting with 200 or 201

UltraTax CS uses amounts with State Use code 18 from federal Screen W2, in the Income folder, Box 18 (Local wages) to calculate the Indiana Credit for Local Taxes Paid Outside Indiana Worksheet. Use these fields to force the taxpayer and spouse amounts of income taxed by non-Indiana locality used on the worksheet.

UltraTax CS uses local withholding entered in federal Screen W2, local wages with State Use code 18 entered in federal Screen W2 (or the amounts from the Income taxed by non-Indiana locality (Force) fields), the appropriate Indiana county tax rate, and the county tax reported on Form IT-40 or Form IT-40PNR to calculate the Indiana Credit for Local Taxes Paid Outside Indiana Worksheet. Enter an amount here to suppress the default calculations on the worksheet. When there is an entry in this field, the credit on Schedule 6 or Schedule G is limited to the lesser of the amount entered here or the county tax reported on Form IT-40 or Form IT-40PNR.

Enter the full amount of the Community Revitalization Enhancement District Credit; UltraTax CS automatically allocates the amounts to offset local and state liabilities.

Educator expense amounts with IN postal code and State Use code 1 entered in the statement dialog on federal Screen OtherAdj transfer to this statement dialog. Enter any qualifying expenses not entered at the federal level. UltraTax CS uses the information in this statement dialog to calculate the Public School Educator Expense Credit for Schedule 6 or Schedule G. The taxpayer portion of the credit is the lesser of taxpayer total qualifying expenses or $100. Likewise, for Married Filing Joint taxpayers, the spouse portion of the credit is the lesser of spouse total qualifying expenses or $100. The credit is further limited to state tax available after consideration of the Schedule CC-40 credit, Other State Credit, Schedule IN-529 credit, and Adoption Credit.

Note: Not all expenses qualify for both the federal deduction and the Indiana credit. Use State Use code 1 in the statement dialog on federal Screen OtherAdj if an expense qualifies for both the federal deduction and the Indiana credit. Leave the State Use code field blank on the federal screen if the expense does not qualify for the Indiana credit. Enter the qualifying amount here if the expense qualifies for the Indiana credit but not the federal deduction.

Information in this statement dialog is used to calculate other nonrefundable credits to report on Schedule 6, Schedule G, and Schedule IN-OCC.

For credits reported on Schedule IN-OCC, include Federal ID and Certification Year or enter Current Year Certification/Project Number.

The calculation of nonrefundable credits is limited to the amount of state income tax available after consideration of previous credits. It may be helpful to sort the credits in the Other credits statement dialog by the Expiration Year. To do so, click the Expiration Year column heading.

Indiana law requires certain credits to be used before other credits. Use the Amt to use on Sch 6/G column of the Other Credits statement dialog to change the amount of credit used on the current year return and to track carryover to next year.

Code

UltraTax CS proformas the credit code from last year.

Carryforward from Prior Years

Enter the carryforward amount from prior years. UltraTax CS proformas this amount if entered in the statement dialog in the prior year.

Amt Generated Current Year

Enter the amount of new credit generated in the current year.

Amount Available

This is a non-enterable column. UltraTax CS automatically totals the amounts for carryforward from prior years and amount generated in the current year.

Amt to Use on Sch 6/G

UltraTax CS automatically updates this field with the Amount Available. If total credits exceed available state income tax (after consideration of other credits), change this amount to the amount that will be claimed on the return.

UltraTax CS issues a critical diagnostic message if this amount exceeds the amount claimed on the return.

Eligible to Carry Forward?

If there is unused portion of the credit, enter 1 to indicate that the credit is eligible to carry forward to next year.

Amount to Carry Forward

If 1 is entered in the Eligible to Carry Forward column, UltraTax CS calculates the difference between the amount available and the amount to use on the current year return. UltraTax CS proformas this amount to next year.

Expiration Year

This column is not used in the calculation of the return. However, it may be helpful to sort the credits in this statement dialog by the Expiration Year if there are credits eligible for carryforward as UltraTax CS calculates Other credits for Schedule 6 and Schedule G according to the order in which they appear in this statement dialog. To sort, click the Expiration Year column heading.

UltraTax CS displays a diagnostic message if the Expiration Year precedes the Current Year.

Prior Year Certification Number

UltraTax CS proformas the Certification Number entered in this statement dialog in the prior year version of UltraTax CS. Information in this column is not reported on Schedule IN-OCC.

Use Prior Year Certification Number

When you enter X in this column, UltraTax CS updates the column for Current Year Certification Number with the Prior Year Certification Number.

Current Year Certification Number

UltraTax CS reports the information from this column on Schedule IN-OCC.

Code 859 - Adoption Credit (Force)

UltraTax CS automatically calculates the Indiana Adoption Credit Worksheet based on information for children reported on Federal Form 8839, Unit 1. If there are more than three children reported on Form 8839, use Code 859 to force the Adoption Credit amount eligible to report on Schedule 6 or Schedule G.

To calculate Schedule CC-40 for the current year, use one of the following methods to enter data for qualifying contributions:

Federal Screen A - Cash contributions:

Enter current-year contributions, including Date, State Use code 24, and applicable four-digit State Institution Code in the Cash or check charitable contributions statement dialog on federal Screen A. The information transfers directly to Schedule CC-40.

Federal Screen A - Noncash contributions:

Enter current-year contributions, including Date, State Use code 24, and applicable four-digit State Institution Code in the Noncash charitable contributions statement dialog on federal Screen A. The information transfers directly to Schedule CC-40.

Contributions not entered on federal Screen A:

For contributions entered elsewhere, such as via K-1 activity or via federal Screens 8283P1, 8283P2, or 1098C, enter complete information in this statement dialog.

UltraTax CS proformas information to these fields from prior year Form 8839. These fields along with information from federal Form 8839 are used in the calculation of the Indiana Adoption Credit Worksheet. Effective for tax year 2015 and beyond, Indiana taxpayers are eligible to claim an Adoption credit, typically calculated as a percentage of the federal Adoption credit, subject to certain restrictions. Specifically, the current year federal adoption credit is calculated based on adoption expenses incurred during the current year plus carryover credit from prior years. Starting with tax year 2012, unused federal credit may be carried forward for 5 years. However, since Indiana did not adopt the credit until 2015, the current year Indiana credit is based on federal credit attributable to current year expenses and federal carryover from 2015 or thereafter. Taxpayers are not eligible to claim any Indiana Adoption Credit based on federal carryover from 2014 or earlier.

Credit Recapture

Use this section to calculate Schedule IN-529R, Recapture of Indiana’s CollegeChoice 529 Education Savings Plan Credit and Schedules 3 & 4.

Enter data in this statement dialog to recapture all or a part of any prior year tax credit allowed due to a non-qualified distribution from a CollegeChoice 529 educational savings plan. Information entered here is reported on Schedule IN-529R.

Enter information for a current year tax credit on federal Screen 1099Q, in the Educate folder. See 1040-IN: Schedule IN-529 - Education Savings Plan Credit for more information on current year credits.

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