1040-IN: Military income deductions

Alerts and notices

Overview

Indiana allows deductions on Schedule 2 or Schedule C for wages or retirement pension attributable to military service or military retirement. The deductions are limited to the extent that the amounts are included in federal AGI and cannot exceed certain maximum amounts per qualifying person.

Data Entry

  • 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. The deduction is reported as a Code 613 amount on Schedule 2 or Schedule C and is capped at $5,000 per qualifying taxpayer.
  • Military Retirement Pension: Use state postal code IN and State use Code 24 - Military Retirement on federal Screen 1099R (in the Retirement folder) to indicate that a pension qualifies for the military retirement deduction on the Indiana return. There is no longer an age restriction for this deduction on the Indiana return, but the pension income must be reflected in federal AGI in order to take the deduction. The deduction is reported as a Code 632 amount on Schedule 2 or Schedule C and is capped at $6,250 per qualifying taxpayer.