1040-IN: Allocation and Apportionment (IT-40PNRA)

Alerts and notices

Overview

For part-year residents and nonresidents, income from a Schedule C, Rental, Farm, or Farm Rental activity can be allocated and/or apportioned to Indiana to determine the amount taxable if less than 100 percent of the total income for the activity is taxable in Indiana.

Allocation

For Indiana purposes, any Schedule C, Rental, Farm, or Farm Rental income taxable to the residency period is typically handled via Allocation if less than 100 percent of the total income is taxable to Indiana.

For part-year residents, enter the percentage of income attributable to the residency period via the Allocation spreadsheet Allocation on the federal C, Rent, F, or 4835 screens. The amount allocated to the Indiana residency period is part of the AGI Worksheet and on Schedule A, column B for the lines for business income, rental income, or farm income.

For nonresidents, don't enter an allocation percentage in the Allocation spreadsheet if income is subject to apportionment. The difference between total income and the income allocated to Indiana (if any) is subject to Apportionment to determine the taxable amount from the nonresident period.

Apportionment

The amount of non-allocated income (the difference between total income and the amount allocated to the residency period, if any) transfers to the INPNRA screen in the Income and Adjustments folder. In the Total Sales field, enter the Within Indiana portion. This information calculates Schedule IT-40PNRA to determine the portion of income subject to apportionment that is taxable in Indiana. The taxable amount from Schedule IT-40PNRA reports on Schedule A, column B, line for apportioned income.

If none of the non-allocated income is taxable to Indiana, leave the Indiana factors blank in the INPNRA screen.

Note: The Indiana instate portion of self-employment tax adjustment reported on Schedule A does not account for taxable income from apportionment. Use the AGI Worksheet to override the Self-Employment tax adjustment to report on Schedule A. An activity is treated as 100 percent allocated to Indiana (and therefore not subject to apportionment) if either of the following apply:
  • You enter an IN postal code in the federal screen for a particular activity, and don't enter anything in the State allocation spreadsheet.
  • You enter information in the State allocation spreadsheet to allocate 100 percent of federal net income to Indiana.

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