1040-IN: Form IT-40RNR (Reciprocal Non-Resident Return, County Tax)

Alerts and notices

Overview

Residents of Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin who have Indiana source wages are not taxed on those wages in Indiana for state income tax purposes. However, those wages are still subject to Indiana county income tax, assuming the taxpayer was employed in an Indiana county as of January 1 of the tax year. Instead of filing Form IT-40PNR, taxpayers may file Form IT-40RNR, a wages-only return, in order to calculate the county tax if they meet certain conditions.

Requirements to file Form IT40-RNR

Per guidance of the Indiana Department of Revenue, an Indiana full-year nonresident taxpayer is eligible to file Form IT-40RNR only if they meet the following conditions:

  • Taxpayer is a full year resident of KY, MI, OH, PA, or WI. If taxpayer resided in any other state or had more than one state of residency during the year, taxpayer must file Form IT-40PNR.
  • Taxpayer’s only Indiana source income is from IN wages reported in Box 16 on the W-2. (Indiana advises that Box 16 wages, not Box 18 wages, are used in determining county taxable income.) If the AGI Worksheet (located in Forms view under the AGI folder) reflects Indiana source income from any other sources, or if income is apportioned via Schedule IT-40PNRA, Form IT-40PNR calculates instead of Form IT-40RNR.
  • Taxpayer’s only source of Indiana withholding is from W-2. If the return reflects any other withholding, including Unemployment withholding, taxpayer must file Form IT-40PNR.
  • Taxpayer did not make any Indiana estimated payments.
  • Taxpayer is not claiming deductions other than those allowed on Form IT-40RNR.
  • Taxpayer is not claiming any credits.

Preparing Form IT-40RNR

  • Choose File > Client Properties > Indiana tab and select Nonresident and mark the IT-40RNR Reciprocal Nonresident Return checkbox.
  • On federal Screen W2, enter IN in Box 15, wages amount in Box 16, State withholding in Box 17, Local withholding in Box 19, and the Locality code ("I" plus the 2-digit county code) in Box 20.
  • On Screen INGen, enter the County of residence as 95, 96, 97, 98, or 99 to indicate taxpayer was a resident of a reciprocal state (KY, MI, OH, PA, WI). Enter the proper 2-digit code for the County of employment as of January 1. If employer withheld Indiana state or county taxes but Indiana principal employment did not begin until after January 1 of the tax year, enter 00 for the County of employment on Screen INGen in order to show that taxpayer is not subject to county tax for the year.
  • On Screen INPYNR, in the State of residency (only one state of residency) field, choose KY, MI, OH, PA, or WI.


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