If you are not a resident of Indiana but you have income from sources in Indiana, you may be required to file and pay Indiana state income tax. If you were a part-year resident of Indiana, you are generally subject to Indiana state tax on all your income from all sources during the part of the year you are a Indiana resident, and on income from Indiana sources during the part of the year you are a nonresident.
According to the Indiana Department of Revenue, you are considered a resident of Indiana if you maintain your legal residence in the state the entire year. You do not have to be physically present in Indiana the entire year to be considered a resident. You would continue to be considered a resident during temporary absences from the state. This includes retired persons who spend the winter months outside the state who maintain their legal residence in Indiana and intend to return. Some of the factors considered include retaining an Indiana driver’s license, voting rights, and/or claiming a homestead deduction on their Indiana home for property tax purposes.
Indiana source income includes salaries, wages, commissions and tips for services performed in Indiana. But according to reciprocal state tax agreements, if you are a resident of Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin you would not be subject to Indiana tax on your income from working in Indiana. You may be subject to a county tax in Indiana.
The Indiana Department of Revenue indicates that pensions, interest and dividends would generally be taxed by the state where you are a resident when you receive them. Income on any real or personal property located in Indiana would be subject to Indiana state income tax. And Indiana source income includes winnings from Indiana riverboats and lotteries. Heirs who are not residents of Indiana would be subject to Indiana tax on income from trusts and estates in Indiana
Income from operating a farm, business, trade or profession in Indiana would be subject to Indiana state tax. Income from stocks, bonds, notes, bank deposits, patents, copyrights, trademarks, and other intellectual property would be taxable in Indiana when the earnings are part of an Indiana business.
Income from a partnership or S corporation doing business in Indiana would be subject to Indiana state income tax. The partnership or S corporation should provide you with a Form IN-K1 that shows the apportioned amount of the income taxable in Indiana. As indicated by the Indiana Department of Revenue, a partnership or S corporation in Indiana is required to withhold Indiana state and county tax on behalf of nonresident partners or shareholders, unless they opt out, and file and pay the tax on a composite return. So if you are a nonresident and your only Indiana income is from a partnership or S corporation, and you are included on a composite return, you would not have to file an individual Indiana tax return.
If you are a nonresident and your only income from Indiana sources is from unemployment compensation, pensions, interest or dividends that are not part of doing business in Indiana, you would not have to file an Indiana state income tax return.
Military personnel who are stationed in Indiana but are residents of another state would not have to file an Indiana income tax return unless they have non-military income from Indiana sources. And a non-military spouse who is a not a resident of Indiana and is in the state only to be with the spouse who is a military service member stationed there is not subject to Indiana state tax on income for services performed in Indiana.
If you are a nonresident or part-year resident of Indiana and are required to file, you must use Form IT-40PNR, Part-Year Resident or Nonresident Individual Income Tax Return. If you have income from a business operated in and outside Indiana, the income would be apportioned on Schedule A of Form IT-40PNR.
According to the Indiana Department of Revenue, if you are resident of Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin, and your only income from Indiana was from wages, salaries, tips or commissions, you would file Form IT-40RNR, Indiana Reciprocal Nonresident Individual Income Tax Return. But if you had other types of income from Indiana, such as income from a farm, rental income, or income from a business you operate in Indiana, you would file Form IT-40PNR. If you are subject to a county tax in Indiana, you would file Schedule CT-40PNR, County Tax Schedule for Part-Year and Full-Year Indiana Nonresidents.
The Indiana Department of Revenue points out that if you are married and file a joint federal tax return you must file a joint return for Indiana. And if you file separate federal returns you would also have to file separate returns in Indiana. As of 2013, same-sex couples must file separate returns in Indiana according to state law.
Individual Income Tax Forms, Indiana Department of Revenue
Residency Status, Indiana Department of Revenue