Indiana IT-40 Income Tax Instruction Booklet

IT-40 Income Tax Instruction Booklet
IT-40 Full Year Resident Individual Income Tax Booklet
INDIANA

2 0 2 4

IT-40

Full-Year Resident

Individual Income Tax Booklet

freefile.dor.in.gov  FAST • FRIENDLY • FREE

WAIT!
YOU MAY QUALIFY FOR FREE ONLINE TAX FILING!

The majority of Indiana taxpayers file electronically every year. Consider the benefits of filing electronically:
•	

Faster Refund. Electronic filing reduces errors and expedites refund time – within 10 to 14 days
(compared with 10 to 12 weeks for a paper return).

•	

Fewer Errors. Up to 20 percent of paper-filed returns have errors, which can result in delays and possible
penalty and/or interest for the taxpayer. Returns filed electronically, however, are 98 percent accurate.

•	

Easier Filing. You won’t have to complete the many complicated forms in this booklet. Instead, you go online,
answer some easy questions, and before you know it your taxes are complete.

You may be eligible to file your taxes online for FREE with INfreefile. Go to www.in.gov/dor/i-am-a/individual/infreefile
to see if you qualify or learn more about INfreefile on page 4.

SP 265
(R25 / 9-24)

Which Indiana Tax Form Should You File?

•	

Indiana has three different individual income tax returns. Read the
following to find the right one for you to file.

•	

Form IT-40 for Full-Year Residents

Use Form IT-40 if you (and your spouse, if married filing jointly) were
full-year Indiana residents.

Form IT-40PNR for Part-Year and Full-Year
Nonresidents

Use Form IT-40PNR if you (and your spouse, if married filing jointly):
•	 Were Indiana residents for less than a full-year or not at all, or
•	 Are filing jointly and one was a full-year Indiana resident and the
other was not a full-year Indiana resident, and
•	 Do not qualify to file Form IT-40RNR.

Form IT-40RNR for Full-Year Residents of Reciprocal
States

Use Form IT-40RNR if you (and your spouse, if married filing jointly)
were:
•	 Full-year residents of Kentucky, Michigan, Ohio, Pennsylvania or
Wisconsin, and
•	 The only type of income from Indiana was from wage, tip, salary
or other compensation.*

•	

•	

•	

•	

•	

*You are required to file Form IT-40PNR if you have any other kind of
Indiana-source income.
Note. If you have income that is being taxed by both Indiana and
another state, you may have to file a tax return with the other state.

Military Personnel

A new credit, Attainable Homeownership Tax Credit (875), is
available for certain contributions to Habitat for Humanity of
Indiana. See page 39 for additional information.
A new credit, Benefit Corporation Employment of Individuals
with Disability Tax Credit (881), is available for benefit
corporations who hire new employees with disabilities and
are placed with the benefit corporations through a vocational
rehabilitation program. See page 39 for additional information.
A new credit, Employer Child Care Expenditure Credit (876), is
available for employers who make qualified expenditures related
to the construction of child care facilities for employees’ children.
See page 40 for additional information.
A new credit, Employment of Individuals with Disability Tax
Credit (877), is available for employers who hire new employees
with disabilities and are placed with the employer through a
vocational rehabilitation program. See page 40 for additional
information.
A new credit, Health Reimbursement Arrangement Credit
(878), is available for certain employers who create health
reimbursement arrangements for their employees in 2024 or later.
See page 42 for additional information.
A new credit, Historic Rehabilitation Tax Credit (879), is
available for taxpayers who incur approved qualified rehabilitation
expenditures for the restoration and preservation of qualified
historic structures. See page 42 for additional information.
A new credit, Physician Practice Ownership Credit (880), has
been added for primary care physicians who own interests in
newly-created entities that provide primary care services. See page
44 for more details.

Deductions
•	

A new deduction, Health Care Sharing Ministry Deduction
(643), has been added for payments made to health sharing
ministries for membership in those ministries. See page 21 for
more information.
For 2024, the deduction for active duty military compensation has
been increased to 100% of compensation. See page 18 for more
information.

See the instructions on page 7 to determine which form to file.
Military personnel stationed in a combat zone should see the
instructions on page 7 for extension of time to file procedures.

•	

2024 Changes

Other Changes

Conformity Updates. Line 1 of Form IT-40 assumes conformity with
the Internal Revenue Code of 1986, as amended and in effect on Jan. 1,
2023. If the 2025 Indiana General Assembly does not conform to the
most current changes to the Internal Revenue Code, you may have to
amend your tax return at a later date to reflect any differences between
Indiana and federal law. You may wish to periodically check DOR’s
homepage at www.in.gov/dor for updates.

Add-backs
•	

A new add-back, NOL Reduction Due to Debt Discharge (155),
is being added for 2024 for purposes of reporting net operating
loss carryforwards eliminated as a result of debt discharges. See
page 14 for additional information.

•	

•	

NOL Modifications. A new schedule, Schedule NOL-MOD,
is available for 2024. This schedule allows for the current-year
reporting of certain federal modifications to net operating losses,
reporting of certain losses not directly reported on your return,
and reduction of losses resulting from certain debt discharges.
Schedule IN-OCC Form Changes. For 2024, Schedule IN-OCC
includes a new Part B. Part B is used to report:
ο	 Any credits that are being carried forward from previous years.
ο	 Any credits that are not fully used and being carried forward
to future years.
ο	 Any credits that are not fully used, even if the credit is not
available for future carryforward.

Credits
•	

A new credit, ABLE 529A Account Credit (872), is available for
contributors to Indiana ABLE Accounts. See page 39 for more
information.
IT-40 Booklet 2024

Page 3

Need Tax Forms or Information Bulletins?
Use Your Personal Computer

Internet Address

If you need help deciding which form to file, or need to get
information bulletins or policy directives on specific topics, visit our
website at www.in.gov/dor.

Visit our website and download the forms you need. Our address for
tax forms is www.in.gov/dor/tax-forms. Information Bulletins are
available at www.in.gov/dor/resources/tax-library.

Ready to File Your Return?

Visit a District Office

Use an Electronic Filing Program

Some tax forms are available at district offices located throughout the
state. These offices are open Monday - Friday, 8 a.m. to 4:30 p.m. local
time. Visit www.in.gov/dor/about/district-offices for a list of these
offices, including addresses and telephone numbers.

Need Help With Your Return?
INTIME e-Services Portal Available

INTIME, DOR’s e-services tax portal available at intime.dor.in.gov,
provides the following functionalities for Individual customers:
•	 Make payments using a bank account or credit card
•	 View and respond to correspondence from DOR
•	 Request and print return transcripts on-demand
•	 Electronic delivery of correspondence
•	 Online customer service support through secure messaging

Increased Online Support for Tax Preparers

In addition to the functionality listed above, INTIME provides
increased access and functionality for tax preparers. INTIME provides
the following functionality for tax preparers:
•	 Gain access to view and manage multiple customers under one
login
•	 Ability to file returns, make payments, and view file and pay
history for clients
•	 Request electronic power of attorney (ePOA) authorization to
view customer accounts
•	 View and respond to correspondence for clients
We strongly encourage all taxpayers to make payments and file returns
electronically whenever possible. INTIME allows customers to make
estimated payments electronically with just a few clicks.

Local Help

You may be eligible to take advantage of the IRS Volunteer Return
Preparation Program (VRPP). This program offers free tax return
help to low income, elderly and special needs individuals. Volunteers
will fill out federal and state forms for those who qualify. Call the IRS
at 1-800-829-1040 to find the nearest VRPP location. Be sure to take
your W-2s, 1099s and a copy of last year’s state and federal tax returns.

Information Line

Call the information line at 317-232-2240 to get the status of your
refund, billing and payment plan information, a copy of your tax
return, or prerecorded tax topics. If you wish to check for billing
information, be sure to have a copy of your tax notice. The system will
ask you to enter the tax identification number shown on the notice. To
speak to a representative, please call during regular business hours, 8
a.m. to 4:30 p.m., Monday - Friday.
Page 4

IT-40 Booklet 2024

A majority of Hoosier taxpayers use an electronic filing program
to file their state and federal individual income tax returns every
year. Electronic filing provides Indiana taxpayers the opportunity
to file their federal and state tax returns immediately, and receive
their Indiana refunds in about half the time it takes to process a
paper return. It takes even less time if you use direct deposit, which
deposits your refund directly into your bank account. Even if there
is an amount due on either return, Indiana taxpayers can still file
electronically and feel comfortable knowing that the returns were
received by the IRS and the Indiana Department of Revenue (DOR).
Use an electronic vendor or contact your tax preparer to see if he or
she provides this service.

INfreefile

This tax season Indiana continues to offer a free tax filing service
through the cooperation of the Free File Alliance. Eligible Indiana
taxpayers can file both the federal and Indiana individual tax returns
using highly interactive and easy-to-use web-based applications that
speed both returns and refunds. You can choose from a list of multiple
vendors that provide this free service. DOR estimates nearly 2 million
Indiana taxpayers are eligible for this free service. See if you are
eligible by visiting www.in.gov/dor/i-am-a/individual/infreefile.

Our Website

Our website offers tax filing options, a Spanish version of the IT-40
booklet with forms, downloadable blank forms and instructions,
information bulletins, an online helpdesk, helpful email links and a
calendar with filing due dates. Visit DOR’s website at www.in.gov/dor.

Moving?

Notify DOR if you move to a new address after filing your tax return,
Change your address with us by doing one of the following:
•	 Use DOR’s e-services portal, the Indiana Taxpayer Information
Management Engine (INTIME), to change your address at
intime.dor.in.gov. INTIME offers customers the ability to manage
their tax account(s) in one convenient location, 24/7.
You can change your address by creating an INTIME log on. Once
logged in, go to the “All Actions” tab and locate the “Update Name
and Addresses” panel and select the “Addresses” tab.
An INTIME User Guide for Individual Income Tax Customers is
available at www.in.gov/dor/files/intime-individual-guide.pdf to
help you through the process.
•	 Fax your request, including your Social Security number, old
address, new address and signature, to 317-615-2608.
•	 Mail the request, including your Social Security number, old
address, new address and signature, to Indiana Department of
Revenue, P.O. Box 6197, Indianapolis, IN 46206-6197.
•	 Visit one of our District Offices (find locations here:
www.in.gov/dor/about/district-offices) in person. Make sure to bring
your Social Security number, old address, and new address with you.

Filing an Amended (Corrected) Tax Return

If you need to amend (correct) your 2024 individual income tax return
after you initially filed:
•	 Prepare another IT-40 return that reflects all changes and check
the “Amended” box on the front page. Failure to do so can delay
processing.
•	 Include a copy of all required schedules reflecting all changes and
documentation. Failure to do so can delay processing.
•	 File the amended return electronically, if possible.
Note. All amounts previously paid should be reported as an estimated
payment. All refunds previously received should not be reported on an
amended filing.
If you are filing an amended return for 2024 reporting additional tax
and you previously received a refund, DOR will issue either a notice of
proposed assessment or demand for payment to request repayment of
the refund plus interest and penalty.
The Form IT-40 and supporting schedules are located at
www.in.gov/dor/tax-forms/individual/current. For prior years,
please see the instructions for that year.

Annual Public Hearing

In accordance with the Indiana Taxpayer Bill of Rights, DOR will conduct
an annual public hearing in Indianapolis in June 2025. Event details will
be listed at www.in.gov/dor/about/news-publications/public-hearings.
Please come and share feedback or comments about how DOR can
better administer Indiana tax laws. If not able to attend, please submit
feedback or comments in writing to: Indiana Department of Revenue,
Commissioner’s Office, MS# 101, 100 N. Senate Avenue, Indianapolis,
IN 46204. Our homepage provides access to forms, information
bulletins and directives, tax publications, email, and various filing
options. Visit www.in.gov/dor.

Before You Begin
Important. You must complete your federal tax return first.

Filling in the Boxes – Please Use Ink

If you are filling out the form by hand, please use black or blue ink and
print your letters and numbers neatly within each box. If you do not
have an entry for a particular line, leave it blank. Do not use dashes,
zeros or other symbols to indicate that you have no entry for that line.

Social Security Number

Be sure to enter your full 9-digit Social Security number in the boxes
at the top of the form. If filing a joint return, enter your Social Security
number in the first set of boxes and your spouse’s full 9-digit Social
Security number in the second set of boxes. An incorrect or missing
Social Security number can increase your tax due, reduce your refund,
or delay timely processing of your filing.

Individual Taxpayer Identification Number (ITIN)

to get an ITIN, contact the IRS at 1-800-829-3676 and request federal
Form W-7, or find it online at www.irs.gov.

Name and Suffix

Please use all capital letters when entering your information. For
example, Jim Smith Junior should be entered as JIM SMITH JR.
Name. If your last name includes an apostrophe, do not use it. For
example, enter O’Shea as OSHEA. If your name includes a hyphen, use
it. For example, enter SMITH-JONES.
Suffix. Enter the suffix associated with your name in the appropriate
box.
•	 Use JR for junior and SR for senior.
•	 Numeric characters must be replaced by alphabetic Roman
Numerals. For example, if your last name is Charles 3rd, do not
use 3rd; instead, enter III in the suffix field.
•	 Do not enter any titles or designations, such as M.D., Ph. D., RET.,
Minor or DEC’D.

Married Filing Requirements
•	
•	

•	

Married Filing Jointly
If you filed your federal income tax return as married filing
jointly, you also must file married filing jointly with Indiana.
Married Filing Separately
If you file your federal income tax return as married filing
separately, you must also file as married filing separately with
Indiana. Enter both of your Social Security numbers in the
boxes on the top of the form, and then check the box directly to
the right of those boxes. Enter the name of the person filing the
return on the top line, but do not enter the spouse’s name on the
second name line.
Married Persons Who Live Apart Filing Status
If you were not divorced or legally separated during the tax year
you may have qualified for and filed as ‘head of household’ on
your federal income tax return. If you did, do not check the
married filing separately box. Also, do not enter either your
spouse’s name or Social Security number.

Military Address

Overseas military addresses must contain the APO, FPO designation
in the “city” field along with a two-character “state” abbreviation of
AE, AP, or AA and the ZIP code. Place these two- and three-letter
designations in the city name area.

ZIP/Postal Code

Enter your five- or nine-digit ZIP code (do not use a dash). For
example, enter 46217 or 462174540. If filing with a foreign address,
enter the associated postal code.

Foreign Country Code

Complete this area if the address you are using is located in a foreign
country. Enter the 2-character foreign country code, which may be
found online at
www.in.gov/dor/resources/tax-library/foreign-country-code-listing.

If you already have an ITIN, enter it wherever your Social Security
number is requested on your tax return. If you are in the process of
applying for an ITIN, check the box located directly beneath the Social
Security number area at the top of the form. For information on how
IT-40 Booklet 2024

Page 5

County Information

Enter the two-digit code numbers for the county(s) where you and
your spouse, if filing jointly, lived and worked on Jan. 1, 2024. You
can find these code numbers on the chart found on the back of
Schedule CT-40. See the instructions beginning on page 51 for
more information, including the definitions of the county where
you live and work, details for military personnel, retired individuals,
homemakers, unemployed individuals, out-of-state filers, etc.

Refund Check Address

Your refund check will be issued in the name(s), address and Social
Security number(s) shown on your tax return. It is very important that
this information is correct and legible. Any wrong information will
delay your refund.

Rounding Required

Each line on which an amount can be entered has “.00” already filled
in. This is to let you know that rounding is required when completing
your tax return.
You must round your amounts to the nearest whole dollar.
To do this, drop amounts of less than $0.50.
Example. $432.49 rounds down to $432.00.
Increase amounts of $0.50 or more to the next higher dollar.
Example. $432.50 rounds up to $433.00.

Losses or Negative Entries

When reporting a loss or negative entry, use a negative sign.
Example. Write a $125 loss as -125.

Commas

Do not use commas when entering amounts. For instance, express
1,000 as 1000.

Enclosing Schedules, W-2s, Etc.

Use only DOR-issued or DOR-permitted forms and schedules. Failure
to use correct forms and schedules could result in disallowance of
deductions or credits and will delay processing your return. You will
find an enclosure sequence number in the upper right-hand corner
of each schedule. Make sure to put your completed schedules in
sequential order behind the IT-40 when assembling your tax return.
Do not staple or paper clip your enclosures. If you have a schedule
on which you’ve made no entry, do not enclose it unless you have
completed information on the back of it.
Also, enclose:
•	 All W-2s, 1099s, Forms IN-MSID-A and IN K-1s on which
Indiana state and/or county tax withholding amounts appear
•	 All IN K-1s on which pass through entity tax amounts appear
•	 All 1099Gs showing unemployment compensation
•	 A check/money order, if applicable
A note about your W-2s. It is important that your W-2 form is
readable. The income and state and county tax amounts withheld are
verified on every W-2 form that comes in with your tax return. We
encourage you to enclose the best copy available when you file.
Page 6

IT-40 Booklet 2024

Who Should File?

You may need to file an Indiana income tax return if:
•	 You lived in Indiana and received income, or
•	 You lived outside Indiana and had any income from Indiana.
Filing Status Requirement. If you and your spouse file a joint federal
tax return, you must file a joint tax return with Indiana. If you and
your spouse file separate federal tax returns, you must file separate tax
returns with Indiana.
Note. There are three types of Indiana tax returns available. The type
you need to file is generally based on your residency status. Read the
following to decide if you are a full-year resident, part-year resident, or
nonresident of Indiana, and which type of return you should file.

Full-Year Residents

If you were a full-year resident of Indiana and your gross income (the
total of all your income before deductions) was greater than certain
exemptions*, you must file an Indiana tax return.
Full-year residents must file Form IT-40, Indiana Full-Year Resident
Individual Income Tax.
You are a full-year Indiana resident if you maintain your legal
residence in Indiana from Jan. 1 – Dec. 31 of the tax year. You
do not have to be physically present in Indiana the entire year to
be considered a full-year resident. Residents, including military
personnel, who leave Indiana for a temporary stay, are considered
residents during their absence.
Retired persons spending part of the year in another state may still be
full-year residents if:
•	 They maintain their legal residence in Indiana and intend to
return to Indiana during part of the taxable year
•	 They retain their Indiana driver’s license
•	 They retain their Indiana voting rights
•	 They claim a homestead deduction on their Indiana home for
property tax purposes
* To figure your exemptions for filing requirement purposes, Indiana
allows a $1,000 exemption for you and a $1,000 exemption for your
spouse (if married filing jointly). You also get a $1,000 exemption
for each dependent you are eligible to claim. See instructions
beginning on page 24 for additional information concerning how
to figure your dependents. If your gross income is less than your total
exemptions figured above, you are not required to file. However, you
may want to file a return to get a refund of any state and/or county
tax withheld by your employer, or other refundable credits, such as an
earned income credit or estimated tax payment.

Part-Year Residents and Full-Year Nonresidents

If you were a part-year resident and received income while you lived
in Indiana, you must file Indiana Form IT-40PNR, Part-Year Resident
or Nonresident Individual Income Tax Return.
If you were a legal resident of another state(s) (exception: see next
paragraph) and had income from Indiana (except certain interest,
dividends, or retirement income), you must file Form IT-40PNR.

Full-Year Residents of Kentucky, Michigan, Ohio,
Pennsylvania or Wisconsin

If you were a full-year resident of Kentucky, Michigan, Ohio,
Pennsylvania or Wisconsin, and your only income from Indiana was
from wages, salaries, tips or commissions, then you need to file Form
IT-40RNR, Indiana Reciprocal Nonresident Individual Income Tax
Return.

Deceased Taxpayers

If an individual died during 2024, or died after Dec. 31, 2024, but
before filing his/her tax return, the executor, administrator or
surviving spouse must file a tax return for the individual if:
•	 The deceased was under the age of 65 and had gross income more
than $1,000
•	 The deceased was age 65 or older and had gross income more
than $2,000, or
•	 The deceased was a nonresident and had gross income from Indiana.
Be sure to enter the month and day of death for the taxpayer or spouse
in the appropriate box located on Schedule 7. For example, a date of
death of Jan. 9, 2024, would be entered as 01/09/2024.
Note. The date of death should not be entered here if the individual
died after Dec. 31, 2024, but before filing the tax return. The date of
death information will be shown on the individual’s 2025 tax return.

Signing the Deceased Individual’s Tax Return

If a joint return is filed by the surviving spouse, the surviving spouse
should sign his or her own name and after the signature write: “Filing
as Surviving Spouse.”
An executor or administrator appointed to the deceased’s estate must
file and sign the return (even if this isn’t the final return), indicating
their relationship after their signature (e.g. administrator).
If there is no executor, or if an administrator has not been appointed,
the person filing the return should sign and give their relationship to
the deceased (e.g. “John Doe, nephew”). Only one tax return should be
filed on behalf of the deceased.
Note. DOR may ask for a copy of the death certificate, so please keep a
copy with your records.

Refund Check for a Deceased Individual

If you (the surviving spouse, administrator, executor or other)
have received a refund check and cannot cash it, contact the State
Comptroller at www.in.gov/comptroller/contact-us to get a widow’s
and distributee’s affidavit (POA-20) or a reissuance of refund (IN1310). Send the completed form, the refund check and a copy of the
death certificate to the State Comptroller so a refund check can be
issued to you.

Military Personnel — Residency

If you were an Indiana resident when you enlisted, you remain an
Indiana resident no matter where you are stationed. You must report
all your income to Indiana on Form IT-40.
If you changed your legal residence (military home of record) during
the tax year, you are a part-year resident and should file Form IT-

40PNR. You must also enclose a copy of Military Form DD-2058 with
the tax return. As an Indiana part-year resident you will be taxed on
the income you earned while you were a resident of Indiana, plus any
income from Indiana sources.
If you are stationed in Indiana and you are a resident of another state,
you won’t need to file with Indiana unless you have non-military
income from Indiana sources.
Example. Annie, who is a Kansas resident, is stationed in Indiana. She
earned $1,300 from her Indiana part-time job. She will need to report
that income to Indiana on Form IT-40PNR.
If you are a full-year Indiana resident in the military, your spouse is a
legal resident of another state and you filed a joint federal return, you
will need to file Form IT-40PNR.
Important. Refer to the instructions on page 51 for an explanation
of county of residence for military personnel.

When Should You File?

Your tax return is due April 15, 2025. If you file after this date and owe
tax, you will owe interest on the unpaid amount and you may owe
penalty, too. See page 11 for more information.
Fiscal year tax returns are due by the fifteenth (15) day of the fourth
(4th) month after the close of the fiscal year. You must complete the
fiscal year filing period information at the top of the Form IT-40.

Extension of Time to File — What if You Can’t File on
Time?
You must get an extension of time to file if you:
•	 Are required to file, and
•	 You cannot file your tax return by the April 15, 2025, due date.
Whether you owe additional tax, are due a refund, or are breaking
even, you still need to get an extension if filing after April 15, 2025.
Note. Indiana’s Application for Extension of Time to File, Form IT-9,
extends the filing date to Nov. 17, 2025.
If You Owe…
Option 1. File Indiana’s Application for Extension of Time to File,
Form IT-9. This must be filed by April 15, 2025, for the extension
request to be valid.
Note. You may file Indiana’s Application for Extension of Time to File
online if you make a payment with it by April 15, 2025. Pay electronically
using DOR’s e-services portal, the Indiana Taxpayer Information
Management Engine (INTIME), by visiting intime.dor.in.gov. INTIME
offers customers the ability to manage their accounts in one convenient
location, 24/7.
Option 2. Filing for a federal application for extension of time to file
with the IRS will automatically provide for a state extension of time to
file. You must file your state tax return by Nov. 17, 2025, paying any
balance due with that filing.
IT-40 Booklet 2024

Page 7

While interest is due on any amount paid after the original April 15 due
date, penalty will be waived if both of the following conditions are met:
•	 The remaining balance due is paid in full by Nov. 17, 2025, and
•	 You paid at least 90% of the tax expected to be owed by the
original April 15 due date.
If You Don’t Owe…
You’ll need to file for an extension if:
•	 You are due a refund, or
•	 You don’t expect to owe any tax when filing your tax return, and
•	 You are unable to file your return by April 15, 2025.
There are two ways to accomplish this:
•	 If you have a federal extension (you filed Form 4868, or made
an extension payment via an electronic filing method), you
automatically have an extension with Indiana and do not have to
file for a separate state extension (Form IT-9).
•	 If you do not have a federal extension, file Form IT-9 by April 15, 2025.
Extension Filing Deadline
Both state Form IT-9 and federal Form 4868 extend your state filing
time to Nov. 17, 2025.
Will You Owe Penalty and/or Interest?
Penalty will not be owed if you have:
•	 Paid 90% of the tax you expect to owe by April 15, 2025,
•	 Filed your tax return by Nov. 17, 2025, and
•	 Paid any remaining amount due (including interest) with that filing.
Interest is owed on all amounts paid after April 15, 2025. See page
11 for instructions on how to figure interest.
Indiana’s Extension of Time to File, Form IT-9
Pay electronically using DOR’s e-services portal, the Indiana Taxpayer
Information Management Engine (INTIME), by visiting intime.dor.in.gov.
INTIME offers customers the ability to manage their accounts in one
convenient location, 24/7. Alternatively, you may access Form IT-9
online at www.in.gov/dor/tax-forms/individual/current. You may file
Indiana’s Application for Extension of Time to File online if you make
a payment with it by April 15, 2025.
Where to Report Your Extension Payment
Add your state extension payment to any estimated tax paid. Report
the total on Schedule 5, line 4.
Military personnel on duty outside of the United States and Puerto
Rico on the filing due date are allowed an automatic 60 day extension of
time to file. A statement must be enclosed with the return verifying that
you were outside of the United States or Puerto Rico on April 15, 2025.
Military personnel in a presidentially declared combat zone have an
automatic extension of 180 days after they leave the combat zone. In
addition, if they are hospitalized outside the United States because of
such service, the 180-day extension period begins after being released
from the hospital. The spouse of such service member must use the
same method of filing for both federal and Indiana (e.g. single or
joint). When filing the return, write “Combat Zone” across the top of
the form (above your Social Security number).
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IT-40 Booklet 2024

Form IT-40: Line-by-line Instructions
Important. You must complete your federal income tax return, Form
1040/1040-SR, before starting your Indiana income tax return. Line
numbers from your federal income tax return are referenced in many
of the following instructions. While every effort has been made to
make the instructions as clear as possible, sometimes the line numbers
change on the federal income tax return after the Indiana forms are
finalized. Please contact us if you are unsure as to whether or not you
are looking at the correct line on your federal income tax return (see
page 4 of this booklet for contact information).

When Not to Fill In a Line

If you do not have an entry for a particular line, leave it blank. Do not
use dashes, zeros or other symbols to indicate that you have no entry
for that line.

Line 1 – Federal Adjusted Gross Income

Enter the adjusted gross income from your federal Form 1040/1040SR, line 11. If you were not required to file a federal return, complete a
“sample” federal return and report the amount you would have shown
on your federal return if you had been required to file.
When reporting a loss or negative entry, use a negative sign.
Example. Write a $125 loss as -125.

Line 2 – Add-Backs

Enter on this line any add-backs from Schedule 1: Add-Backs.
Instructions for Schedule 1 begin on page 12. Make sure to enclose
Schedule 1 when filing.

Line 4 – Deductions

Enter on this line any deductions from Schedule 2: Deductions.
Instructions for Schedule 2 begin on page 16. Make sure to enclose
Schedule 2 when filing.

Line 6 – Exemptions

Enter any exemptions from Schedule 3: Exemptions on this line.
Instructions for Schedule 3 begin on page 24. Make sure to enclose
Schedule 3 when filing.

Line 9 – County Tax

Complete Schedule CT-40 to figure your county tax and enter it here.
Instructions for Schedule CT-40 begin on page 51. Make sure to
enclose Schedule CT-40 when filing.

Line 10 – Other Taxes

Enter any other taxes from Schedule 4: Other Taxes on this line.
Instructions for Schedule 4 begin on page 29. Make sure to enclose
Schedule 4 when filing.

Line 12 – Credits

Enter your credits from Schedule 5: Credits on this line. Instructions
for Schedule 5 begin on page 29. Make sure to enclose Schedule 5
when filing.

Line 13 – Offset Credits

Enter the total of any offset credits reported on Schedule 6: Offset
Credits on this line. Instructions for Schedule 6 begin on page 36.
Make sure to enclose Schedule 6 when filing.

Line 17 – Donation Check-Offs

Enter on this line the total of any donations made on Schedule INDONATE. Make sure to enclose Schedule IN-DONATE, which is
located at the bottom of Schedule 5: Credits, when filing. See page
35 for more information.

Line 19 – Amount to be Applied as a 2025 Estimated
Tax Installment Payment

You should pay estimated tax during the 2025 tax year if:
•	 You have income that will not be subject to Indiana tax
withholding, or
•	 You think the amount withheld will not be enough to pay your tax
liability, and
•	 You expect to owe more than $1,000 when you file your tax
return.
The simplest and most efficient way to pay quarterly estimated taxes
is by using INTIME at intime.dor.in.gov. INTIME offers a quick, safe
and secure way to submit estimated payments, while providing the
option to schedule payments and view payment history. By using
this method, customers receive a confirmation number immediately
without having to wait for mail to arrive or checks to clear.
INTIME also provides the option to schedule all four estimated
payments, up to a year in advance, to avoid penalties and never miss
a deadline again. Any awaiting payment(s) in INTIME will remain
“pending” until the scheduled payment date enabling customers to
make changes or cancel at any time leading up to that date.
Instructions on how to make estimated payments using INTIME
are available in the INTIME User Guide for Individual Income Tax
Customers at www.in.gov/dor/files/intime-individual-guide.pdf.
Beginning in 2024, if you file your individual return electronically,
DOR will accept direct debit of up to four estimated payments.
Alternatively, you may visit www.in.gov/dor/tax-forms/individual/current
to get Form ES-40. Use the worksheet on Form ES-40 to see how much
you will owe. Then, if you have an overpayment showing on line 18 of
your tax return, you can have some or all of the overpayment applied
to next year’s estimated tax account. To do so, enter any portion of the
overpayment:
•	 On line a, if you want to apply an amount to offset estimated
county tax due (from Form ES-40 worksheet, line K). Also, enter
the 2-digit county code from line K; and/or
•	 On line b, if your spouse lived in a different county than you did
on Jan. 1, 2025, and you want to apply an amount to offset your
spouse’s estimated county tax due (from Form ES-40 worksheet,
line L). Also, enter the 2-digit county code from line L; and/or
•	 On line c, if you want to apply an amount to offset your estimated
state tax due (from Form ES-40 worksheet, line J).

Example. Mark and Megan have a $420 overpayment, and want to
apply $300 of it to their 2025 estimated tax account. Their worksheet
from Form ES-40 has the following breakdown:
•	 Line I (each installment payment) is $300;
•	 Line J (portion that represents state tax due) is $270; and
•	 Line K (portion that represents county tax due) is $30.
They will enter $30 on line 19a (along with their 2-digit county code),
$270 on line 19c, and the $300 total amount to be applied will be
entered on line 19d. They will get a $120 refund ($420 overpayment
minus $300 applied to their 2025 estimated tax account).
Example. Stu wants to pay $500 in estimated tax for each installment
period. He has a $30 overpayment on his tax return. He chooses to
enter the full $30 overpayment on line 19c (Indiana adjusted gross
income tax amount), and carries it to line 19d. (He may pay the $470
additional amount by using INTIME to make a secure electronic
payment, or by printing Form ES-40 and filing it along with a check or
money order.)
Important. Estimated tax installment payments made for the 2025 tax
year are due by:
•	 April 15, 2025 (1st installment)
•	 June 16, 2025 (2nd installment)
•	 Sept. 15, 2025 (3rd installment)
•	 Jan. 15, 2026 (4th installment)
Any installment payment amount entered on line 19d will be
considered to be paid on the day your tax return is filed (postmarked).
For instance, an installment payment shown on a return filed on: April
15, 2025, will be considered to be a 2025 first installment payment;
June 3, 2025, will be considered to be a 2025 second installment
payment; and July 22, 2025, will be considered to be a 2025 third
installment payment.
Note. You may complete and mail the ES-40, Estimated Tax Payment
form, along with your payment to DOR’s return address on the form.
Estimated payments can also be made online with an electronic bank
payment (ACH/e-check) or Visa, MasterCard and Discover debit or
credit cards by using DOR’s e-services portal, the Indiana Taxpayer
Information Management Engine (INTIME), at intime.dor.in.gov. See
line 26 instructions on page 11 for details about payment options.
See Income Tax Information Bulletin #3 at
www.in.gov/dor/files/ib03.pdf for additional information
about estimated taxes.

Line 20 – Penalty for Underpayment of Estimated Tax

You might owe a penalty for the underpayment of estimated tax if you
did not have taxes withheld from your income and/or you did not pay
enough estimated tax throughout the year.
In fact, not properly paying estimated tax is one of the most common
errors made in filing Indiana tax returns. Generally, if you owe $1,000
or more in state and county tax for the year that’s not covered by
withholding taxes, you need to be making estimated tax payments.

IT-40 Booklet 2024

Page 9

You might owe this penalty if:
•	 The total of your credits, including timely made estimated tax
payments, is less than 90% of this year’s tax due or 100% of last
year’s tax due, ** or
•	 You underpaid the minimum amount due for one or more of the
installment periods.

installment periods, and that a proper payment was made for the
fourth installment period. She will owe no penalty.

If either of these cases apply to you, you must complete Schedule
IT-2210 or IT-2210A to see if you owe a penalty or if you meet an
exception.
•	 If you owe this penalty, complete Schedule IT-2210 or IT-2210A
and write the penalty amount on Form IT-40, line 20.
•	 If you meet an exception, complete Schedule IT-2210 or IT-2210A
to show which exception was met.

Option 1. Pay your estimated tax in one payment on or before Jan. 16,
2025, and file your tax return by April 15, 2025; or
Option 2. Make no estimated tax payment and file your tax return and
pay all the tax due by March 3, 2025.

Include the completed form with your submission.

Farmers and Fishermen.
Special options are available if more than two-thirds of your gross
income for 2023 and/or 2024 was from farming or fishing.

Example. More than two-thirds of Henry’s gross income is from
farming. He should complete Schedule IT-2210. Henry will be able
to use the Section D Short Method to figure his penalty or to show he
meets an exception to owing a penalty.

**Farmers and fishermen should see the special instructions on page
10.

Example. Henry had two-thirds of his income for 2022 from farming.
In 2023 and 2024, Henry had less than two-thirds of his income from
farming or fishing. Henry can use the special option for farmers or
fisherman for 2023 because two-thirds of his previous-year income
(2022) was from farming or fishing. Henry cannot use the special
option for 2024 because less than two-thirds of his income for both
2023 and 2024 was from farming or fishing.

Important. DOR will compute and assess the underpayment penalty
where appropriate based on filing history and tax due.

Visit our website at www.in.gov/dor/tax-forms/individual/current to
get Schedule IT-2210 or Schedule IT-2210A.

Should You Use Schedule IT-2210 or Schedule IT-2210A?

Line 20a

*You must have timely paid 100% of lines 8 and 9 of your 2023 IT-40
or IT-40PNR. Note: If last year’s Federal adjusted gross income was
more than $150,000 ($75,000 for married filing separately), you must
pay 110% of last year’s tax (instead of 100%) to meet this exception.

Schedule IT-2210 should be used by individuals who receive income
(not subject to withholding tax) on a fairly even basis throughout the
year. This schedule will help determine whether a penalty is due, or
whether an exception to the penalty has been met.

Example. Jim and Sarah together received $4,500 in pension income
each month. Since their income is received on a fairly even basis, they’ll
use Schedule IT-2210 to figure their penalty or exception to the penalty.
Farmers and fishermen have special filing considerations. If at least
two-thirds of your gross income is from farming or fishing, complete
Schedule IT-2210, using the Section D Short Method.

Enter Code A if you are computing your penalty using Form IT-2210A.
Enter Code F if you are reporting estimated tax as a farmer or a fisherman.

Line 21 – Refund

You have a refund if line 18 is greater than the combined amounts
entered on lines 19d and 20.
Important. If the combination of line 19d plus line 20 is greater than
the amount on line 18, you must make an adjustment. The estimated
tax carryover amount on line 19d is limited; it cannot be greater than
the remainder of line 18 minus line 20. See the second example about
Stu under the Line 19 instructions on page 9.

Schedule IT-2210A may be used by individuals who receive income
(not subject to withholding tax) unevenly during the year. Also use
this form if you had substantial changes in withholding during the
year. See Income Tax Information Bulletin #3 available at
www.in.gov/dor/files/ib03.pdf for further information. This schedule
will help determine whether a penalty is due, or whether an exception
to the penalty has been met.

A Note About Refund Offsets

Example. Bill’s income is from selling fireworks in June and July. He
will want to figure any penalty due on Schedule IT-2210A, which may
exempt him from having had to pay estimated tax on the April 15,
2024, first installment due date.

When to Expect Your Refund

Example. Rachael received a sizable lump sum distribution in Dec. of
2024. She figured how much estimated tax was due, and paid it in full
by the Jan. 15, 2025, fourth period installment due date. By completing
Schedule IT-2210A, she shows she owes no penalty for the first three

A refund may take longer under certain circumstances. The most
common incidents are when businesses supply withholding statements
(such as W-2, 1099-R, Schedule IN K-1, etc.) late and when the return
reports a Schedule C loss.

Page 10

IT-40 Booklet 2024

Indiana law requires that money you owe to the state, its agencies,
and certain federal agencies, be deducted from your refund or credit
before a refund is issued. This includes money owed for past-due
taxes, student loans, child support, SNAP benefits or an IRS levy. If
DOR applies your refund to any of these debts, you will receive a letter
explaining the situation.
Generally, 10 to 14 business days is the average wait for a refund if
the tax return is electronically filed; it can take up to 12 weeks for the
refund to be issued if you mail a paper tax return.

Where’s Your Refund?

There are several ways to check the status of your refund. You will
need to know the exact amount of your refund, and a Social Security
number entered on your tax return. Then, do one of the following:
•	 Go to www.in.gov/dor/i-am-a/individual/check-refund and click
Check the Status of Your Refund.
•	 Call 317-232-2240 for automated refund information; to speak to
a representative, please call during regular business hours, 8 a.m.
to 4:30 p.m., Monday - Friday.
•	 Go to INTIME at intime.dor.in.gov and click “Where’s my refund?”
A refund directly deposited to your bank account may be listed on
your bank statement as a credit, deposit, etc. If you have received
information from DOR that your refund has been issued, and you are
not sure if it has been deposited in your bank account, call the ACH
Section of your bank or financial institution for clarification.
Important. If we are unable to deposit your refund to the listed
account (incorrect/incomplete account numbers; account closed;
refund to go to an account outside the United States; etc.), DOR will
mail a paper check to the address on the front of the tax form.
Note. A refund deposited directly to your Hoosier Works MasterCard
account will appear on your monthly statement.

Statute of Limitations for Refund Claims

There is a statute of limitations when filing for a refund of overpaid
taxes for tax year 2024. In general, a claim for refund must be made
by April 18, 2028 (Nov. 15, 2028 if filing under extension). The claim
for refund is considered to be made on the day your tax return
is postmarked. If you file your 2024 tax return after the statute of
limitations has expired, no refund will be issued.

Line 22 – Direct Deposit

You may choose to have your refund deposited in your checking, savings
or Hoosier Works Master Card account. If you want your refund directed
into your checking or savings account, complete lines 22 a, b, c and d.
Caution. If you choose this option, make sure to verify the account
information after you have entered it. This will help ensure your
refund is deposited into your desired account.
The routing number is nine digits, with the first two digits of the
number beginning with 01 through 12 or 21 through 32. Do not use a
deposit slip to verify the number because it may have internal codes as
part of the actual routing number.
The account number can be up to 17 digits. Omit any hyphens, accents
and special symbols. Enter the number from left to right and leave any
unused boxes blank.
Check the appropriate box for the type of account you are making
your deposit to: either a checking account or savings account.
To comply with banking rules, you must place an X in the box on line
d if your refund is going to an account outside the United States. If you
check the box, we will mail you a paper check.

If you currently have a Hoosier Works MasterCard and wish to have
your refund directly deposited in your account, enter your 12-digit
account number on line 22b, where it says “Account Number” (do
not write anything on line 22a “Routing Number”). You can find
your 12-digit account number in the upper right-hand corner of your
account monthly statement.
Note. DO NOT use your MasterCard 16-digit number. Make sure to
check the “Hoosier Works MC” box on line 22c.
For more information on direct deposit, please see “Where’s Your
Refund?” on page 11.

Line 23

If line 21 is less than zero, you have an amount due. Enter here as a
positive number and skip to line 24.
OR
If line 15 is greater than line 14, complete the following steps:
Subtract line 14 from line 15 and enter the total here... A___________
Enter any amount from line 20..........................................B___________
Add lines A + B. Enter total here and on line 23.............C___________

Line 24 – Penalty

You may owe a penalty if your tax return is filed after the April 15,
2025, due date and you have an amount due. Penalty is 10% of the
amount due (line 23 minus line 20) or $5, whichever is greater.
Exception. No penalty will be due if you have:
•	 An extension of time to file,
•	 Are filing and paying the remaining tax due by the extended filing
due date, and
•	 Have prepaid at least 90% of the amount due by April 15, 2025.

Line 25 – Interest

You will owe interest (even if you have an extension of time to file)
if your tax return is filed after the April 15, 2025, due date and you
have an amount due. Interest should be figured on the sum of line 23
minus line 20. Contact DOR at 317-232-2240 or visit our website at
www.in.gov/dor/files/dn03.pdf to get Departmental Notice #3 for the
current interest rate.

Line 26 – Amount Due – Payment Options
There are several ways to pay the amount you owe.

Electronic payments can be made via DOR’s e-service portal, the
Indiana Taxpayer Information Management Engine (INTIME), at
intime.dor.in.gov. INTIME offers customers the ability to manage their
accounts in one convenient location, 24/7. Accepted forms of payment
via INTIME include electronic bank payment (ACH/e-check), Visa,
MasterCard and Discover debit or credit cards. No fees are assessed for
electronic bank payments. Fees apply to payments made with credit or
debit cards. You do not need to logon to INTIME to make payments.
Simply select the “Make a Payment” option on the page. An INTIME
User Guide for Individual Income Tax Customers is available at
www.in.gov/dor/files/intime-individual-guide.pdf to help you
through the process.

IT-40 Booklet 2024

Page 11

Taxpayer Advocate

Schedule 1: Add-Backs
Another option is to mail your payment to:
Indiana Department of Revenue
P.O. Box 7224
Indianapolis, IN 46207-7224
You may pay in person at one of DOR’s district offices with cash, but
with the exact amount only. Other in-person options include paying
with a money order, cashier’s check or personal check made payable to
DOR.
Note. All payments to DOR must be made with U.S. Funds.
Payment plan option. If you cannot pay the full amount due at the
time you file, you may be eligible to set up a payment plan online
using DOR’s e-services portal, the Indiana Taxpayer Information
Management Engine (INTIME), at intime.dor.in.gov. INTIME offers
customers the ability to manage their tax account(s) in one convenient
location, 24/7. Create an INTIME logon to manage your account,
make payments, establish payment plans, and more. After your return
finishes processing, a payment plan can be established.
Important. If using the payment plan option, penalty and interest will
be due on all amounts paid after the April 15, 2025, due date.
If you have questions, contact DOR in one of three ways:
•	 Use the secure messaging feature in the Indiana Taxpayer
Information Management Engine (INTIME). If you are not
registered, create an online account at intime.dor.in.gov. Select
“New to INTIME? Sign up” and follow instructions to complete
the process. You will need your taxpayer ID (FEIN, SSN, etc.) and
the unique Letter ID, printed in the upper-right hand corner of
this letter. Once logged in, select “Respond to a letter, notice, or
bill” under the “All Actions” menu.
•	 Call DOR Customer Service at 317-232-2240, Monday through
Friday, 8 a.m. - 4:30 p.m. EST.
•	 Correspond with DOR via mail using this address:
Indiana Department of Revenue
100 N. Senate Ave.
Indianapolis, IN 46204-2253

Returned Checks and Other Types of Payments

If you make a tax payment with a check, credit card, debit card,
electronic funds transfer, or any other instrument in payment by any
commercially allowable means, and DOR is unable to obtain payment
for its full amount when it is presented for payment through normal
banking channels, a $35 penalty will be assessed.
The assessed amount will be due immediately upon receipt of the tax
due notice and must be paid by certified check, bank draft or money
order. Note. Any permits and/or licenses issued by DOR may be revoked
if the assessed amount is not paid immediately.

Signatures and Signing Dates

First, read the Authorization area on Schedule 7. Then, sign and date
the tax return. If this is a jointly filed tax return, both you and your
spouse must sign and date it. Make sure to enclose the completed
Schedule 7 when filing.
Page 12

IT-40 Booklet 2024

As prescribed by the Taxpayer Bill of Rights, DOR has an appointed
Taxpayer Advocate whose purpose is to facilitate the resolution of
taxpayer complaints and complex tax issues. If you have a complex tax
issue, you must first pursue resolution through normal channels, such
as contacting the customer service division at 317-232-2240. If you
are still unable to resolve your tax issue, or a tax assessment places an
undue hardship on you, you may receive assistance from the Office of
the Taxpayer Advocate.
For more information, and to get required schedules if filing for an
offer in compromise or a hardship case, visit our website at:
www.in.gov/dor/about/contact-us/taxpayer-help. You may also contact
the Office of the Taxpayer Advocate directly at [email protected],
or by telephone at 317-232-4692. Submit supporting information and
documents to: Indiana Department of Revenue, Office of the Taxpayer
Advocate, P.O. Box 6155, Indianapolis, IN 46206-6155.

Where to Mail Your Tax Return
If you are enclosing a payment, please mail your tax return with all
enclosures to:
Indiana Department of Revenue
P.O. Box 7224
Indianapolis, IN 46207-7224
For all other filings, please mail your tax return with all enclosures to:
Indiana Department of Revenue
P.O. Box 40
Indianapolis, IN 46206-0040

Schedule 1: Add-Backs

Some amounts reported on your federal tax return may require
different treatment for Indiana income tax purposes. Listed in this
area are those items that may need to be added back on your Indiana
tax return. Please review the list carefully. When reporting these addbacks, maintain with your records the corresponding federal tax forms
and schedules as DOR can require you to provide them at a later date.

Important Information About Possible Year-End
Federal Legislation

This publication was finalized before all year-end federal legislative
changes were complete. Therefore, some of these add-backs may need
to be adjusted. You may wish to periodically check DOR’s homepage
at www.in.gov/dor for updates about any impact of late federal
legislation.

Treatment of Previously Discontinued Add-Back

Several discontinued add-backs were created as a result of timing
differences between federal and Indiana allowable expenses. See Certain
Discontinued Add-Backs: How and When to Report a Final Catch-Up
Modification on page 15 for information about these add-backs.

Line 1 – Tax Add-Back

If you did not complete Federal Schedules C, E or F, which include
sole proprietorship income, farm income, rental, partnership, S
corporation, and trust and estate income (or loss), then do not
complete this line.

Schedule 1: Add-Backs Continued
On those schedules you are allowed to claim a deduction for taxes paid
which are:
•	 Based on, or
•	 Measured by income, and
•	 Levied at a state level by any state in the United States.
If you claimed this kind of deduction on any of these schedules,
then you must add it back to your Indiana income. Do not add back
property taxes on this line.
State-level pass through entity taxes that are deducted in determining
your federal adjusted gross income should be added back on this line.
If you subsequently receive a refund of those taxes, report the refund
on this line as a deduction.
Wagering Taxes. The portion of wagering taxes required to be added
back as a tax based on or measured by income is being reduced (phased
out). The percentage of taxes required to be added back is determined
by the first date of the taxpayer’s taxable year, and is determined as
follows: 2020 – 75%; 2021 – 62.5%; 2022 – 50%; 2023 – 37.5% 2024 –
25.0%; 2025 – 12.5%; 2026 and later – no add back required.
For example, Casino X deducts $10,000,000 in wagering taxes in 2024.
Individual owns 10% of Casino X. Individual’s share of Casino X’s
income taxes is $1,000,000. Instead of individual adding back the full
$1,000,000, Individual will add back $250,000.
Note. Income, losses and/or expenses from other schedules and
forms may flow through to federal Schedules C, E and F. For example,
partnership income from federal Schedule K-1 (Form 1065) may be
included on federal Schedule E, while expenses from federal Form
8829 may be included on federal Schedule C. Make sure to check these
schedules and forms for any deduction that needs to be added back.

Line 2 – Net Operating Loss Add-Back

Any net operating loss (NOL) deduction reported on line 8 of your
federal Schedule 1 must be added back on this line. Write the amount of
the net operating loss as a positive figure. (You may be eligible to claim
an Indiana net operating loss deduction on Schedule 2, under line 9.)

Line 4 – Bonus Depreciation Add-Back

You must make an modification for any bonus depreciation deduction
used for property placed in service after Sept. 11, 2001. Bonus
depreciation is the additional first-year special depreciation deduction
allowed under Section 168(k) of the Internal Revenue Code (IRC).
Figure the net income (or loss) that would have been included in
federal adjusted gross income had the bonus depreciation method
not been used. Then, enter the difference, which may be a positive or
negative amount, on line 4.
Example. Mack used the bonus depreciation method for federal
income tax purposes. After refiguring the depreciation without using
the bonus method, he has to add back $1,500 on his Indiana tax
return.
Note. After making an initial adjustment for bonus depreciation you
will need to refigure the amount of depreciation available for state tax
purposes for subsequent years.
Example. Ann made an initial adjustment for bonus depreciation on
last year’s Indiana tax return. This year she figures she is entitled to
a $150 additional depreciation amount for state tax purposes. She
should enter that amount as a negative entry, or -150, on line 4.
Special rules may apply if the bonus depreciation is taken against
property acquired in a like-kind exchange or acquired in a taxable
year in which you have an excess business loss. See Income Tax
Information Bulletin #118 at www.in.gov/dor/files/ib118.pdf for
additional information.

Line 5 – Section 179 Expense Add-Back

You may have figured an IRC Section 179 expense using a ceiling
of more than $25,000 for federal tax purposes. Indiana allows you
to figure IRC Section 179 expense using a ceiling of no more than
$25,000. If you figured IRC Section 179 expense using a ceiling
amount of more than $25,000, you will need to add back the difference
between it and $25,000 on line 5.

Note. Leave this line blank if you did not report a net operating loss
deduction on line 8a of your federal Schedule 1.

Special rules may apply if the bonus depreciation is taken against
property acquired in a like-kind exchange or acquired in a taxable
year in which you have an excess business loss. See Income Tax
Information Bulletin #118 at www.in.gov/dor/files/ib118.pdf for
additional information.

Line 3 – OOS Municipal Obligation Interest Add-Back

Line 6 – Other Add-Backs

Interest earned from a direct obligation of a state or political
subdivision other than Indiana (out of state, or OOS) is taxable by
Indiana if the obligation is acquired after Dec. 31, 2011. Interest earned
from obligations held or acquired before Jan. 1, 2012, is not subject to
Indiana income tax and should not be reported as an add-back.
Note. Interest earned from obligations of Puerto Rico, Guam, Virgin
Islands, American Samoa, or Northern Mariana is not included in
federal gross income and is exempt under federal law. There is no addback for interest earned on these obligations.

Each of the following add-backs has been assigned a 3-digit code
number. When reporting the add-back, write its name, the associated
3-digit number and the amount.

Conformity Add-Back

Before this publication was finalized Indiana had not conformed
to any changes to the Internal Revenue Code (IRC) that may have
become law after Jan. 1, 2024. Therefore, the IRC used to figure
Indiana income may not wind up being the same as the IRC used to
figure federal income.

For more information about this add-back, see Income Tax
Information Bulletin #19 at www.in.gov/dor/files/ib19.pdf.
IT-40 Booklet 2024

Page 13

Schedule 1: Add-Backs Continued
This add-back is specific to these annual current year conformity
issues. If uncertainty exists as to whether or not Indiana will adopt
some or all of the federal legislation passed after Jan. 1, 2024, that acts
to modify federal AGI, you may add-back those items as an “other”
add-back. In the event those items are adopted, an amended return
should be filed to recoup the add-back(s).
Conformity Add-Back – Positive Entry  120
This add-back is only for:
•	 Current year conformity issues, and
•	 Add-backs required by Indiana legislation passed retroactively to
years before 2024.
Conformity issues for preceding tax years must be addressed on the
add-back line specific to the item in question.
If the state legislature does not conform to federal code changes enacted
after Jan. 1, 2024, you may have to amend your return at a later date to
reflect any differences between Indiana and federal law. You may wish to
periodically check DOR’s homepage at www.in.gov/dor for updates.
Enter code 120 on Schedule 1 under line 6 if reporting this add-back.
Conformity Add-Back – Negative Entry  147
This add-back generally is based on conformity issues arising from a
previous year or on deductions enacted by Indiana legislation passed
retroactively to years before 2024. However, in rare cases this can arise
from conformity issues arising in the current year where the IRC treats
an item as taxable or nondeductible that was previously exempt or
deductible.
Enter code 147 on Schedule 1 under line 6 if reporting this add-back.

Excess Federal Interest Deduction Modification  142

IRC Section 163(j) limits the federal interest deduction for most
business interest to 30% (50% for 2019 and 2020 in certain cases)
of adjusted taxable income plus business interest. However, Indiana
has decoupled from this provision. Subtract an amount equal to the
amount as a deduction for excess business interest under IRC Section
163(j) in the year in which the interest was first paid or accrued. If you
are deducting any business interest carried over from a previous year,
add the amount of this interest deducted. Enter code 142 on Schedule
1 under line 6 if reporting this add-back.

Federal Repatriated Dividend Deduction Add-Back  139
Untaxed foreign earnings and profits are repatriated dividends that
need to be reported when filing state taxes. Individuals should add
back the deduction taken on federal Form 965, Line 17. For additional
information see Income Tax Information Bulletin #116 at
www.in.gov/dor/files/ib116.pdf.

Modifications for Excess Business Losses  151

If you:
•	 Have a current-year excess business loss under IRC section 461(l)
that is not deducted in determining your federal adjusted gross
income,
•	 Have current-year federal deductions that:
ο	 are disallowed in determining your current-year federal
adjusted gross income, and
ο	 for which an add-back is required for Indiana adjusted gross
income tax purposes,
use Code 151 to deduct the add-backs required for Indiana purposes.
The most common examples will be bonus depreciation, IRC section
179 expensing, and the add-back for state and local taxes deducted
in determining federal adjusted gross income. Do not report
modifications arising from prior year Indiana modifications such as
bonus depreciation catch-up modifications.

Discharge of Debt Reduction of Net Operating
Losses  155

First, if you have such add-backs, report the add-backs in the normal
manner as if no excess business loss limitation was in effect under IRC
section 461(l). Second, report the lesser of these add-backs required
for Indiana purposes or the IRC section 461(l) disallowance (Form
1040, Schedule 1, Line 8p) as a Code 151 deduction. Also report this
amount on Schedule NOL-MOD, Part 2.

To determine this amount, first complete the return as normal. Then,
determine how much net operating loss carryforwards are required to
be used as a result of debt discharge. The amount to be reported is the
amount necessary to make Schedule 2, line 9 equal to the sum of any
Indiana net operating losses allowed for the current year plus any Indiana
net operating losses required to be reduced due to debt discharges. Please
complete Schedule NOL-MOD before entering an amount for Code 155.

The Code 151 deduction will reduce the net operating loss
carryforward allowable for Indiana purposes.

If you have a net operating loss carryforward that is required to
be reduced as a result of discharge