DIGEST OF CHANGES: Aside from minor, technical changes, this bulletin has been changed from the previous version to provide guidance as to withholding requirements for Indiana residents with out-of-state income.
INTRODUCTION
Full-year Indiana residents must report all income that is reported for federal income tax purposes on their Indiana individual income tax return (Form IT-40 or Form IT-40EZ). This includes all income, even if it is derived from sources outside Indiana.
Full-year nonresidents who received income from Indiana sources must file an Indiana individual income tax return (Form IT-40PNR). They are subject to tax on that part of their total federal income that is derived from or connected with Indiana sources. If the nonresident's only Indiana source income was from an Indiana partnership or S corporation, the nonresident shall be included in the entity's composite return and will not be required to file Form IT-40PNR.
Part-year Indiana residents must file an Indiana individual income tax return (Form IT-40PNR). They are subject to tax on that part of their total federal income that was received while they were residents of Indiana. Also taxable is income from Indiana sources received while they were nonresidents of Indiana.
If a joint federal income tax return is filed, a joint Indiana return is also required. If separate federal income tax returns are filed, separate Indiana returns are also required.
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