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Volume 14 No. 2 (2011)

Changes Affecting Individual Tax Returns

Find details of the following changes in the 2011 IT-40/IT-40PNR instruction booklets.

  • Indiana’s EIC calculation has changed.
  • A $1,000 deduction may be available for each dependent child attending a private school or who is homeschooled.
  • No claim for an Indiana net operating loss carryback may be filed after Dec. 31, 2011. Get Schedule IT-40NOL.
  • A Schedule IN-DEP: Additional Dependent Child Information must be completed when claiming an additional dependent child exemption.
  • Changes have been made to several state offset credits, including:
    • Employer health benefit plan credit
    • Industrial recovery account credit
    • Maternity home credit
    • Small employer qualified wellness program credit
    • Teacher summer employment credit
    • Venture capital investment credit
  • The following items must be added back* (in whole or in part):
    • Certain trade or business deductions based on employment of unauthorized alien (for tax years beginning in 2011)
    • Educator expense
    • Employer-provided educational expenses
    • IRA charitable distribution
    • Motorsports entertainment complex
    • Oil and gas well depletion deduction
    • Qualified advance mining safety equipment
    • Qualified electric utility amortization
    • Qualified environmental remediation costs
    • Qualified leasehold improvement property
    • Qualified transportation fringe expenses
    • RIC dividends to nonresident aliens
    • Start-up expenditures
    • Student loan interest
    • Tuition and fees

*All but the first of these must also be added back for the 2010 tax year. For those who have yet to report these add-backs for 2010 and do not wish to file an amended return, Indiana has a new policy covering how they may be reported. Specifically, an individual can choose to report the required add-back(s) for 2010 on the 2011 state tax return.

Indiana’s Earned Income Credit (EIC)

The way to figure Indiana’s EIC has changed. Some of the differences between Indiana’s requirements and the federal requirements include federal AGI must be less than $40,950 (no increased amount for married filing jointly); modified AGI must be figured; a qualifying child may be claimed only by the person with the highest modified AGI; and the EIC must be reduced by 9% of any federal AMT.

Indiana Worksheet A or Worksheet B will need to be completed to figure the credit. Detailed instructions for figuring the credit may be found in the 2011 IT-40/IT-40PNR instruction booklets, available online at www.in.gov/dor/4546.htm. Additional worksheets, definitions, and examples may be found in Indiana’s Publication EIC (this has not been released yet, but it will also be available online at www.in.gov/dor/4546.htm) by January 2, 2012.

County Tax Rates

The rates used for figuring an individual’s 2011 county tax liability may be found here: http://www.in.gov/dor/4547.htm.

Changes Affecting Corporate Tax Returns

There have been several changes to corporate tax returns this year. You can read the complete list on our website at www.in.gov/dor/3656.htm. You can also find details on the following changes in the instructions booklets, available online at www.in.gov/dor/4441.htm:

  • Taxpayers will be required to add back to their Indiana adjusted gross income several deductions that the IRS is allowing for federal AGI. Corporations, insurance companies, and life insurance companies will have five; trusts, estates, and financial institutions will have six. (Many of these must also be added back for the 2010 tax year. For those who have yet to report these addbacks for 2010 and do not want to file an amended return, Indiana is allowing taxpayers to report the required addback(s) for 2010 on their 2011 state tax returns.)
  • The cap on the total amount of credits that can be claimed in a fiscal year for contributions to scholarship-granting organizations has increased from $2,500,000 to $5,000,000.
  • The teacher summer employment credit will not be awarded after Dec. 31, 2011.
  • The maternity home, health benefit plan, and small employer qualified wellness program tax credits will not be awarded after Dec. 31, 2011, and credits previously awarded may not be carried forward during 2012 and 2013. However, they may be carried forward during 2014 and 2015.
  • The corporate income tax rate will decrease by .5% per year beginning July 1, 2012 and continue until July 1, 2015, at which time the rate will be 6.5%.
  • The net operating loss (NOL) carryback has been eliminated after Dec. 31, 2011.
  • Current law requires professional tax preparers who file more than 100 returns to use electronic filing. That threshold drops to 50 returns in 2012 and just 10 returns in 2013.

Annual Report

The annual report for the Indiana Department of Revenue is now available. The PDF version of the report touches on the accomplishments of the past year as well as areas of improvement. It is a great resource for not just practitioners, but taxpayers as well.

To access the 2011 annual report any time, go to www.in.gov/dor/files/report11.pdf or just click here.

Super Bowl

As a general rule, the National Football League (NFL) and its affiliates will be exempted from paying Indiana state taxes related to the Super Bowl. These exemptions apply only to the NFL and a specific list of affiliates. The exempted groups are as follows:

  • The National Football League and its 32 member clubs
  • National Football League Management Council, not-for-profit trade association
  • NFL Ventures, L.P.
  • NFL Ventures, Inc.
  • NFL Productions, L.L.C.
  • NFL Enterprises, L.L.C.
  • NFL Properties, L.L.C.
  • NFL International L.L.C.
  • NFL Productions, Inc.
  • NFL Network Services, Inc.
  • NFL Combine Properties, Inc.
  • NFL Charities
  • NFL Youth Football Fund

These groups have been allowed to create one master account each. To be considered tax exempt, an expense must be charged to one of these master accounts. If employees of these organizations make purchases relating to the Super Bowl without using a master account, the purchases will not be exempted from state taxes.

To purchase property or services from a retail merchant and utilize the exemption from state taxes (including sales tax, use tax, innkeepers’ tax, and/or food and beverage taxes), the National Football League or an affiliate must open a master account with that retail merchant to be used. The account must include a list of those employees of the NFL or the affiliate who are authorized to make charges to the master account, provide master account information to the Department of Revenue, and submit an exemption certificate (Form ST-105 or SSTGB Form F0003) to the retail merchant.

The NFL and its affiliates also will be exempt from adjusted gross income tax. Additionally, withholding taxes on the salaries and wages of employees of the NFL or an affiliate will be exempted, except for those employees who are residents of Indiana.

For complete information, read Commissioner’s Directive #42 at www.in.gov/dor/3617.htm.

Indiana freefile

Indiana has launched a new, free tax-filing system for low-income Hoosiers, called Indiana freefile. This new system replaces Indiana’s I-File system, which has provided free, state-only tax filing since 1999.

Indiana freefile now provides free federal and state online tax-filing services to Hoosier taxpayers. This year, taxpayers will have four vendors from which to choose, including

  • H&R Block
  • Online Tax (OLT)
  • Tax Hawk
  • TurboTax/Intuit

The IT-40PNR/RNR is being accepted by most online tax services. As long as your tax application supports MEF, the IT-40PNR/RNR can be filed online. Also, all Indiana freefile vendors are supporting the IT-40PNR /RNR.

The Department recognizes that throughout the course of the upcoming tax season, some taxpayers will not be able to afford tax prep services. In those instances, the Department encourages practitioners to direct low-income filers to Indiana freefile. In these situations, although you might not have been able to bring your expertise to bear, you will still have been able to help these taxpayers file their taxes.

Please direct anyone who cannot afford your services to www.freefile.dor.in.gov/.

Departmental Outreach Continues

Every year the Department reaches out to inform the public and professional communities as much as possible. Employees from throughout the Department of Revenue volunteer their knowledge, time, and resources to educate the tax-paying community. Most of the time, they present the "General Update," which is a 50-minute presentation given during Tax Schools and other events. It details and explains all the recent legislative and procedural changes that will occur over the next year. Other times, they present on specific topics such as inheritance tax, utility and sales tax issues, or new and small business issues.

A number of organizations, including local chambers of commerce, volunteer organizations, and other associations, request that the Department come and speak to them at their functions, events, and conventions. Audience size can range from 10 to 200 attendees per session. These sessions also allow attendees to query the Department on any number of topics that range from the general to the arcane.

The Tax Schools are also a popular venue for the tax professional community to learn about what's new at the Department. These events are joint collaborations between the Indiana Department of Revenue, the Internal Revenue Service, and Indiana and Purdue Universities. They are designed to educate and meet continuing education requirements for attorneys, certified public accountants, certified financial planners, and enrolled agents. Topics include the Department's "General Update," small business issues, net operating losses, entity issues, and ethics, among many others.

This year was a banner year for the Department’s outreach efforts. Nearly 75 presentations were given throughout the state. And with the outreach season almost over, the feedback we have received has been fantastic. So when you are attending one of these events, take a second to thank our brave and intrepid volunteers. They are the public face of a Department that continues to serve the taxpayers of Indiana consistently and effectively while achieving our obligations with distinction.

Thank you to: Meme Anderson, Mindy Bates, Diane Blankenship, Darlene Bowen, April Bruce, Dale Chattin, Nick Fetchina, Debbie Grammer, Don Hopper, Amanda Lively, Cathy McGuckin, Cristen Reed, Sally Rinker, Kim Sharp, and Lisa Wilson.

2011 Forms Available Now!

The Department knows that at this time of year tax practitioners are eager to see the forms and instructions. The 2011 Indiana individual and corporate tax forms became available online on Dec. 1.

To view the new forms and instructions, visit www.in.gov/dor/3489.htm

New and Updated Tax Bulletins, Directives, and Notices Available Online

Commissioner’s Directives:

Income and Sales Tax Information Bulletins:

Departmental Notices:

Be sure to check the Department’s Web site regularly for additional updates to tax bulletins, directives, and notices at www.in.gov/dor/3330.htm

Get Connected and Get Critical Updates from the Department

With tax season just around the corner, it is important for tax practitioners to know the various ways in which they can contact the Department if they are in need of help or want to receive critical updates from the Department.

When you have a specific question that the website does not answer, you are encouraged to use the online inquiry center to send your questions and concerns directly to our tax professional area. If you have an immediate concern, however, you can contact the Department at (800) 462-6320 (enter 4367) to connect. This number is for the use of tax practitioners only. If a taxpayer would like to contact the Department, he or she can contact the Department at (317) 232-2240.

In addition, the Department now offers several ways for you to learn about important tax updates at your convenience:

For previous editions of the Tax Dispatch, click here.


To better serve Indiana taxpayers, the Indiana Department of Revenue may occasionally inform taxpayers of new services and results of a survey or invite a randomly selected group of taxpayers to participate in a short electronic survey or focus group. Electronic communication and surveys enable the Department to inform you about our services and helps the Department learn how to better serve Hoosier taxpayers.

Electronic surveys and e-mail messages from the Indiana Department of Revenue will never ask for any financial or personal information, and survey responses are always confidential.

If you are asked for personal or financial information (Social Security number, bank account information, etc.), do not reply or click on any links in the e-mail message. Legitimate organizations should never ask for personal information by e-mail.

If you would like to further verify an e-mail you have received by the Indiana Department of Revenue, please call (317) 232-2379.

Remember, the Indiana Department of Revenue will never request personal information by e-mail.

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