New Legislation Part 3 – Individual Income Taxes

Dec. 16, 2013 – TaxTalk Blog

Part 1 of this New Legislation series dealt with changes affecting business taxes. Part 2 covered changes affecting special taxes. This final installment discusses the changes affecting individual income tax.

Several add backs no longer have to be added back when determining adjusted gross income. The following two lists include the discontinued add-backs and the dates when they were no longer required to be added back.

The requirement to add-back the following has been eliminated retroactive to Jan. 1, 2013 (this basically means they are not required to be added back after the 2012 tax year):

  • Educator expense
  • Employer-provided educational expenses
  • Qualified environmental remediation costs
  • Oil and gas well depletion
  • Qualified electric utility amortization
  • RIC dividends to nonresident aliens
  • Start-up expenditures
  • Student loan interest

The following add-backs have been eliminated retroactive to Jan. 1, 2012 (this basically means they were not required to be added back after the 2011 tax year):

  • IRA charitable distribution add-back
  • Motorsports entertainment complex expense
  • Qualified advanced mine safety equipment expense
  • Qualified leasehold improvement property expense
  • Qualified restaurant property expense
  • Qualified retail improvement property expense
  • Qualified transportation fringe expense
  • Tuition and fees deduction

If you reported any of the above-listed eight add-backs on your 2012 state tax return, you may be eligible for a refund or a reduction of any tax otherwise owed. See page 14 of the 2013 IT-40 instruction booklet for details.

Other changes include:

  • The automatic taxpayer refund credit is not available for the 2013 tax year.
  • The School Scholarship Credit can now be carried forward for nine years after the unused credit year, and the cap on this credit has increased from $5 million to $7.5 million.
  • The Coal Combustion Credit has been repealed.

Change to the county tax schedules
Now that all 92 Indiana counties have adopted a county income tax, the full-year resident county tax schedules CT-40 and CT-40EZ have been simplified. The section to be completed by someone who lived in a county that does not have a tax has been eliminated. Also, the tax rates listed on the back of the schedules no longer include the nonresident rates.

All the 2013 individual forms and booklets are now available on the department’s website at

For more information about these legislative changes and more, see the 2013 Legislative Synopsis.

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