Form IT-40RNR (Reciprocal Non-Resident Return, County Tax)
Overview
Indiana doesn't tax the state income on wages earned in Indiana by residents of Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. However, if the taxpayer worked in an Indiana county as of January 1 of the tax year, they still have to pay Indiana county income tax on those wages. Instead of filing Form IT-40PNR, taxpayers can file Form IT-40RNR, a wages-only return, to calculate the county tax if they meet certain conditions.
Requirements to file Form IT40-RNR
Per guidance of the Indiana Department of Revenue, an Indiana full-year nonresident taxpayer is eligible to file Form IT-40RNR only if they meet the following conditions:
- The taxpayer is a full-year resident of KY, MI, OH, PA, or WI. If the taxpayer lived in any other state or had more than 1 state of residency during the year, taxpayer will need to file Form IT-40PNR.
- The taxpayer’s only Indiana source of income is from IN wages reported in Box 16 on the W-2. (Indiana recommends that Box 16 wages, not Box 18 wages, are used in determining county taxable income.) If the AGI Worksheet (located in Forms view under theAGIfolder) reflects Indiana source income from any other sources, or if income is apportioned via Schedule IT-40PNRA, Form IT-40PNR calculates instead of Form IT-40RNR.
- The taxpayer’s only source of Indiana withholding is from W-2. If the return reflects any other withholding, including Unemployment withholding, the taxpayer will need to file Form IT-40PNR.
- The taxpayer didn’t make any Indiana estimated payments.
- The taxpayer isn't claiming deductions other than those specified on Form IT-40RNR.
- The taxpayer isn't claiming any credits.
Prepare Form IT-40RNR
Do the following steps to prepare Form IT-40RNR.
- SelectFile,Client Properties, theIndianatab,Nonresident, then mark theIT-40RNR Reciprocal Nonresident Returncheckbox.
- On the federalW2screen, enterINin Box 15, and wages amount in Box 16. Enter State withholding in Box 17. Also enter the Local withholding in Box 19, and the Locality code ("I" plus the 2-digit county code) in Box 20.
- On theINGenscreen, enter theCounty of residenceas95,96,97,98, or99to indicate the taxpayer was a resident of a reciprocal state (KY, MI, OH, PA, WI). Enter the proper 2-digit code for theCounty of employmentas of January 1. If the employer withheld Indiana state or county taxes but Indiana principal employment didn’t start until after January 1 of the tax year, enter00for theCounty of employmenton theINGenscreen to show that the taxpayer isn't subject to county tax for the year.
- In theINPYNRscreen, in theState of residency (only one state of residency)field, selectKY,MI,OH,PA, orWI.
