Questions & Answers

Who qualifies for a credit for taxes paid to other states?

If you received income from another state while you were an Indiana resident, you must report that income on your Indiana income tax return. You may be able to take a credit for taxes paid to another state.

If you were an Indiana resident during 2018 and had income from any of the states listed in Group A below, you should first find out what the other state's rules are concerning the taxation of your income.

Group A - No Agreement (Credit taken on resident return)

  • Alabama
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Oklahoma
  • Rhode Island
  • South Carolina
  • Tennessee
  • Utah
  • Vermont
  • Virginia
  • West Virginia
You must enclose a copy of the income tax return (not just the W-2 forms) you filed with the other state to claim this credit. If the other state's return is not enclosed, the credit will not be allowed. Likewise, if you have a foreign tax credit, complete the Group A Worksheet and federal Form 1116. If Form 1116 was not required, enclose Forms 1099-INT and/or 1099-DIV (or a substitute statement) to verify the foreign tax and amount of income being taxed.

Exception: Gambling winnings from other states. If you're not required to file another state's income tax return to report gambling winnings from that state, enclose the W-2G issued by that state.

Group B - Reciprocal Agreement (Wages, Salaries, Tips, and Commissions Only)
  • Kentucky
  • Pennsylvania
  • Michigan
  • Wisconsin
  • Ohio
If you were an Indiana resident during 2018 and had income from one of the states listed in Group B, you are covered by a reciprocal agreement. However, this agreement only applies to income from wages, salaries, tips and commissions. If you had other types of income from these states (such as business income, farm income, etc.), you need to claim a credit for taxes paid to those states.

Normally, employers in these states will withhold Indiana state tax from your wages because of the reciprocal agreement. However, if the state tax they withheld is not for Indiana, you must file a claim for refund with that state. You still have to include this income on your Indiana return and pay the Indiana tax. You'll get some or all of the other state's taxes back by filing a refund claim with them.

Note. Winnings from Indiana riverboats and lotteries are not eligible for the reciprocal agreement.

If you were a full-year resident of one of the reciprocal states and your income from Indiana was from wages, salaries, tips and commissions, you should file Form IT-40RNR, Reciprocal Nonresident Income Tax Return. If you were a resident of one of the reciprocal states and had other types of income from Indiana, or were a part-year Indiana resident, you will need to file Form IT-40PNR.

Group C - Reverse Credit (Credit taken on nonresident return)
  • Arizona
  • Oregon
  • Washington D.C.
If you were an Indiana resident during 2018 and had income from one of the states in Group C, you must pay Indiana tax on all your income. You will also need to file a nonresident return with the other state and claim a credit on their tax return for the Indiana tax paid.

Group D - No State Income Tax (No credit allowed)
  • Alaska
  • South Dakota
  • Wyoming
  • Florida
  • Texas
  • Nevada
  • Washington
If you were an Indiana resident during 2018 and had income from one of the states in Group D, you are not allowed to claim this credit. These states do not have an income tax. You must file an Indiana resident return and pay Indiana tax on all your income.

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