As part year resident of Indiana (10 months) how are state and county taxes calculated

[ejc]

Does Indiana require me to pay taxes on my unearned income for the entire year when I lived in Indiana for the first 10 months and then NC for the last 2 months?  Turbo tax transferred my entire federal adjusted gross income to my IN return and my taxes were based on that amount (12 months of income).  I then filled out the NC part year resident  and nonresident form D-400, and was taxed on the last 2 months of income.  Indiana did give me credit for the taxes due to NC, but why are the IN taxes for the full 12 months, not prorated for 10 months?  Also will turbo tax transmit the NC form D-400 forms to Turbo tx if I e-file?

[KrisD15]

No, you should have filed a Part-year Indiana state return and allocated only the income you earned (and received) while living in Indiana. 

Please check the dates of residency you entered for Indiana.   

[ejc]

I had entered the time I lived in IN and the time time I lived in NC into turbo tax.  Why did turbo tax not ask me to attribute the income earned in IN for the first 10months, instead of just transferring the full 12 months of income? Turbo tax does have me using the IT-40PNR.  Also if I do prorate IN income for time spent only in IN, then I would assume that I would not take the IN credit for taxes paid to NC.  When I spoke to IN dept of Revenue they lead me to believe that I should pay IN for the full year.

[BillM223]

On page 8 of the IT-40PNR Instructions, it states: "A part-year resident owes tax on taxable income received from all sources while being a resident of Indiana. A part- or full-year nonresident also owes tax on income from Indiana sources as listed below while a legal resident of another state."

To be clear, your state income is not prorated by the amount of time you were in Indiana, it is based on what items are taxable in Indiana.

The instructions for Schedule A (the Schedule to determine Indiana income for the IT-40PNR) state:

• Enter in Column A your income and adjustments as they appear on your federal return, Form 1040/1040-SR; and 

• Enter in Column B the portion of your income and adjustments that is subject to Indiana income tax.

Note that the first item is from your federal return, and the second item might be the same as your federal return, depending on your sources of income.

"Turbo tax does have me using the IT-40PNR." What form is TurboTax creating?