Indiana local tax and multiple locations

[stateofconfusion]

I am a resident of WI, and work for a company with a location in Indiana.  About 75% of the time I work from home in WI, and the remainder I travel to Indiana to be on site physically.  Indiana and WI have a tax reciprocity treaty, so all state tax withholding is for WI.   My question is about local taxes in Indiana which are not covered by the tax treaty.    My employer has counted the number of days I work on site, and used that to determine the fraction of my total income to put in Box 18 of my W-2 and withheld local taxes according to the county of the Indiana location.

As I understand it, I am considered a Reciprocal Non-resident for Indiana local tax purposes, so I am following instructions for IT-40RNR.  In those instructions it asks  "Was your principal place of employment on Jan. 1, 2022, located in an Indiana county?"    I can't find a definition for principal place of employment in this document, but elsewhere I found 45 Ind. Admin Code 3.1-4-8 defines it as "that county where the taxpayer receives the greatest percentage of his or her gross income from salaries, wages, commissions, fees, and similar income."

Based on this, it seems that my principal place of employment was Wisconsin, not an Indiana county, and therefore I can claim a refund of those Indiana local taxes.   Am I interpreting this correctly?

[Hal_Al]

Q. Based on this, it seems that my principal place of employment was Wisconsin, not an Indiana county, and therefore I can claim a refund of those Indiana local taxes.   Am I interpreting this correctly?

A. No. You employer was correct to withhold county tax, for the time you worked in IN. You can not get county tax refunded, unless the wrong amount was withheld. 

Your principal place of employment on Jan. 1, 2022, located in an Indiana county is where you work when you "traveled to Indiana to be on site physically".  The intent of the wording is to allow employers to only have to withhold county tax  for one county, when employees work in multiple counties. 

 Because of the reciprocal agreement, you are not required to file an IN return, unless your employer mistakenly withheld IN state income tax or the wrong amount of country income tax. In that case,  IT-40RNR is the correct form. 

[stateofconfusion]

Thanks Hal_Al,

this is very helpful.   My confusion came from the fact that this outcome would mean that on the one hand the proportion of time I spend in Indiana is used to prorate the income that is subject to local taxes, but it is not used to evaluate what the principal place of employment is (which seems to be the basis for the definition given in the Indiana statute).  But I guess not everything is always consistent!

[Hal_Al]

The intent of the wording is to allow employers to only have to withhold county tax  for one county, when employees work in multiple counties.