Indiana filing

[RS110]

We live in Illinois. My wife works from home for a hospital with an Indiana address. Is all of her income reported for Indiana even though she never stepped foot in Indiana to work.

[RobertG]

You don't have to file an Indiana return if you are a nonresident of Indiana unless you have income from Indiana sources.

The following types of income of a nonresident are directly allocated to Indiana:

1. Salaries, wages, fees, commissions, and all other types of income received by a nonresident employee for services performed in Indiana; 
2. Income from a trade or business (including professional services) or a farming operation carried on entirely within Indiana;

Since her services are not performed in Indiana they are not Indiana source income.

Guidelines for Reporting Income from Indiana Sources by Nonresident Individuals

If you had Indiana withholding, you can file a nonresident return to get it refunded.  You do have to report the income in Illinois.