Indiana residency question if married to nonresident alien treating as a resident for tax purposes.

[Cardinals8]

I am a full year resident of Indiana, but my non resident alien lived in Indiana for a few months in 2019. We are electing to treat my nonresident spouse as a resident for tax purposes, but it is confusing if this only applies to federal taxes and not state taxes.

The software allows to change residency from full year to full year, part year, nonresident, or reciprocal nonresident. These options drastically change the tax refund.

I am having trouble finding information about what my spouse would be considered. Thanks

[DavidS127 · Accepted solution]

According to the Indiana rules, taxpayers who file their federal tax return as married filing jointly must also use married filing jointly in Indiana.  I would read that to mean that if your spouse is treated as a resident for federal purposes on your married filing jointly federal return, she can also be included on an Indiana resident return you file jointly.

[Cardinals8]

The next question asks the county of residence as of January of 2019. Since my spouse was living out of the country as of January 1st, do I selected out of state - other states? The next question is about the county where employed for both of us... I am assuming it would be out of state - other states for that question too.

Thanks

[KatrinaB48]

Yes, you would select out-of-state for the county of residence and county of employment.

[Cardinals8]

After I click "Let's check it over" for Indiana taxes, it says "Check this entry form. Information worksheet: Spouse county of residence is not a valid selection based on your full-year resident status. Please select the Indiana county where the spouse lived on January 2019."

However, my spouse lived in South America on January 1st.

On the next screen it says check this entry. Information worksheet: Full Year Resident should not be checked. Form IT-40 may be selected if taxpayer and spouse are both full-year Indiana residents."

I was advised to treat as a resident. Now there are options to change full year resident IT40 to IT-40PNR part year resident and IT-40PNR nonresident. My spouse lived in Indiana for some months during the middle of the year. So if I had to switch to part year resident, then it has you select the dates for residency. It would be possible to enter the IN residency dates, but for the other state residency dates is seems only possible to put first months of the year or the last months because you can't put two separate ranges.

Thanks.

[KarenJ2]

Yes, you should change to IT-40PNP - see information from information booklet IT-40PNR

Form IT-40PNR for Part-Year and Full-Year Nonresidents

Use Form IT-40PNR if you (and/or your spouse, if married filing jointly): • Were Indiana residents for less than a full-year or not at all, or • Are filing jointly and one was a full-year Indiana resident and the other was not a full-year Indiana resident, and • Do not qualify to file Form IT-40RNR. 

Does your spouse have a SSN or ITIN?  

You can always print and mail your state tax return and manually enter the correct residence dates before mailing.