Non-resident Indiana county tax.

[mjh1]

TurboTax instructions say I don’t owe county tax in Indiana because I’m a non-resident and don’t work in Indiana. This is true, but TT is calculating county tax and adding it to my return anyway. Prior to 2025, I was a resident—I left in 2024.  Now, TT is calculating county tax due on the 2025 return. I talked to their “expert” who went over all my entries and confirmed they are correct. A second “expert” suggested that I delete the State return and start it over; but I’m not confident that will solve the problem.  AI chat suggested that I file it anyway and submit an amended return!  I have my doubts about that, too. Obviously, there’s a problem in TT software, and they don’t seem interested in fixing it. Anyone have another idea?

[AmyC]

 I am thinking you have business income/ rental/ some income from IN forcing you to file a return since you no longer live or work there. There is a good chance some ghost data is in your return. Let's go through a few basic things that you may have already done:

1. Open to your federal return
2. Personal info
3. Edit your state of residence
4. Verify your new state is listed and IN is not anywhere in the federal section - despite needing to file a return
5. Open to your IN return
6. Go through the General Info section
7. In which county did you live? select Out of State
8. In which county did you work? select 00 or 99 - depending on the version
9. If those answers were already marked correctly, change the answers to some random county, continue, continue
10. Change the answers back to the correct answer. This should force a refresh.
11. You should be cleared and ready to file. If not, there is definitely ghost data in your return.

A full or corrupted cache can cause problems in TurboTax, sometimes you need to clear your cache (that is, remove these temporary files). Delete all the forms that relate to the county.

Online version:

1. Delete all the forms related to county, see How to Delete  
2. Log out of your return and try one or more of the following:
   • Don't use Internet Explorer.
   • Clear cache and cookies,
   • Sign in using a different browser.
   • Sign in using a different device.
3. Log back into your return.
   • Enter the information again.

Desktop version: 

1. Delete the forms
2. Save your return while closing the program.
3. Update the program
4. Open
5. Enter the information again.

Just for kicks, I asked Gemini your question and it said amending the return was terrible advice. Which it was. You do not want to file an incorrect return. If you do all of the above and still have an issue, delete the state, clear cache and cookes, etc again. Best wishes!

[mjh1]

Thanks for the suggestions.  I tried changing the county info over and back, no success.  I cleared cookies.  Nothing.  TurboTax won't let me delete the relevant forms.  When I try to delete any of them, it says the form was deleted, but it still remains on the list.  If I clear the cache for TurboTax, will I have to enter all my tax information again?  I'd rather just leave it alone and fill out the IN return myself than do that.

[mjh1]

I have also cleared cache.  Attempted to delete State form entirely, using the Start Over option.  It still carries over some of my previous entries.  It's just assigning some random rate of county tax.  Tried signing in on a different browser.  Nothing has worked.  Is there some way I can just get a refund of my State filing fee?

[MarilynG1]

Make sure your W-2 entry doesn't show any tax county tax withheld (or income).  If you imported your W-2, try deleting it and re-entering it manually.  

Also, in the Indiana State interview, make sure you indicated 'non-resident' at the beginning of the interview.  In that case, you should not be asked for an address or County in the following screens.

@mjh1 

[mjh1]

I had no W-2s.  One 1099-R has IN state tax withheld (not specific to county).  I can't delete that, because then I wouldn't get credit for the State tax withheld.  

I did choose non-resident, and even after choosing that, there is a screen where I entered my FL address for the entire year.  

I have gone over all my entries with TT "experts" 3 times now--twice by phone, once by chat.  They agree that my entries are correct.  They had me try various things without success.   I have deleted the IN return and done it over also, and did so again just now, in hopes that TT would have the problem fixed.  No success.

Here is the TT help screen:

"Indiana County Tax

The Indiana county tax is calculated as a percentage of your income similar to how the state tax is computed and is based on the county you lived in on January 1, 2025.

If you did not live in Indiana on January 1, 2025 then you are not subject to Indiana county tax unless you worked in Indiana on January 1, 2025, in which case the county tax is calculated based on the county of employment.

Nonresidents who lived and worked outside Indiana on January 1, 2025 are not subject to Indiana county tax for the entire year even if they moved to Indiana or started working in Indiana on January 2."

The above info is correct.  My entries as a non-resident who did not work in Indiana at all in 2025 are all correct.  TT is still calculating a county tax due.  This is a problem with TT software that needs to be corrected.  If TT does not get it corrected, I suppose I can get forms from the State of IN and fill them out myself, but the whole reason I rely on TT is so I can be assured that my taxes are computed correctly.  If TT can't this done correctly, how can I trust that any other part of my return is correct?

[JamesG1]

In TurboTax, in the Indiana nonresident income tax return, at the screen Your County of Employment, what selection was made?  Please clarify.

I am able to enter OUT-OF-STATE - OTHER STATES and the Indiana IT-40PNR reports $0 Indiana income and refunds the Indiana income tax withheld.

Below the address on the tax return, it states:

Enter the 2-digit county code numbers for the county where you lived and worked on January 1, 2025.

The Indiana IT-40PNR reports County where you lived as 00 and County where you worked as 00.

@mjh1 

[mjh1]

James, I'm using the online version of TT. 

After selecting non-resident on my IN return, the next screen asks for my state of residency--FL. 

Next, number of days worked in IN--0.  

Next, county of employment (redundant, since I didn't work at all in IN), but selected "Out of state--other states" as instructions say to do.  I have tried leaving it "No entry," but TT won't proceed without an entry there.

Next, State Residency Information.  FL, all year, from 1/1/25 to 12/31/25.  It doesn't give the option of filling in dates prior to 2025.   I have tried checking both yes and no for filing a FL return, and that doesn't change anything, either.

I know TT SHOULD put 00 on the IN return, but it's not; and I can't change it from the return.  It's putting in a county code from the IN county I lived in until I left in 2024, and I don't know why it's doing that, but I can't change it.  

[mjh1]

Just FYI for anyone else who faces something like this:

After numerous contacts with TT "experts," I determined that I would stay on the phone with one until I had this solved.  Fortunately, "Anne" was helpful and agreed to work on the problem with another expert.  After 1 hour and 50 minutes on the phone, they came up with this work-around.

On the screen that asked about my residency, I changed it to resident of Indiana (which is not true).  At that point, TT asked for my county of residence, which it had not asked when I checked that I was not a resident.  It had prepopulated the field with a county that I had lived at the previous tax year.  I changed that to the option "OUT OF STATE."  Then I was able to go back to the question about residency and change it to non-resident.  Viola.  Fixed.  TT was carrying over information that should not have been.  Thanks for hours wasted, TT.  But, at least now my return is -- maybe -- correct.