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County tax (CT-40, CT-40PNR)

Use the
County Tax
 section of the
INGen
 screen in the
General
 folder to enter county tax information. To calculate county tax on Schedule CT-40, CT-40PNR, or Form IT-40RNR, you'll need to first determine the county tax rate and county taxable income.

Determine the county tax rate

Each of the 92 counties in Indiana has its own rate. For the purpose of determining the proper county tax rate, it doesn't matter if the taxpayer’s county of residency status or county of employment status changes during the year. The rate itself is based on the taxpayer’s residency or employment status as of January 1 of the tax year.
Residency status
If a taxpayer and/or spouse lived in Indiana on January 1, enter the Indiana county they were living in at that time in the
County of residence
 fields on the
INGen
 screen in the
General
 folder. Indiana-source income will be taxed at this county’s tax rate. If the taxpayer or spouse were military personnel that are exempt from county tax, enter code
00
. If a taxpayer and/or spouse didn't live in Indiana on January 1, principal employment status will determine their tax rates.
Employment status
If a taxpayer and/or spouse didn't live in Indiana on January 1 but was earning principal employment income in Indiana on January 1, enter the county they were earning the income in the
County of employment
field on the
INGen
 screen in the
General
 folder. A taxpayer’s principal employment income will be taxed at this rate. If, on January 1, a taxpayer wasn't living in Indiana nor did they have principal employment in Indiana, there's no county tax, even if either of these statuses change after January 1. If an employer withheld Indiana state or county taxes, even though Indiana principal employment began after January 1, enter code
00
.

Determine county taxable income

If the taxpayer is filing single or married filing joint and both live and/or work in the same county, Schedule CT-40 or CT-40PNR, Section 1 uses the taxable income on Form IT-40 to calculate county taxable income. If the taxpayers are married filing joint but live or work in different counties, county taxable income calculates on the Indiana Taxable Income Worksheet for the taxpayer and spouse individually. Schedule CT-40 or CT-40PNR, Section 1 uses this worksheet to calculate county taxable income. The income for Schedule CT-40PNR, Section 2 calculates based on eligible Indiana source wages from W-2, Box 16 (not 18) and Indiana source income from Schedule C. Use the
Principal employment income (Force)
 field on the
INGen
 screen to force the amount reported on Schedule CT-40PNR, Section 2.

Credit against county income tax

Schedules CT-40 and CT-40PNR don't have a provision for credits against county income tax. Instead, credits against county income tax calculate on Schedule 6 or Schedule G. To calculate the Indiana Credit for Local Taxes Paid Outside Indiana Worksheet, enter code
18
 in the
State use
 field on the federal
W2
 screen for local wages/withholding from KY, MI, MO, OH. Force fields are also available on the
INCr
 screen.

This article applies to:

  • Product: UltraTax CS
  • Return type: 1040 Individual
  • State: Indiana
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