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Form IT-40RNR (Reciprocal Non-Resident Return, County Tax)

Overview

Indiana doesn't tax the state income on wages earned in Indiana by residents of Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. However, if the taxpayer worked in an Indiana county as of January 1 of the tax year, they still have to pay Indiana county income tax on those wages. Instead of filing Form IT-40PNR, taxpayers can file Form IT-40RNR, a wages-only return, to calculate the county tax if they meet certain conditions.

Requirements to file Form IT40-RNR

Per guidance of the Indiana Department of Revenue, an Indiana full-year nonresident taxpayer is eligible to file Form IT-40RNR only if they meet the following conditions:
  • The taxpayer is a full-year resident of KY, MI, OH, PA, or WI. If the taxpayer lived in any other state or had more than 1 state of residency during the year, taxpayer will need to file Form IT-40PNR.
  • The taxpayer’s only Indiana source of income is from IN wages reported in Box 16 on the W-2. (Indiana recommends that Box 16 wages, not Box 18 wages, are used in determining county taxable income.) If the AGI Worksheet (located in Forms view under the
    AGI
     folder) reflects Indiana source income from any other sources, or if income is apportioned via Schedule IT-40PNRA, Form IT-40PNR calculates instead of Form IT-40RNR.
  • The taxpayer’s only source of Indiana withholding is from W-2. If the return reflects any other withholding, including Unemployment withholding, the taxpayer will need to file Form IT-40PNR.
  • The taxpayer didn’t make any Indiana estimated payments.
  • The taxpayer isn't claiming deductions other than those specified on Form IT-40RNR.
  • The taxpayer isn't claiming any credits.

Prepare Form IT-40RNR

Do the following steps to prepare Form IT-40RNR.
  1. Select
    File
    ,
    Client Properties
    , the
    Indiana
     tab,
    Nonresident
    , then mark the
    IT-40RNR Reciprocal Nonresident Return
     checkbox.
  2. On the federal
    W2
     screen, enter
    IN
     in Box 15, and wages amount in Box 16. Enter State withholding in Box 17. Also enter the Local withholding in Box 19, and the Locality code ("I" plus the 2-digit county code) in Box 20.
  3. On the
    INGen
     screen, enter the
    County of residence
     as
    95
    ,
    96
    ,
    97
    ,
    98
    , or
    99
     to indicate the taxpayer was a resident of a reciprocal state (KY, MI, OH, PA, WI). Enter the proper 2-digit code for the
    County of employment
     as of January 1. If the employer withheld Indiana state or county taxes but Indiana principal employment didn’t start until after January 1 of the tax year, enter
    00
     for the
    County of employment
     on the
    INGen
     screen to show that the taxpayer isn't subject to county tax for the year.
  4. In the
    INPYNR
     screen, in the
    State of residency (only one state of residency)
     field, select
    KY
    ,
    MI
    ,
    OH
    ,
    PA
    , or
    WI
    .

This article applies to:

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