IT-40 Booklet Hits the Presses
Once you set your eyes on the 2009 IT-40 forms and schedules, you will immediately notice how different it looks.
“Having to add eight more lines to the front of the form (for the new add-backs) meant we had to move in a different direction,” says Indiana Department of Revenue’s Individual Income Tax Specialist Diane Blankenship, who writes all the individual tax forms and instructions. “We took a play out of the IRS handbook and have made the IT-40 and IT-40PNR returns schedule-driven. We now have schedules for the add-backs, deductions, exemptions, etc.”
The new forms are designed to give taxpayers more room to write critical tax information, and to accommodate the new add-backs. The new design also lends itself to software developers’ specifications, which will allow the forms that are generated through software programs to have the same “look” as the ones distributed by the Department. “This will help to improve electronic scanning of the paper forms,” said Blankenship.
The tax booklets will begin arriving at the Department’s district offices the week of Dec. 7. Taxpayers can expect their tax booklets to arrive at their homes the week of Dec. 31. In addition, the 2009 individual tax forms and instructions are now available online at www.in.gov/dor/4167.htm
Corporate Tax Forms Have Major Changes, Too!
Like the individual tax forms, tax preparers will right away see that 2009 corporate forms have some noticeable changes, too. Some of these changes are legislation-driven changes; some are cosmetic changes; and some are legislation-driven cosmetic changes.
One of the “legislation-driven cosmetic changes” is the addition of a decimal point and two zeroes (“.00”) in all the dollar amount boxes on the main corporate tax forms. Effective July 1, 2009, taxpayers are now required to round all amounts to the nearest whole dollar amount.
The IT-20, IT-20S, IT-65, and FIT-20 all reflect another major legislation-driven cosmetic change. Seven new add-backs on the corporate tax returns went into effect Jan. 1, 2009.
“Due to space limitations, however, we were unable to give each new add-back its own presence on the forms,” says Indiana Department of Revenue’s Corporate Tax Specialist Megan Wade, who writes all the corporate tax forms and instructions. “Instead, the lines that modify the corporate adjusted gross income were changed to fill-in-the-blank lines, with space for the add-back or deduction’s name and its three-digit code. Supplemental materials that should be sent to the Department with each add-back or deduction claimed and the specific code for each can be found within the booklet instructions.”
The new add-backs this year are as follows:
- Deduction for deferral of business indebtedness discharge and reacquisition
- Deduction for qualified restaurant property
- Deduction for qualified retail improvement property
- Deduction for qualified disaster assistance property
- Deduction for qualified refinery property
- Deduction for qualified film or television production
- Deduction for qualified preferred stock (Freddie Mac and Fannie Mae)
This year there is also a new form—the Schedule IN-PAT, “Qualified Patents Exemption Schedule.” Taxpayers (both corporate and individual) claiming the qualified patents exemption must complete the IN-PAT and enclose it with their Indiana tax return. This schedule contains lines for the name, description, and issue date of the patent, as well as lines on which the taxpayer can carry forward the exemption amount.The 2009 corporate tax forms and instructions went live on the Department’s Web site Dec.1. To view the corporate forms and instructions, visit www.in.gov/dor/4179.htm
New Forms Available Now!
With all the legislative and layout changes to the forms, the Department knows tax practitioners are eager to see the forms and instructions. The 2009 Indiana individual and corporate tax forms became available online on Dec. 1.
You will notice a number of new schedules that will help practitioners and the Department’s equipment better manage add-back data that is now required to be added back to the state returns in 2010 (for 2009 filings).
These changes will ensure that the forms will have the most efficient read rate through the Department’s new paper imaging system, which will provide more timely answers and problem resolution to practitioners down the road. To view the new forms and instructions, visit www.in.gov/dor/3489.htm
Forms Order Process Changing
In an effort to save taxpayer money and bring more efficiency to state government, the Department has had to reevaluate its forms order process for tax practitioners and libraries.
Tax practitioners will now be allowed to place only one form order per season, with a limit of 25 total forms. The IT-40 packet and IT-40 PNR packet will include the tax form and subsequent schedules. However, each packet counts as one form and tax practitioners are limited to one IT-40 and IT-40 PNR packet this year. For example, a tax practitioner can order:
|IT-40 Packet (limit is one)|
IT-40 PNR Packet (limit is one)
Total Forms Ordered 25 (23 stand-alone forms, and 2 packets)
Currently the state spends more than $145,000 per year to administer the forms order process, when all forms are already available online via the Department’s Web site.
“Even in high economic times, this seems like an antiquated process to keep funding,” said Stephanie McFarland, director of public relations for the Indiana Department of Revenue. “All forms are available online today for free, and more than 80 percent of Indiana practitioners use software anyway that use our approved forms.”
Libraries will no longer have to place form order requests. Each library will receive the same type of forms that they ordered in 2009. However, the number of forms they receive will be reduced by 10 percent from last year’s total order amount per branch. The Department will also include additional informational signage that libraries can use to help direct their patrons to I-File, the state’s fast, friendly and free online filing system.
As always, all Indiana tax forms (current and previous years) can be found and printed for free and with no limitation directly from the Department’s Web site at: www.in.gov/dor/3489.htm
If you have questions about the Department’s forms order process, please call (317) 615-2581.
New Schedules Required for Individual Income Tax Filing This Year
You will notice a change to the 2009 Indiana IT-40 and IT-40PNR filing process. Indiana has adopted an expanded schedule-driven approach to reporting income-tax information this year due to several state legislative changes that vary from federal tax changes. Specifically, you will need to complete additional schedules this year to properly file your clients’ returns. But you may not notice the difference until you actually hit the print button on your computer to print out the return.
For example, there are some new federal deductions and an exemption that must be added back to the adjusted gross income amount that begins the Indiana return. All of the standard “add-backs,” including these eight new ones, are now located on the new Schedule 1 (Schedule B of the IT-40PNR). Schedules are also required for deductions, exemptions, other taxes, refundable and offset credits and additional required information.If your client insists on filing a paper return, make sure they enclose all the required schedules.
State’s New Non-Filing Penalty
Effective Jan. 1, 2010, Indiana will allow for a penalty of $10 per day (to a maximum of $500) to be assessed on taxpayers that fail to file an annual individual income-tax return—even if they do not owe tax or are due a refund. Indiana has required taxpayers to file an individual income tax return under these circumstances for decades. However, the possibility of a penalty being assessed is new.
It is important for taxpayers and practitioners alike to know that the Indiana Department of Revenue wants to encourage voluntary compliance. Therefore, the penalty will not be automatically assessed on taxpayers who have acted in good faith to file voluntarily after the annual filing deadline. However, if the Department identifies a non-filer through its own cross-checks and other discovery methods, a penalty will be assessed.
Military Spouses Residency Relief Act
On Veterans Day the Military Spouses Residency Relief Act (P.L. No. 111-97) was signed into law. This new law allows a military servicemember’s spouse to keep a tax domicile throughout the marriage, under certain conditions, and applies to income earned after Dec. 31, 2008.
How the new law affects Indiana income tax filings:
- A qualified military spouse may claim a deduction of Indiana-source earned income (wages, salaries, tips and other compensation, plus any Schedule C sole proprietor income) on the IT-40PNR, Schedule C, under line 11. Specifically, they can claim the new “Nonresident Military Spouse Earned Income Deduction,” with the three-digit code #625. The IT-40PNR cannot be electronically filed if claiming this deduction.
- The Schedule IN-2058SP, Nonresident Military Spouse Earned Income Deduction (in development), along with the spouse’s and servicemember’s W-2s, must be enclosed with the filing.
The Department is creating an exemption form (in lieu of a WH-4) to be filed with the Indiana withholding agent beginning in 2010. This will exempt the military spouse from Indiana state/county withholding taxes while at the same time providing official documentation for the employer and Department’s use.Be sure to look for an updated military Information Bulletin #27, an exemption form and Schedule IN-2058SP on the Department’s Web site at www.in.gov/dor
Important Update – Five Counties Change Their Tax Rates
Carroll, Clark, Clay, Madison and Wabash counties have adopted new county option income rates that went into effect Dec. 1, 2009. These rate changes were adopted after Oct. 15 and before Nov. 1, which is why they became effective Dec. 1.
This information is of particular interest to businesses in Carroll, Clark, Clay, Madison and Wabash counties, as they will need to begin applying these new rates to employee tax withholdings in counties where rates have changed.
To view these rate changes, as well as the complete list of all 92 county tax rates, please visit www.in.gov/dor/files/dn01.pdf
New Tax Bulletins, Directives and Notices Available Online
New Commissioner’s Directives:
Income and Sales Tax Information Bulletins:
Tax Policy Directive:
Be sure to check the Department’s Web site regularly for additional updates to tax bulletins, directives and notices at www.in.gov/dor/3330.htm
New Businesses Now Must Use INtax
Tax practitioners who use vouchers to file and pay sales and withholding taxes for business clients need to know about a change in Indiana law. Effective Jan. 1, 2010, new businesses that register with the Indiana Department of Revenue to collect sales and withholding taxes will be required to electronically file and pay these taxes using INtax.
While it will be mandatory, INtax is a great tool that will make filing and paying your clients’ taxes, and taking care of several other record-keeping tasks, much easier. With INtax, you can manage your clients’ obligations for Indiana retail sales, out-of-state sales, prepaid sales, metered pump sales, tire fees, fuel tax, withholding taxes and so much more!
Many taxpayers and practitioners currently using INtax are extremely satisfied with this online tool. In fact, 93 percent of INtax users recently surveyed said they were satisfied and would recommend INtax to others. And, all users liked the fact that it’s a free program.
Here are just a few of the other things a practitioner can do using INtax:
- Correspond with the Department of Revenue online through a confidential, secure inbox.
- Register a new (or additional) business.
- Schedule payments for future due dates of taxes.
- Use multiple payment options such as electronic check, electronic funds transfer (EFT) and credit cards.
- View a client’s Department of Revenue account balances at any time.
And if you’re a tax practitioner who is not using INtax, it is easy to get started at www.intax.in.gov/
With multiple clients, INtax will cut down on costly printing and postage fees and save you money. Not to mention it will make your life easier, give you 24/7 access to your clients’ business tax records, let you file and pay online right up to the last deadline minute and save you the cost and hassle of mailing those pesky returns on time every month or quarter.
To find out more about INtax, visit www.intax.in.gov/ And for more information about Indiana business taxes, visit the Department’s New and Small Business Education Center at www.in.gov/dor/3939.htm
WH-1 Do’s and Don’ts
Completing the Withholding Tax Form (WH-1) correctly ensures that a business’s withholding taxes by county are reported accurately and timely. It is imperative that these returns (WH-1s) be completed properly to ensure taxpayer money goes to the respective counties.
When filing a paper WH-1, it is important to keep the following do’s and don’ts in mind:
- Complete the county tax breakdown portion on the reverse side of the WH-1 and, beginning in 2010, check the box on the front of the form indicating you have completed the reverse side.
- Be sure that the total amount withheld on the county breakdown on the reverse of the WH-1 matches line 2 on the front of the form.
- Leave the entry blank if the dollar amount is “0”.
- Be sure your client signs and dates the form.
- Don’t use dashes, “0”, a line or other symbols to indicate that you have no amount for that line.
- Don’t cut the form in half (the reverse side must be completed).
- Don’t send in multiple returns for the same reporting period unless otherwise requested by the Indiana Department of Revenue.
- Don’t use another retailer’s WH-1.
More do’s and don’ts and an example of how to complete a WH-1 correctly can be found on the Department’s Web site at www.in.gov/dor/4183.htmFor additional information about the WH-1, contact the Department at (317) 233-4016.
FREE DELIVERY: Get Critical Updates from the Department of Revenue Delivered Directly to You
The Indiana Department of Revenue is offering “free delivery” of critical Indiana tax updates and information directly to you. You can either follow us on Twitter at www.twitter.com/INDeptofRevenue or sign up on our Web site at www.in.gov/dor to get automatic updates on specific information most relevant to you.
In fact, the Department of Revenue recommends you consider doing both, so you’re always in the know.
Tax Schools Offer Expert Education
Each year several Department employees present the "Revenue Update" to tax practitioners throughout the state. This update is a 50-minute presentation given during Tax Schools. It details and explains all of the recent legislative and procedural changes that will occur in the next year. Audience size has ranged from 40 and 110 attendees per session. These sessions also allow attendees to discuss a number of topics that range from the general to the arcane with a Department content expert.
These Tax Schools are joint collaborations among the Indiana Department of Revenue, Indiana University, Internal Revenue Service and Purdue University. They are designed to educate and meet continuing education requirements for attorneys, certified public accountants, certified financial planners and enrolled agents. Topics include the "Revenue Update," small business issues, net operating losses, entity issues and ethics, among many others.
For more information about these Tax Schools, visit:
To better serve Indiana taxpayers, the Indiana Department of Revenue may occasionally inform taxpayers of new services and results of a survey or invite a randomly selected group of taxpayers to participate in a short electronic survey or focus group. Electronic communication and surveys enable the Department to inform you about our services and helps the Department learn how to better serve Hoosier taxpayers.
Electronic surveys and e-mail messages from the Indiana Department of Revenue will never ask for any financial or personal information, and survey responses are always confidential.
If you are asked for personal or financial information (Social Security number, bank account information, etc.), do not reply or click on any links in the e-mail message. Legitimate organizations should never ask for personal information by e-mail.
If you would like to further verify an e-mail you have received by the Indiana Department of Revenue, please call (317) 232-2379.
Remember, the Indiana Department of Revenue will never request personal information by e-mail.For previous editions of the Tax Dispatch, click here.