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If they file married filing jointly for federal tax purposes, then they must file a married filing jointly Indiana return. If they file married filing separately for federal tax purposes, then they must file a married filing separately Indiana return.
When filing the return, write "Combat Zone" across the top of the form (above your Social Security number).
Note: Valid extensions are only for filing purposes. Interest will be due on any tax that remains unpaid during the extension period.
Important: If you were an Indiana resident at the time you enlisted in the military service, Indiana will be your home of record; you are considered to be a full-year Indiana resident for state income tax purposes during your enlistment regardless of where you are stationed, and all of your income will be taxed by Indiana.
You have special filing considerations if Indiana is your military home of record. Read the following to see which set of circumstances fits you.
If your spouse maintains his/her Indiana residency during your enlistment, all of his/her income will be taxed by Indiana, regardless of where you are stationed.
Example 1 You and your spouse were stationed in Indiana all year. Both you and your spouse's total taxable income will be taxed by Indiana.
Example 2 You and your spouse were stationed in Virginia. As long as your spouse maintains his/her Indiana residency, all of your joint income will be taxed by Indiana.
Note: If Virginia taxes some or all of your spouse's income, you will be allowed to claim a credit for taxes paid to other states on your Indiana return.
If your spouse is a part or full-year Indiana nonresident, see Example 3 to help determine the amount of income subject to tax by Indiana.
Example 3 You and your spouse are stationed in California. Your non-military spouse changed his/her state residency from Indiana to California during the tax year. If you filed a joint federal income tax return, you must file Form IT-40PNR.
Example 4 You and your spouse are stationed overseas. Your spouse is also in the military, with a Montana home of record. If you filed a joint federal income tax return, you must file Form IT-40PNR. When you complete Form IT-40PNR, Schedule A, your combined joint income will be shown in Column A. Any income your spouse earned from Indiana sources (such as partnership or S corporation), plus your income, will be reported in Column B. Then, complete Schedule IN-2058SP*, Nonresident Military Spouse Earned Income Deduction, to figure the amount of your spouse’s income that is exempt from Indiana income tax.
Note: If you filed separate federal income tax returns, you will file the Form IT-40. Your spouse will not be required to file a Form IT-40PNR with Indiana unless he/she received income from Indiana sources.
*Nonresident military spouse earned income deduction. A spouse of a nonresident military servicemember may not owe tax to Indiana on earned income from Indiana sources.
The spouse may be eligible to claim a deduction if:
To claim this deduction you must enclose a completed Schedule IN-2058SP, which is available here.
Indiana military personnel have special county tax filing considerations. See which of the following examples applies to you.
Example 5 You are single and you enlisted in the military service during the tax year. You were an Elkhart County resident on January 1 of that year. You will file Form IT-40 as a full-year resident and will show Elkhart as the county where you lived on January 1. You will owe Elkhart county tax at the resident rate.
Example 6 You are single and you were stationed outside Indiana before the first of the year. You will not owe an Indiana county tax. Enter "00" (indicating out-of-state) as the 2-digit county code number in the county information boxes at the top of your tax return.
Note: Examples 7 through 9 apply if you are married and filing a joint Indiana income tax return.
Example 7 You were a Daviess County resident at the time you enlisted. Your spouse maintains his/her Indiana residency. Daviess County will be your county of residence while you are stationed in Indiana. You will owe Daviess County tax at the resident rate.
Example 8 You were a Marion County resident at the time you enlisted. Your spouse maintains his/her Indiana residency. You and your family have been stationed outside Indiana for the last few years. You and your spouse's county of residence as of January 1 will be considered to be "out-of-state". You will owe no county tax. Enter "00" (indicating out-of-state) as the 2-digit county code number in the county information boxes at the top of your tax return.
Example 9 You were an Indiana resident at the time you enlisted. Your spouse maintains his/her Indiana residency. If you are stationed outside Indiana, but your spouse maintains a household in Indiana, your county of residence as of January 1 will be considered to be the same as your spouse's. Therefore, you will owe tax to that county on your income.
Note: If you have a military personnel question that is not answered here, please e-mail Tax Administration.