DISCLAIMER: Information Bulletins are intended to provide non-technical assistance to the general public. Every attempt is made to provide information that is consistent with the appropriate statutes, rules, and court decisions. Any information that is inconsistent with the law, regulations, or court decisions is not binding on either the Department or the taxpayer. Therefore, information provided in this Bulletin should only serve as a foundation for further investigation and study of the current law and procedures related to its subject matter.

SUBJECT: Summary of Tax Credits Available to Taxpayers Who File Income Tax Returns

REFERENCES: IC 6-2.5-3-5; IC 6-3-3; IC 6-3-4-8; IC 6-3.1; and IC 6-5.5-2

INTRODUCTION: There are numerous Indiana tax reduction credits available for individual, fiduciary, partnership and corporate taxpayers. This bulletin classifies all the various credits into a combined summary. It includes the credits that may be claimed when the annual income tax return or other applicable tax form is filed. In the case of partnerships, limited liability partnerships, S corporations and limited liability companies, some credits are allocated to pass through to the partners, shareholders or members of the entity.

You may obtain detailed information on selected credits by searching on the Department's Web page at www.in.gov/dor/reference/bulletins/index.html

I. TYPES OF CREDITS

Credits are divided into two types:

Type 1 - Nonrefundable Credits and Carryovers

Some of the nonrefundable credits may only be used to reduce specific current-year tax liabilities. The unused portion of the credit cannot be refunded or applied against other outstanding tax liabilities. However, there are other nonrefundable credits with provisions stipulating that if the credit exceeds the total of the current amount of tax due, the unused portion may be carried forward to the taxpayer's future tax liabilities for the same tax type.

Type 2 – Refundable Credits

Refundable credits have a limited period of time in which they may be claimed in order to be eligible for refund. Also, at the taxpayer's election, all or portion of a current year's eligible refund can carryover, in lieu of an estimated tax payment, toward the next year's income tax return liability. However, the Department may reduce or apply an eligible refund toward the taxpayer's other unpaid tax liabilities according to IC 6-8.1-9-2 and for a debtor's offset of refunds under IC 6-8.1-9.5.

II. CREDITS AVAILABLE TO TAXPAYERS

The following chart titled Tax Liability Credits on page 4, lists all of the available nonrefundable and refundable credits. Each credit is classified into one of these five categories:

Type 1 Credits

1-A. Nonrefundable credits for certain charitable contributions made within Indiana.

1-B. Nonrefundable credits for qualified investments made within Indiana.

1-C. Nonrefundable credits for income and business activities of Indiana taxpayers.

Type 2 Credits

2-D. Refundable credits for personal and business activities of Indiana taxpayers.

2-E. Refundable credits for estimated and withholding taxes paid to Indiana.

Each credit has been assigned a three-digit code or label identifier to be used when claiming credits on your tax return. The chart includes these codes and a listing of required attachments for claiming the credit on your tax return.

For filing requirements, eligibility, amount of credit, effective dates, carry back/carry forward application and other detailed information, see the specific income tax information bulletin issued by the Department of Revenue, or contact the agency administering the tax credit for instructions. Claims for credits should be supported by filing all applicable schedules and forms, or by a separate calculation and certification from the appropriate agency of the amounts eligible for credit.

Restrictions and Limitations

The credits are to be applied against the claimant's tax due in the following order:

The type of tax to which the credit may be applied is also listed. If the credit can be applied against more than one tax type, the additional tax types are listed in the order to be applied. See page 3 for the key to the abbreviation of tax types.

Additional restriction - A taxpayer, pass-through entity, shareholder, partner or member of a pass-through entity cannot be granted more than one tax credit for the same project. This restriction applies to the following credits:

Amount of Credit Available to be Granted: Limitations

Key for Tax Types Offset

Nonrefundable Credits

Type 1-A Credit for certain charitable contributions within Indiana

Type 1-B Credit for qualified investments (expenditures) made within Indiana

Type 1-C Credits for income and business activities of Indiana taxpayers

Refundable Credits

Type 2-D Credits for personal and business activities of Indiana taxpayers

Type 2-E Credit for estimated and withholding taxes paid to Indiana

III. HOW TO CLAIM CREDIT

To claim credits you must make application or follow claim procedures specified by each tax credit program. Complete the appropriate forms and provide all required supporting documentation. See www.in.gov/dor/reference/bulletins/index.html for additional information issued by the Department of Revenue, or contact the agency administering the credit to verify eligibility requirements and filing instructions.

Below is a list of tax credits and contact information for the administering agency of the credit.

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John Eckart

Commissioner