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DEPARTMENT OF STATE REVENUE

Information Bulletin #60
Income Tax
May 2012
(Replaces Bulletin #60 Dated August 2009)


DISCLAIMER: Information bulletins are intended to provide nontechnical 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 serve only as a foundation for further investigation and study of the current law and procedures related to its subject matter.

SUBJECT: Taxation of Unemployment Compensation Benefits

EFFECTIVE: January 1, 2010 (RETROACTIVE)

DIGEST OF CHANGES: Reinstates provisions that were in place prior to 2009


INTRODUCTION

All unemployment compensation benefits are taxable at the federal level. However, a federal adjusted gross income threshold of $12,000 for single taxpayers and $18,000 for married taxpayers determines the taxability of unemployment compensation benefits in Indiana.

CALCULATION OF DEDUCTION FROM FEDERAL ADJUSTED GROSS INCOME

The following worksheet should be used to calculate the Indiana deduction, if qualified.
  1. Net unemployment compensation received in the tax year     
  2. Federal adjusted gross income including net unemployment compensation     
  3. Enter $12,000 if single or $18,000 if married filing jointly     
  4. Subtract line 3 from line 2. If zero or less, enter zero.     
  5. Enter 50% of the amount on Line 4     
  6. Taxable unemployment compensation for Indiana purposes:     
  enter the amount from Line 1 or Line 5, whichever is smaller     
  7. Subtract Line 6 from Line 1.     

Enter the amount from Line 7 on the appropriate line of Form IT-40, Form IT-40PNR, or Form IT-40EZ.

If you were married but are filing separately and you lived with your spouse at any time during the year, you must enter 0 on Line 3 of the worksheet. However, if you were married and filing separately and lived apart from your spouse the entire year, you may use the single taxpayer income limitation of $12,000 on Line 3.
____________________________
John Eckart
Commissioner

Posted: 05/30/2012 by Legislative Services Agency

DIN: 20120530-IR-045120252NRA
Composed: Sep 02,2014 8:46:19PM EDT
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