45 IAC 3.1-1-74 Credit for other state income taxes

Sec. 74. Credit for Taxes Paid To Other States. An Indiana resident must report income from all sources, including out-of-state income, in calculating Indiana adjusted gross income tax. If a resident is required and does pay an income tax to any other state (depending upon which state), possession or foreign country on income derived therefrom, he may, upon production of satisfactory evidence of such payment of tax, claim a credit against his Indiana Adjusted Gross Income Tax. The credit is the lesser of: (a) The amount of income tax actually paid to the other state on income from that state; or, (b) An amount equal to two percent (2%) of the income from the other state which is taxed by Indiana; or (c) The amount of state tax due to Indiana. Credit is not allowed for city income or occupational taxes paid in other states or state income taxes paid in states allowing Indiana residents a nonresident credit. Satisfactory evidence is as follows: The credit taken must be supported by a separate calculation of the credit along with a copy of the tax return filed with the other state, certified as true, and/or having been received by the proper taxing authority of such state. Withholding statements or other evidence of tax payments without a certified copy of an annual tax return will not be acceptable. Income from another state is that part of Federal gross income, minus all attributable Internal Revenue Code section 62 deductions, derived from sources without Indiana that is taxable in a particular state or country and is also taxable under this Act. EXAMPLE: Assuming the following facts: Income from Indiana $ 6,000.00 Income from other state 4,000.00 Total Indiana exemptions 3,000.00 Tax liability to other state 100.00 Calculate Indiana tax and credits as follows: Total income $10,000.00 Less: Exemptions 3,000.00 Taxable Income 7,000.00 Indiana tax rate .02 Indiana tax 140.00 Credit for tax paid to other state: Income from other state $ 4,000.00 Indiana rate .02 *Tax Credit $ 80.00 Balance of tax due Indiana $ 60.00 *[This amount cannot be larger than tax actually paid to other state.]