2015, 2016 Indiana Earned Income Credit Indiana EITC

By | January 3, 2016

Indiana enacted a state EITC in 1999, but it was not based on the federal EITC. In 2003, Indiana switched to an EITC model that replicated the federal program. Indiana is one of 24 states that have their own state EITC to supplement the federal credit.

Claiming the Indiana EITC

State EITCs range from 3.5 percent to 35 percent. The District of Columbia has the highest credit at 35 percent. Indiana’s EITC is based on the federal EITC and is set at 9 percent of the federal credit.


Indiana Earned Income Credit Indiana EITC

According to the most recent information available, more than 493,000 Hoosiers benefitted from the federal EITC. However, the IRS estimates that approximately 25 percent of individuals who are eligible do not file. Using this data, approximately 123,250 additional Hoosiers were eligible to receive the federal EITC in 2008, but did not claim it. With an average return of $1,991 for the federal credit, that amounts to over $245 million in unclaimed dollars for Hoosier workers


Who can claim Indiana Earned Income Tax Credit?

If, during 2015: • you were an Indiana resident, and/or • had income from Indiana sources, and • you claimed the EIC on your federal income tax return (Form 1040, 1040A or 1040EZ), then you may be eligible to claim Indiana’s EIC. STOP. You must get the 2014 IT-40 or IT-40PNR instruction booklet before you can continue. The instructions for how to figure Indiana’s EIC are located within those booklets. You may find these booklets online at www.in.gov/dor/5174.htm. Once you get the instructions, review Step 1 through Step 7, and complete either Worksheet A or Worksheet B to figure your Indiana EIC. After you have completed the worksheet, return to these instructions and finish Schedule IN-EIC. Caution: Schedule IN-EIC must be filed with your tax return in order for you to be eligible to claim Indiana’s EIC.


Calculate Indiana Earned Income Credit EITC

To figure your Indiana earned income credit: • Follow the steps below. • Complete the Worksheet(s) that apply to you. • Complete and enclose Schedule IN-EIC. • Enter on Schedule F, line 5: ◦ Box A, your Indiana Earned Income Credit from Schedule IN-EIC, line A-3; ◦ Box B, the number from Schedule A, Proration Section, line 21D; then • Multiply the amount in Box A by the number in Box B. Enter the total on line 5.


Requirements for Indiana EITC

If your qualified dependent child was born and died in 2014 and you do not have an SSN for the child, enter the word “Died” in the third (largest) Social Security Number box associated with your child’s name. You must keep a copy of the child’s birth certificate, death certificate and/or hospital records with your records as the Department may request this information at a later date. The documents must show the child was born alive.


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: • Indiana is not the military servicemember’s state of domicile as reported on the servicemember’s Form DD-2058; • The military servicemember and spouse are domiciliaries of the same state; • The military servicemember is in Indiana on military orders; • The military servicemember’s spouse is in Indiana in order to live with the servicemember, and resides at the same address; or • The military servicemember and spouse live together in a state other than Indiana, but the servicemember’s spouse works in Indiana; and • The Indiana-source income is included on Indiana Schedule A on line 1B, 2B and/or 7B