Non resident, retired, received Indiana income, do i owe state taxes

Forum|Forum|1 year ago
February 10, 2025
1 reply
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I have already posted this question, but issue is still not resolved.

I retired in 2023, and moved from Indiana to Florida. In 2024 I received profit sharing payment from my former Indiana employer

for year 2023. Employer deducted Indiana state and local taxes from my payment. Indiana tax law says that if I had income from the state than I have to file income taxes. That is fine, but should I receive all of my Indiana taxes back ?

TurboTax deluxe says that If I did not work nor live in Indiana in 2024, my Indiana income should be 0.

What do I do, is TurboTax not correct ? Or should I include Indiana income and ignore the error check, it reduces my return significantly ?

KeshaH

According to Indiana's rules, since this was a profit-sharing payment from a qualified plan, it'd only be considered Indiana income if you were a legal resident of Indiana at the time you received the payment. Since you lived in Florida when you received the payment, it'd be sourced to Florida.

Your Indiana income in this case should be zero. You will get a refund of the tax that you paid to Indiana.

mt5528Author

I actually received a W2 from the employer for the profit sharing payment. So, I think this is earnings, or wages and not a qualified plan ... Here is what google search says:

Full-year nonresidents who received income from Indiana sources must file an Indiana individual income tax return (Form IT-40PNR). They are subject to tax on that part of their total federal income that is derived from or connected with Indiana sources.

TurboTax merely transferred the amount from federal return and put it in Column B as Indiana taxable income. And than, it realizes that I did not work or live there, and says my Indiana income should be 0.

I think this software is messed up. Is it possible ? I am royally confused.

LenaH

If this profit sharing payment was related to your services before you retired or an employment agreement you had previously, then it is Indiana source income. In this scenario, you would be subject to Indiana state tax.

On the Indiana screens, enter the following:

0 days worked in Indiana
On the screen, Your Indiana wages, enter the amount of your Indiana sourced income. This screen should an amount that matches your W-2 income. By entering the full amount, you are allocating this income to the state of Indiana.

The Check This Entry screen will still populate, but should not prevent you from e-filing your return.

@mt5528

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