Keeping You Informed on Indiana's Tax Changes
By Jennifer McNett, CPA
Manager, Tax Services

In 2011, Indiana's lawmakers made several changes that affect income, sales and use taxes. Do any of these changes benefit or burden you? Here's a quick summary of some of the key changes.

Several of the deductions that had been allowed on federal income tax returns in recent years will need to be added back on your Indiana return for 2011. Some of these include:

Deduction for distribution from an individual retirement plan paid directly to a charity.
Deduction for qualified tuition and fees.
Expenses of elementary and secondary school teachers.
Excess depreciation deduction for qualified leasehold improvement property classified as 15-year property (Indiana returns to treating as 39-year property).
Previously tax-exempt interest income from state and local obligations from outside Indiana (acquired after 12-31-11).

On the upside, there are some new deductions/credits available. These include:

A deduction of $1,000 per dependent who was enrolled in a private school or home-schooled (K-12) for tuition, fees, computer software, textbooks and school supplies.
A credit of 50% (limited to the current year tax liability) of the contribution to a Scholarship Granting Organization, such as the Educational CHOICE Charitable Trust or other approved SGOs.

Some other changes to note include:

Eliminated the net operating loss carryback after 12-31-11 for corporations and individuals.
Extended the time to protest an assessment from 45 days to 60 days.
Now allow voluntary withholding of state and local taxes from payments for unemployment compensation.
Eliminated the health benefit plan tax credit for employers providing health insurance to certain employees.
Eliminated the small employer qualified wellness program credit for employers offering a qualified wellness program to employees.

If you would like additional information on any of these changes, please contact Jennifer McNett at 317.613.7857 or [email protected].