What are the Income Tax Laws in the State of Indiana?
Tax season is never a favorite season even if you are eligible for a considerable return. Adding insult to injury is when you hear about states that do not have any state income taxes. This is why you need to know how the Hoosier State laws compare to the laws in other states and where the different income tax statutes are applicable. Below is a summary of the Indiana personal income tax laws.
Most of the taxes that are collected in the state are used for the infrastructure in the state such as for roads, police, education, and other state services that are essential. The personal income tax laws in Indiana levy a tax of 3.4% on all income that is taxable of their residents. On the other hand, there are a few institutes, partnerships, corporations, as well as trusts that may need to pay an additional amount on the income gained from their business.
The income tax codes in Indiana overlap with the federal tax laws and consumer tax laws. It is under the basic tax law that the state, as well as federal governments, can tax the residents on their earned as well as unearned income. Unearned income consists of secondary incomes such as dividends, interest, profits from asset sales, farm, and business income, and income from rent while earned income is the wages, salaries, commissions, tips, unemployment benefits, bonuses, as well as sick pay.
The Internal Revenue Service that is the IRS handles all federal taxations that are collected according to the Internal Revenue Code. The files and forms that you need to know more about the federal tax laws can be found along with other publications. Most of the federal codes and state income tax laws are similar however there are a few distinctions between the two that you need to take into consideration before you pay your taxes. The significant differences are that the state usually offers a taxpayers assistance program for those who need help while filling out their state as well as federal income tax return forms. The states also ensure that the needed forms are readily available online.
It may sometimes seem a bit impossible to navigate through all the tax codes, and there could be a hefty penalty for filling errors hence it is essential to learn as much as you can about these tax laws.
Who needs to file tax returns in Indiana?
You would need to file income tax returns in the state of Indiana if you have lived in Indiana and received income here or if you have lived outside Indiana but received income from a business or individual in Indiana.
If you are a full-time resident of Indiana and your gross income that is total income before deductions are more than the exemptions claimed you would need to file income tax returns. There is a general rule that states that if you have an income of more than $1000, then you need to file. It is also a good practice to file returns anyway if you are in doubt.
If you are a part-time resident that has received income while you lived in Indiana, you will also need to file Indiana income tax returns likewise if you are a full-time nonresident but are receiving any income from a source in Indiana you would need to file income tax in Indiana.
Once you are familiar with the Indiana tax code and know exactly what kind of tax you need to pay you can file your taxes clearly and not rely on a third party for doing the same.