2008 Indiana Department of Revenue Tax Update

1. 2008 Indiana Department of Revenue Tax Update

2. Electronic Filing • Nearly 1.9 million filed state return using an electronic filing option in 2007 • 22-percent increase over the same time last year • Each electronic return filed saves taxpayers 96 cents

3. I-FileFast, friendly and free • Prepare and file Indiana tax returns using the Internet • Available to taxpayers and tax professionals • Uses a question/answer format • www.ifile.in.gov

4. Collection Allowance Changes Change effective for reporting periods after June 30, 2008 • 0.73 percent if the total sales tax collected was less than $60,000 • 0.53 percent if the total sales tax collected was between $60,000 and $600,000 • 0.26 percent if the sales tax collected was more than $600,000

5. Electronic Funds Transfer (EFT) Filers • Effective January 1, 2009 EFT taxpayers are required to file monthly ST-103 forms rather than quarterly recaps • Effective January 1, 2009 EFT withholding taxpayers are required to file monthly returns (WH-1) in addition to the monthly tax payment • Annual WH-3 is still required

6. Withholding Tax Effective Jan. 1, 2009 – County tax withheld must be broken down by county on WH-1 return.

7. Individual Income Tax Renters Deduction - Increased from $2,500 to $3,000 Homeowners Deduction - 2008 taxpayers billed and paid property tax payable for 2007 may be eligible for up to $2,500 deduction Taxpayers can also be eligible for 2008 deduction for taxes normally payable in 2008

8. Military Income Military Service Deduction – The maximum military service income-tax deduction is increased from $2,000 to $5,000 per qualifying person

9. Military Income National Guard and Reserve Component Member Deduction - For tax years beginning after Dec. 31, 2007 • For service as a result of involuntary orders • During the period the person is deployed or mobilized for full time service • During the period for which the member’s National Guard unit is federalized

10. Military Income To take these deductions: • IT-40 Schedule 1 “Other Deduction" • IT-40PNR Schedule D

11. Military Income Notes: • An individual may be eligible for both deductions within a given year • Both deductions when combined cannot be greater than the total taxable military income received during the year

12. Estimated Tax Carryover IT-40 and IT-40PNR – overpayments can be carried over to next year’s estimated tax account Beginning with 2008 tax returns, a remittance can no longer be added for purposed of increasing the amount to be carried over

13. Composite Filer Credit S corps and partnership are required to include all individual nonresident shareholder/partners on a composite tax return at the entity level. Individual nonresidents included on the composite return may have other taxable Indiana-source income, requiring them to file the IT-40PNR. If so, the individual may be eligible for a composite filer credit.

14. County Tax Counties can adopt or change local income tax rates through Dec. 31, 2008. Rates printed in booklets may have changed. For the current rates, visit: www.in.gov/dor/3980.htm county tax schedules have been modified if Lake County adopts local tax, DOR must collect certain information for Lake Co distribution purposes

15. County Tax New Schedule CT-40EZ

16. Processing Paper Returns Include all information loose in the envelope • No Staples • No Paper Clips 1D Barcode will be on most forms/schedules Barcode will identify: • tax year • form type • page

17. 2009 Earned Income Credit increases from 6 percent of the federal credit to 9 percent (effective Jan. 1, 2009)

18. IT-40ES Effective Jan. 1, 2009 you must distinguish between state AGI tax and LOIT on the IT-40 ES and ES-40

19. WH-4 Effective Jan.1, 2009 nonresident alien can claim only one exemption for purposes of figuring withholding tax

20. WH-4P Effective Jan. 1, 2009 withholding of AGI from an annuity, pension or retirement plan must distinguish between AGI tax and LOIT

21. Personal Representative Information • Taxpayers can use this area of the tax returns to authorize a personal representative • Personal representative can be a friend, relative, etc. • Authorization can be revoked anytime with signed statement Required information: • name • Phone number and complete address

22. Paid Preparer Information Required Information: • Name/address of firm • IN-OPT on file with preparer if not filing electronically • ID number • Telephone number • Complete address • Signature with date

23. Power of Attorney • Individual representative name • address • telephone number • Firm or Corporation • address • telephone number

24. Power of Attorney The Department will accept a signed, faxed POA. • Fax POA to: (317) 615-2736 We will even accept an electronic image: • PDF, JPEG, GIF • Email the image to: rabell@dor.in.gov Mail to: P.O. Box 7230 Indianapolis, IN 46207-7230 FAQs visit: www.in.gov/dor/3802.htm

25. Electronic Filing Mandate if a professional preparer files more than 100 tax return in a calendar year for individuals, those returns must be filed in an electronic format

26. Electronic Filing Mandate Effective Jan. 1 2011 A penalty for professional preparer of $50 is imposed for each return that is not filed electronically, $25,000 per calendar year. Exception Individuals may opt-out having their return filed electronically. Form IN-OPT must be signed and filed with preparer. Opt-out option must be indicated on the return.

27. CollegeChoice 529 New Plan Administrator • Account numbers will now be 11 digits beginning with “61” or “62” • For more information visit: www.collegechoiceplan.com www.in.gov/dor/3650.htm • To claim credit you must include the IN-529: www.in.gov/dor/3910.htm IB #98

28. Obsolete Schedules forms used to report partnership and/or S corporation income (loss) no longer required • Schedule 3 • Schedule 3A • Schedule F • Schedule F1

29. Estimated Corporate Payments For taxable years beginning after Dec. 15, 2007, a corporation or financial institution is not required to file quarterly estimated payment if its annual unpaid liability is less than $2,500. The previous limitation was $1,000.

30. Corporate Information Qualified Patents Income Exemption • Income tax bulletin #104 Captive Real Estate Investment Trust • Effective Jan. 1, 2008 – Corps must add back deductions for dividendspaid to shareholders of a captive real estate investment trust for taxable years beginning after Dec. 31,2007

31. Other Indv/Corporate Credits Indiana Research Expense Tax Credit Increasing Ethanol Production Tax Credit to Include Credit for Cellulosic Ethanol • Information Bulletin #93 Energy Star Heating and Cooling Equipment Tax Credit • Information Bulletin # 100

32. Other Indv/Corporate Credits Rerefined Lubrication Oil Facility Credit Repealed • Effective March 20, 2007 – credit is repealed Coal Gasification Technology Investment Tax Credit • Information Bulletin #99 Media Production Credit • Commissioner’s Directive #36 Ethanol Production Credit • Information Bulletin #93

33. Additional Highlights New Subscription Tool Available • After registering, you’ll receive an email to inform you of Web site updates • Subscribe to the entire Web site or a specific area • Choose when you receive emails – Daily, Weekly or Monthly

34. Additional Highlights INtax • Instant access to file and pay business taxes online • Review account history • www.intax.in.gov

35. Additional Highlights Feedback • Form changes • Web site suggestions • Department interaction • feedback@dor.in.gov