Schedule CT-40PNR (IT-40PNR) is a form used by Indiana taxpayers who are either part-year residents or nonresidents, filing a tax return for the year 2026. It serves to calculate the county income tax owed by individuals who worked in Indiana or lived in Indiana for part of the year. This form provides the mechanism for reporting your residency status, income, and calculating any taxes owed based on the county of residence or the county where you worked. Part-year and full-year Indiana nonresidents are required to file this form if they earned income from Indiana sources or worked in an Indiana county that taxes its residents. The form has two sections: one for residents of an Indiana county as of January 1, 2026, and another for nonresidents who worked in Indiana on that date.
How to Complete Schedule CT-40PNR (IT-40PNR)
- Obtain the Form: Schedule CT-40PNR (IT-40PNR) is available for download from the Indiana Department of Revenue website, or it can be filed as part of your IT-40PNR tax package.
- Section 1: To Be Completed by Indiana County Residents (as of January 1, 2026)
- Line 1: Enter the amount from IT-40PNR, line 7. This is the total income you earned in Indiana. If you lived in the same county as your spouse, enter the full amount on line 1A (for you) and 1B (for your spouse).
- Line 2: Look up the county tax rate for your county from the provided chart. Enter the rate on line 2A (for you) and 2B (for your spouse). The rate is specific to the county you resided in.
- Line 3: Multiply the amount entered in Line 1 by the rate on Line 2. This calculates the county tax you owe. If the amount is negative, leave the line blank.
- Line 4: Add the results from lines 3A and 3B for both you and your spouse. If you live in Perry County and worked in Kentucky counties (Breckinridge, Hancock, or Meade), you’ll need to complete additional lines. Otherwise, enter the total from this line.
- Line 5: If you were taxed by Kentucky localities, enter that amount here (refer to the instructions for guidance on which Kentucky areas are applicable).
- Line 6: Multiply the amount from Line 5 by the Perry County rate. Enter this total here.
- Line 7: Subtract Line 6 from Line 4. This will give you the net county tax you owe. If you are married and filing jointly, complete this section as directed and carry the result to Line 9 of Form IT-40PNR.
- Section 2: To Be Completed by Nonresidents Who Worked in Indiana
- Line 1: Enter your principal employment income (this refers to income earned from your work in Indiana).
- Line 2: Enter any applicable deductions allowed under the instructions.
- Line 3: Subtract Line 2 from Line 1. This represents your taxable income.
- Line 4: Enter the exemptions from Line 9 of Schedule D. These exemptions help reduce the amount of taxable income.
- Line 5: Subtract Line 4 from Line 3. This is your adjusted taxable income for Indiana.
- Line 6: Look up the county tax rate where you worked on January 1, 2025. Enter the tax rate on Line 6A (for you) and 6B (for your spouse).
- Line 7: Multiply the taxable income on Line 5 by the county rate on Line 6. This is your county tax liability.
- Line 8: Add the totals from Line 7A and 7B for both you and your spouse. This total is carried over to Line 9 of Form IT-40PNR.
- Finalize Your Return
- After completing the sections applicable to you, ensure all calculations are correct, and that all required fields are filled.
- Once the form is completed, file it with your Indiana tax return. The Schedule CT-40PNR should be attached to your Form IT-40PNR and submitted to the Indiana Department of Revenue either by mail or electronically