Schedule G (IT-40 PNR)

Here is a line-by-line guide for completing Schedule G (IT-40 PNR)

Schedule G: Offset Credits is a critical supplementary form for Indiana taxpayers filing the IT-40 PNR (Part-Year or Nonresident) return. Its primary purpose is to lower your overall tax bill by applying specific “offset” credits against your Indiana state and county tax liabilities. These credits are non-refundable, meaning they can reduce your tax owed to zero but cannot generate a refund check if they exceed what you owe. The form is divided into two distinct sections based on what tax they reduce: Lines 1 through 3 are dedicated to credits that offset your county tax liability (tax owed to specific Indiana counties), while Lines 4 through 7 focus on credits that offset your state adjusted gross income tax. Properly filing this schedule ensures you don’t double-pay taxes on the same income to different jurisdictions and allows you to claim incentives for things like charitable contributions to Indiana colleges or investments in community revitalization.

How To File Schedule G (IT-40 PNR)

Schedule G must be filed as an enclosure with your main Form IT-40PNR. You cannot file it by itself.

  • Attach it: Physically attach or digitally upload this schedule along with your IT-40PNR return.
  • Transfer Totals: You must transfer the final total from Line 8 of this schedule directly to Line 13 of Form IT-40PNR.
  • Documentation: Certain lines require you to attach additional proof, such as another state’s tax return (for Line 5) or specific credit schedules (like Schedule CC-40 for Line 4).
How To Complete Schedule G (IT-40 PNR) Line-by-Line Instructions

How To Complete Schedule G (IT-40 PNR): Line-by-Line Instructions

Follow these instructions carefully to ensure every credit is claimed correctly.

Section 1: Credits that Offset County Tax (Lines 1–3)

Note: The total of Lines 1 through 3 cannot exceed the amount of county tax you owe. Check your Form IT-40PNR, Line 9, to see your county tax liability limit.

Line 1: Credit for local taxes paid outside Indiana
If you paid a local income tax to a city or county outside of Indiana (for example, a city tax in Ohio or Michigan) on income that is also being taxed by an Indiana county, you may be eligible for a credit here. Enter the amount of local tax you actually paid to the non-Indiana locality. This prevents you from being taxed twice at the local level on the same income.

Line 2: Community revitalization enhancement district credit
Enter the amount of your allowable credit for investing in a designated Community Revitalization Enhancement District (CRED). This incentive encourages investment in specific areas to spur economic development. If you made a qualified investment and have the necessary certification from the Indiana Economic Development Corporation (IEDC), enter the credit amount here.

Line 3: Other Local Credits
This section is for any other specific local credits that don’t fit on the lines above.

  • Line 3a & 3b: For each credit, enter the credit name, the specific code number assigned to that credit (found in the IT-40PNR instruction booklet), and the dollar amount.
  • Note: If you have more credits than lines available, you must enclose additional sheets listing the same details (Name, Code, Amount) and include the total here.

Section 2: Credits that Offset State Tax (Lines 4–7)

Note: The total of Lines 4 through 7 cannot exceed the amount of state tax you owe. Check your Form IT-40PNR, Line 8, to see your state adjusted gross income tax liability limit.

Line 4: College credit
If you made a charitable contribution to an eligible Indiana college or university, you might claim a credit here. You must first complete Schedule CC-40 to calculate the allowable amount. Attach Schedule CC-40 to your return and enter the calculated credit amount on this line. Generally, this credit is limited to 50% of your contribution, up to a maximum of $100 for single filers or $200 for joint filers.

Line 5: Credit for taxes paid to other states
This is one of the most common credits. If you paid income tax to another state (not a locality, but a state) on income that is also taxed by Indiana, you can claim a credit to avoid double taxation.

  • Requirement: You must enclose a copy of the other state’s tax return to prove you paid the tax.
  • Enter the calculated credit amount on this line.

Line 6: Other Credits
Use this section for miscellaneous state-level credits that are not listed separately.

  • Lines 6a through 6d: For each credit, you need to provide the credit name, the 3-digit code number (refer to the instruction booklet for a list of valid codes), and the amount.
  • Examples might include the Headquarters Relocation Credit or the Teacher’s Classroom Expense Credit (if applicable for the tax year).
  • If you have more credits than space allows, enclose additional sheets with the details.

Line 7: Enter the total credits from Schedule IN-OCC
If you are claiming “Other Certified Credits” (credits that require certification from a state agency, like the Hoosier Business Investment Credit), you must file Schedule IN-OCC.

  • Complete Schedule IN-OCC first.
  • Take the total from Line 8 of Schedule IN-OCC and enter it here on Line 7.
  • Requirement: You must enclose Schedule IN-OCC with your return.

Section 3: Total Offset Credits

Line 8: Total Offset Credits
Add the amounts from Lines 1 through 7.

  • Enter the grand total in the box on Line 8.
  • Crucial Step: Take this total figure and enter it on Line 13 of your Form IT-40PNR. This is the final step that actually lowers your tax bill.

Remember to round all entries to the nearest whole dollar (.00).

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