Schedule IN-2058SP

This article provides a detailed, step-by-step guide on how to correctly complete Schedule IN-2058SP, a form used by nonresident spouses of military servicemembers to claim the earned income deduction in Indiana.

Schedule IN-2058SP, also known as the Nonresident Military Spouse Earned Income Deduction, is a tax form provided by the Indiana Department of Revenue. It allows the spouse of a nonresident military servicemember to deduct Indiana-source earned income from their state tax return. This deduction is based on the Military Spouse Residency Relief Act of 2009, which ensures that a military spouse does not owe taxes to a state where they reside only because of their spouse’s military assignment.

To qualify for this deduction:

  • The military servicemember must be stationed in Indiana on military orders.
  • The servicemember and spouse must share the same state of domicile, which is not Indiana.
  • The spouse must have earned income from Indiana sources, such as wages, tips, or sole proprietorship income.

This form is essential for nonresident military spouses who want to ensure they are not unfairly taxed on income earned in Indiana, and it must be submitted along with Form IT-40PNR. A copy of the servicemember’s military W-2 is also required to claim the deduction.

How to File Schedule IN-2058SP

  1. Download and Prepare the Form: Obtain Schedule IN-2058SP from the Indiana Department of Revenue’s website, ensuring you have the most recent version.
  2. Attach the Required Documents: Ensure you have a copy of the military servicemember’s W-2 form. This is mandatory when filing the deduction.
  3. Complete Both Parts of the Form: Follow the step-by-step instructions below to fill out the form correctly.
  4. Enclose the Form with IT-40PNR: Once completed, attach the form to your Indiana Part-Year or Full-Year Nonresident Individual Income Tax Return (Form IT-40PNR).
  5. Submit Your Return: File the forms with the Indiana Department of Revenue before the tax deadline.
How to Complete Schedule IN-2058SP Line-By-Line Instructions

How to Complete Schedule IN-2058SP: Line-By-Line Instructions

Below is a detailed guide to completing each section of Schedule IN-2058SP. Follow these steps carefully to avoid errors.

Part 1: Figure Your Deduction

Line 1: Military Spouse’s Earned Income from Indiana Sources

  • Enter the wages, salaries, tips, and other compensation from Indiana sources, as reported on Schedule A, Line 1B or 2B.
  • Do not include any income earned by the servicemember; this line is exclusively for the spouse’s income.
  • Example: If the spouse earned $32,000 in wages while working in Indiana, enter $32,000 on this line.

Line 2a: Business Income from Indiana Sources

  • Enter any sole proprietorship income earned from Indiana sources, as reported on Schedule A, Line 7B.
  • This includes income from businesses owned and operated by the servicemember’s spouse.

Line 2b: Military Spouse’s Portion of Line 2a

  • If the sole proprietorship income reported on Line 2a includes amounts earned by the military servicemember, only include the spouse’s portion here.
  • Example: If the spouse earned $27,000 from a sole proprietorship, enter $27,000 here.

Line 3: Total Indiana-Source Income

  • Add the amounts from Line 1 and Line 2b. This is the total Indiana-source earned income for the military spouse.
  • Enter this total on Indiana Schedule C: Deductions, Line 11, and use the 3-digit code 625 to identify the deduction.
  • Example: If Line 1 is $32,000 and Line 2b is $27,000, enter $59,000 here.

Part 2: Additional Information

Line 1: State of Domicile

  • Enter the 2-letter state code for the spouse’s state of domicile (e.g., KS for Kansas).
  • This must match the state of domicile listed on the servicemember’s Form DD-2058.

Line 2: Reporting Income on Domicile’s Tax Return

  • Indicate whether the Indiana-source earned income is included on your state of domicile’s tax return.
  • Check Yes, No, or N/A depending on your circumstances.
  • Example: If the spouse includes their Indiana-source income on their Kansas tax return, check Yes.

Explanation (if No or N/A is Checked)

  • If you select No or N/A, you must provide a brief explanation. For instance, clarify why the Indiana-source income is not being reported on your state of domicile’s tax return.

Important Notes and Examples

  1. Changing Conditions: If the military servicemember’s assignment changes (e.g., they leave Indiana), the spouse can only deduct income earned up to that point.
    • Example: If $24,000 out of $32,000 was earned before the servicemember left Indiana, only $24,000 is deductible.
  2. Required Documentation: Always include a copy of the servicemember’s W-2 form when filing this deduction. Failure to do so may result in denial.
  3. Eligibility Details: To qualify for this deduction:
    • The military servicemember must be stationed in Indiana under military orders.
    • The servicemember and spouse must share the same state of domicile, which is not Indiana.
    • The income must come from Indiana sources.

For additional information, consult Income Tax Information Bulletin #27 on the Indiana Department of Revenue’s website.

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