Schedule IT-40PNRA, officially titled Indiana Apportioned Income for Nonresident Individuals, is a required schedule used by nonresident and part-year resident taxpayers who earn business income both inside and outside Indiana. Its main purpose is to determine what portion of a taxpayer’s business income is taxable by Indiana when that business operates in more than one state. Because Indiana does not automatically tax all income earned by nonresidents, this form applies an apportionment formula—based primarily on business receipts—to fairly allocate income attributable to Indiana sources. Schedule IT-40PNRA works together with Form IT-40PNR and Schedule A, ensuring that only the Indiana-related share of adjusted gross business income flows into the taxpayer’s Indiana return. This schedule is commonly used by sole proprietors, entertainers, independent contractors, farmers, and other unincorporated individuals who report income on federal schedules such as Schedule C, E, F, or Form 4797.
Who Must File Schedule IT-40PNRA?
You must file Schedule IT-40PNRA if:
- You are a nonresident or part-year resident of Indiana, and
- You earned business income from sources both within and outside Indiana, and
- That income is reported on your federal return using Schedule C, C-EZ, E, F, or Form 4797.
If all of your business income is earned entirely within Indiana or entirely outside Indiana, apportionment is not required and this schedule should not be used.
How To File Schedule IT-40PNRA
Schedule IT-40PNRA is filed with Form IT-40PNR. It cannot be filed on its own.
You must prepare a separate Schedule IT-40PNRA for each business or entity that has multistate activity. Once completed, the apportioned income calculated on this schedule is carried to line 19B of Schedule A (Form IT-40PNR). If filing by mail, include this schedule in the enclosure sequence indicated on the form. If filing electronically, the same information must be entered into your tax software.
How To Complete Schedule IT-40PNRA
Below is a complete, plain-language explanation of every section and line on Schedule IT-40PNRA.
Header Information
Tax Year
Enter the tax year for which you are filing the return.
Your Name
Enter your full legal name as shown on Form IT-40PNR.
Social Security Number
Enter your Social Security number.
Name Of Business
Write the legal or trade name of the business generating the income.
FEIN Or SSN (If Different)
Enter the Federal Employer Identification Number of the business. If the business does not have a FEIN, enter your SSN if different from above.
Part 1 – Taxpayer Information
Federal Income Source Checkboxes
Check the box that shows where the business income was reported on your federal tax return. Select only those forms that apply, such as:
- Federal Schedule C or C-EZ
- Federal Schedule E
- Federal Schedule F
- Federal Form 4797
The income reported here must already be included on the corresponding lines of Schedule A of Form IT-40PNR.
Part 2 – Adjusted Gross Business Income Subject To Apportionment
This section calculates the total business income before Indiana apportionment.
Line 1 – Net Federal Income (Loss)
Enter the net income or loss from this business as reported on your federal return.
Line 2a – Indiana Add-Backs And Other Adjustments
Enter the total amount of Indiana-required additions related to this business income, such as bonus depreciation adjustments or other required add-backs. Combine all applicable items into one figure.
Line 2b – Nontaxable Income
Enter income included on the federal return that Indiana does not tax, such as qualifying U.S. government bond interest or other exempt income.
Line 3 – Net Modifications
Subtract line 2b from line 2a. This represents the net adjustment to federal income for Indiana purposes.
Line 4 – Total Income As Modified
Add line 1 and line 3. This is your total adjusted business income subject to apportionment.
Part 3 – Apportioned Income For Nonresident Individuals
This section applies Indiana’s apportionment formula to determine the portion of income taxable by Indiana.
Line 1a – Gross Receipts Within Indiana
Enter total business receipts generated from Indiana sources only.
Line 1b – Gross Receipts Everywhere
Enter total business receipts from all locations, both inside and outside Indiana.
Line 2c – Indiana Apportionment Percentage
Divide line 1a by line 1b and enter the result as a percentage.
If you are an interstate transportation business, use the percentage from Schedule E-7 instead.
Line 3 – Indiana Apportioned Income
Multiply the total income from Part 2, line 4 by the percentage on line 2c.
This result is the portion of your business income taxable by Indiana.
Combining Multiple Schedules
If you completed more than one Schedule IT-40PNRA:
- Add together all amounts from Part 3, line 3
- Enter the combined total on line 19B of Schedule A (Form IT-40PNR)
Round all dollar amounts according to standard rounding rules.
Important Notes And Filing Tips
- Prepare one Schedule IT-40PNRA per business entity
- Do not include nonbusiness income in the receipts factor
- Distributive shares from partnerships or S corporations are apportioned at the entity level and should not be recalculated here
- Keep copies of all schedules and supporting records