Do you live in one state and have investments in another state? If so, you may find your income tax filings a bit more complicated.

Full-year residents of a state must report all income that is reported for federal income tax purposes on their resident income tax return. If your out of state income source is from a partnership or S Corporation, the nonresident tax most likely was paid by the entity’s composite return and is not required to be taxed by your home state. Many states have drafted agreements with other states to eliminate the requirement of paying tax to two states on the same income. Tax treatment of out-of-state income depends upon the type of income and the state from which the income is derived. In the case of tax credits, Indiana only allows credit for individual income tax paid to other states or localities. Other taxes such as property taxes, corporate income taxes, and other business taxes are not allowed as a basis for claiming an income tax credit. Five states have a reciprocal agreement with the state of Indiana. They are Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin. All salaries, wages, tips, and commissions earned in these states by an Indiana resident must be reported as if they were earned in Indiana. A credit cannot be taken for any taxes withheld or paid to any of these states in connection with the income. If taxes have been withheld or paid to any of these states, a claim for refund should be filed with that state by filing that particular state’s income tax form for non-residents.

If you have resided in more than one state during 2016, or have lived in one state and worked in another state, it would be in your best interest to contact your Somerset advisor to discuss the most beneficial way to file your state income tax returns for 2016. Give us a call at 317-472-2200 or contact us at us at .