Section 45 IAC 3.1-4-5 - Treatment of married individuals filing jointlyAuthority: IC 6-8.1-3-3
Affected: IC 6-3.6
Sec. 5.
(a) Each individual spouse is treated separately under local income tax (LIT). Accordingly, each spouse must determine his or her respective county of residence and county of principal place of business or employment as of January 1 and will compute his or her respective county tax due, based on his or her separate adjusted gross income.(1) However, for purposes of calculating LIT on a return of a married couple filing jointly, if one (1) spouse has a negative adjusted gross income and the other spouse has a positive adjusted gross income, the negative income may be used to offset the other spouse's positive income.(2) If one (1) spouse uses the other spouse's negative adjusted gross income to offset the spouse's positive adjusted gross income, the other spouse shall report zero (0) adjusted gross income and shall not be permitted to carry forward any negative adjusted gross income used by the spouse to succeeding tax years.(b) Except as permitted in subsection (a), if a person files a joint return with his or her spouse and only the person or the person's spouse is taxable for LIT, then the person who is taxable may take all the exemptions claimed on the joint return except the exemptions attributable to the other spouse (for instance, the personal exemption for the spouse and the exemption for taxpayers over sixty-five (65) years of age or blind, or both, for that spouse).(c) If a person files a joint return and the person is taxable at one (1) rate on his or her income and the person's spouse is taxable at another rate on the spouse's income, then the spouses may allocate each whole exemption taken on the joint return between themselves except for the exemptions attributable to the other spouse. The other spouse should then use the exemptions attributable to that spouse.(d) The computation of LIT is to be completed on the county tax schedule, which is an attachment to the individual income tax return. The county tax computed on the county tax schedule is to be carried to the designated area on the applicable state income tax form.Department of State Revenue; 45 IAC 3.1-4-5; filed 5/10/2017, 3:04 p.m.: 20170607-IR-045160491FRAReadopted filed 8/11/2023, 10:08 a.m.: 20230906-IR-045230534RFA