Add-backs

Eligibility
If you have a net operating loss carryforward that is required to be reduced as a result of discharges of debt excluded from federal gross income.

If you claimed a domestic production activities deduction on your federal Form 1040, line 35, enter that amount on line 4 of Form IT-40.

Eligibility
Your employer paid any amount for your student loans and you excluded the payment from federal gross income. See IT-40 or IT-40PNR instruction booklet for more information about this add-back.

Eligibility

• If an individual claimed a deduction for meal expenses regarding food and beverages provided by a restaurant in computing your federal adjusted gross income.
• The deduction would have been limited to 50% of the meal expenses if the expenses had been incurred before Jan. 1, 2021.

See IT-40 or IT-40PNR instruction booklet for more information about this add-back.

Eligibility

• If you have current-year excess business loss under IRC section 461(l) that is not deducted in determining your federal adjusted gross income

If you have current-year federal deductions that:

• Are otherwise disallowed in determining your current-year federal adjusted gross income due to having a current-year excess business loss
• For which an add-back is required for Indiana adjusted gross income tax purposes

Eligibility

If you have:

• A net operating loss for federal purposes incurred the current taxable year that does not appear in your federal taxable income as a result of reporting excess inclusion income under IRC section 860E
• Modifications to your Indiana adjusted gross income that are allowable in determining your Indiana net operating loss

Eligibility
Any net operating loss deduction taken on line 21 of your federal Form 1040 must be added back. Write the amount of the net operating loss as a positive figure. (You will claim an Indiana net operating loss deduction on Indiana’s Schedule 2, under line 11. Get Schedule IT-40NOL to figure your Indiana loss.)

Eligibility

If you:

• Have a current-year net operating loss that arises from a trade or business
• Did not report the loss on line 1 of Form IT-20NP
• Have modifications related to that trade or business

Eligibility
Any interest earned from a direct obligation of the state of Indiana or a political subdivision of the state of Indiana is not taxable for Indiana income tax purposes.

Interest earned from a direct obligation of a state or political subdivision other than Indiana is taxable to Indiana if the obligation was acquired after Dec. 31, 2011. Interest earned from obligations held or acquired prior to Dec. 31, 2011, is not subject to Indiana income tax.

Example: Martha, an Indiana resident, purchased bonds issued by the city of Washington, Indiana. The $247 interest income received from these bonds is exempt from tax by Indiana. She also purchased bonds issued by the city of San Antonio, Texas. She received $421 interest from these bonds, which were purchased after Dec. 31, 2011. She will have to add back the $421 interest received from the OOS municipal bonds.

Eligibility
If an individual:

• Had losses from the sale or exchange of preferred stock in either Federal National Mortgage Association or Federal Home Loan Mortgage Corporation.
• Treated the loss from the sale or exchange as ordinary income for federal income tax purposes in the year the loss had been incurred.
• Had any amount previously added back that not been allowed as a deduction, the individual is permitted to continue deducting the loss not previously allowed as a capital loss.

However, the amount allowable as a capital loss must be computed in accordance with federal limitations on allowable capital losses. See IRC sections 1211 and 121 for further details on federal limitations.

Eligibility
You may have figured an IRC Section 179 expense using a ceiling of more than $25,000 for federal tax purposes. Indiana allows you to figure IRC Section 179 expense using a ceiling of no more than $25,000.

If you figured IRC Section 179 expense using a ceiling amount of more than $25,000, you’ll need to add back the difference between it and $25,000.

Note: Plus Forms 1040NR/1040NR-EZ, filed by U.S. Nonresident Aliens

Eligibility
If you claimed a federal income tax deduction for specified research and experimental expenses that are required to be amortized for federal purposes pursuant to IRC section 174.

Eligibility
You had a student loan discharged during the taxable year and you excluded the amount of the discharge from your federal gross income. See IT-40 or IT-40PNR instruction booklet for more information about this add-back.