By Payroll and Entitlements Editorial Staff
Indiana does not conform to the Tax Cut and Jobs Act changes to personal income tax exemptions. Indiana ties its dependent and certain other exemptions to the Internal Revenue Code as in effect on January 1, 2017. The bulletin provides information on Indiana’s exemption amounts.
Taxpayer and spouse exemption. A taxpayer can claim a $1,000 exemption for themselves and $1,000 for their spouse.
Dependent exemption. There is a $1,000 exemption for each dependent.
The exemption is also available for each “qualifying child” A qualifying child must:
- pass certain relationship tests (child, adopted child, eligible foster children, stepchild, sibling, stepsibling, or their descendants);
- have the same principal place of abode for more than one-half of the taxable year;
- be either 19 years or younger, 24 years or younger and a full-time student for at least five months during the year, or any age, if the child is permanently and totally disabled;
- be younger than the taxpayer
- not provide more than one-half of the child’s support for the calendar year; and
- not file a joint federal return with the child’s spouse, except to claim a refund.
Other relatives that may be treated as a dependent include:
- children and the descendants of children who do not meet the definition of a “qualifying child;”
- siblings and stepsiblings;
- parents and their ancestors;
- descendants of siblings (nephews and nieces, etc.);
- siblings of parents (aunts and uncles);
- spouses of children, parents, and siblings; and
- any other individual, other than the taxpayer’s
- spouse, who had the same principal place of abode as the taxpayer and who was a member of the taxpayer’s household.
The dependent cannot have gross income over $4,050.
Additional dependent exemption. There is an additional $1,500 exemption for children who are a son, stepson, daughter, or stepdaughter of the taxpayer or an individual under the guardianship of the taxpayer. Adopted children are treated as natural children. Foster children who live with the taxpayer for the entire year also are treated as natural children. The exemption is available for dependents who are under the guardianship of the taxpayer and who:
- are under the age of 19 at the end of the taxable year; or
- are both under the age of 24 at the end of the taxable
- year and a full-time student for at least five months during the taxable year.
65 and older and blind exemption. The taxpayer or their spouse can qualify for an additional federal exemption if they are over 65 or blind. Further, taxpayers or their spouses 65 and older are eligible for an additional $500 exemption if their income is under $40,000. (Indiana Department of Revenue, Information Bulletin #117, February 2019.).
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