How to File Your Indiana Tax Return for 2020: A Step-by-Step Guide

Introduction

Filing your Indiana state income taxes can feel complex, especially if you are unfamiliar with the required forms, deadlines, and rules. This guide explains how to file your Indiana tax return for 2020, providing clear, step-by-step instructions for individuals and small business owners. The information is specific to the 2020 tax year and includes significant updates related to COVID-19 deadline extensions.

The Indiana Department of Revenue adjusted several filing and payment deadlines in 2020, giving taxpayers additional time to prepare and submit their returns. Understanding these changes and the correct forms to use is essential for avoiding penalties, securing any refund you are owed, and ensuring your return is processed without delays.

Whether you are an employee reporting wages from your employer, a sole proprietor managing business income, or a nonresident with taxable income from Indiana sources, this article will help you file accurately. Following the steps outlined in this guide, you can make informed choices, meet all requirements, and keep your records ready for future reference.

Overview of Indiana State Income Tax for 2020

Indiana imposes a flat state income tax rate of 3.23% for the 2020 tax year. In addition to the state rate, most counties in Indiana collect their local income tax. The county tax rate varies depending on where you lived or worked on January 1, 2020, and is calculated on your Indiana taxable income after state deductions and exemptions.

You must file an Indiana tax return if you were a full-year resident during 2020 and were required to file a federal tax return. Filing is also required if you had taxable income from Indiana sources but lived outside the state or were a part-year resident who earned income while living in Indiana. This includes wages, self-employment income, or other taxable earnings from Indiana-based activities.

Indiana generally follows federal filing triggers. If you meet the federal requirement to file a return, you likely must also file an Indiana return. Even if you do not owe state taxes, filing ensures you receive any refund or credit for which you qualify. Certain types of income, such as interest, dividends, and some unemployment benefits, may also be taxable at the state level. For a complete overview of filing options, payment methods, and state forms, visit the Indiana DOR Home / Online Services Overview to access official resources directly from the Indiana Department of Revenue.

Filing Deadlines and COVID-19 Extensions

For the 2020 tax year, the standard filing and payment deadline for Indiana state income tax returns was April 15, 2021, in line with the federal IRS deadline for most taxpayers. However, due to the COVID-19 pandemic, the Indiana Department of Revenue extended this deadline to July 15, 2021, for filing and payment. This extension gave taxpayers additional time to prepare, organize documents, and submit accurate returns without late penalties.

The extension also applied to refund claims and certain amended returns that were set to expire between April 1 and July 14, 2021. Moving the due date to July 15, the state aligned with federal relief measures and reduced pressure on individuals and small business owners facing pandemic-related challenges. Importantly, no separate extension form was required to take advantage of this COVID-19 deadline change.

Although the extended due date postponed filing and payment requirements, taxpayers who expected to owe should have submitted their payments by July 15 to avoid interest and penalty charges. If you need more time beyond the extended deadline, you can request an extension to file, but any unpaid tax still accrues interest after July 15, 2021.

Key Changes from the 2019 Tax Year

Several updates affected Indiana taxpayers in the 2020 tax year. One notable change was the slight decrease in the state’s financial institutions tax rate, which dropped from 6.25% to 6.0%. While this change primarily impacted banks and certain financial businesses, it reflected ongoing legislative efforts to adjust tax rates gradually.

A major COVID-19–related update was the exemption of federal unemployment compensation from Indiana taxable income for 2020. Typically, unemployment benefits are subject to state tax, but this temporary measure reduced the tax burden for individuals who received such payments during the pandemic. Taxpayers must review their state return carefully to ensure the exemption was applied correctly.

The state also extended deadlines for filing refund claims that would have expired between April 1 and July 14, 2020. This allowed affected taxpayers additional time to recover overpaid taxes. While these changes are filing-specific to the 2020 tax year, they highlight the importance of reviewing yearly updates before you file your return to ensure compliance and take advantage of any relief measures.

Indiana Tax Forms and Schedules for 2020

Filing your 2020 Indiana state income tax return requires the correct forms, which vary depending on your residency status and type of income. The primary individual forms are available on the Indiana DOR 2020 Tax Forms & Instructions page.

• Form IT-40—For full-year Indiana residents reporting all taxable income.
• Form IT-40PNR—For part-year residents or nonresidents who earned income from Indiana sources.
• Form IT-40ES—for making estimated tax payments during the year.

In addition to the primary forms, you may need to attach one or more schedules:

• Schedule 1 – Indiana Add-Backs, for reporting income additions such as specific interest or business-related adjustments.
• Schedule 2—Indiana Deductions, for claiming deductions like the renter’s or allowable military income deductions.
• Schedule 3 – Indiana Exemptions, for personal and dependent exemptions.
• Schedule 4 – Other Taxes, such as county income or household employment taxes.
• Schedule 5 – State Credits, including credits for college contributions or solar energy systems.
• Schedule 6 – Offset Credits, for credits applied against your tax liability.
• Schedule 7 – Additional Required Information, used for supplemental taxpayer details.
• Schedule CT-40 – County Tax Schedule, required for calculating county income tax.
• Schedule IT-2210 – Underpayment of Estimated Tax by Individuals.

For business income, certain entities file additional forms:

• Form IT-65 – Indiana Partnership Return.
• Form IT-20S – Indiana S Corporation Income Tax Return.
• Schedule C—For sole proprietors, filed with your federal return and carried over to your Indiana return via Form IT-40.

Using the correct form and schedules is essential for accurate reporting. Before you submit your return, review the Indiana Department of Revenue’s official instructions to ensure all required documents are included.

Step-by-Step Instructions for Completing Your Return

Filing your 2020 Indiana state income tax return accurately requires organization, attention to detail, and the proper forms. The process below outlines preparing, completing, and submitting your return to avoid delays or errors.

1. Prepare Your Documents

Before starting your return, gather all required records so you have everything ready when completing your forms:

• Federal tax return (Form 1040)—Your Indiana return begins with your federal adjusted gross income.
• W-2 forms—Show your wages and the state tax your employer withholds.
• 1099 forms—Include 1099-MISC, 1099-NEC, or 1099-G (unemployment compensation).
• Estimated tax payment records—proof of any quarterly payments made in 2020.
• Receipts and statements—For deductions and credits you plan to claim, such as rent receipts for the renter’s deduction.
• Prior-year tax return—helpful for reference.

2. Complete IT-40 or IT-40PNR

1. Enter your name, address, Social Security number, and filing status.
2. Report your federal adjusted gross income (AGI) from Form 1040, line 11.
3. Add any income adjustments using Schedule 1 (Indiana Add-Backs).
4. Subtract eligible deductions using Schedule 2 (Indiana Deductions).
5. Calculate your Indiana adjusted gross income and enter your exemptions on Schedule 3.
6. Determine your taxable income by subtracting exemptions from adjusted income.
7. Multiply taxable income by 3.23% to calculate state tax owed.
8. Use Schedule CT-40 to calculate any county income tax.
9. Add state and county tax for your total tax liability.

3. Claim Credits and Apply Payments

• Schedule 5 – Claim state tax credits such as the renter’s deduction or solar energy credit.
• Schedule 6 – Apply offset credits against your tax balance.
• Enter any Indiana state tax withheld (from W-2 or 1099 forms).
• Include any estimated tax payments you made during the year.

After completing all forms and schedules, verify every entry, check for math errors, and sign your return. Whether you e-file or mail a paper return, ensure all attachments are included before you submit your paperwork.

Special Instructions for Small Business Owners

If you operated a business in 2020, your Indiana state tax filing requirements depend on your business structure. For sole proprietors, partnerships, and S corporations, how you report income, deductions, and payments will differ.

Sole Proprietors

• Report business income and expenses on Schedule C with your federal tax return.
• Transfer your net profit or loss from Schedule C to your federal Form 1040.
• Use your federal adjusted gross income, including your business results, as the starting point for your Indiana Form IT-40.
• If you made estimated tax payments during the year, list them on IT-40 to reduce your final payment amount.

Partnerships

• File Form IT-65 for the partnership, even though the entity does not pay state income taxes.
• Each partner receives a Schedule K-1 showing their share of income, which is then reported on their individual IT-40 or IT-40PNR.

S Corporations

• File Form IT-20S for the S corporation.
• Income is passed to shareholders, who report their share on their Indiana tax returns.

For all business types, Indiana generally follows federal rules for allowable deductions. Ensure that all expenses claimed are supported by proper documentation, and keep these records for at least three years. Correctly reporting your business income helps you comply with state requirements and avoid issues with the IRS or the Indiana Department of Revenue.

Common Mistakes to Avoid

Even minor errors can delay your refund, cause unnecessary correspondence with the Indiana Department of Revenue, or result in penalties. To avoid these issues when you file your 2020 Indiana tax return, watch out for the following:

• Math errors—Double-check all calculations, especially when adding deductions, credits, and payments.
• Missing signatures—Both spouses must sign the return if filing jointly.
• Incorrect Social Security numbers—Verify every SSN listed on the return.
• Using the wrong form—Full-year residents should use IT-40; part-year residents and nonresidents must use IT-40PNR.
• Forgetting to claim eligible deductions – Commonly missed deductions include the renter’s and military service deductions.
• Leaving out required attachments—Include W-2s, 1099s, and any schedules used in your return.
• Incorrect county code—Ensure you enter the code for your county of residence on January 1, 2020.

By preparing and reviewing your return thoroughly, you can reduce errors and help ensure the timely processing of your refund or payment.

Filing Methods

Indiana offers multiple ways to file your 2020 state income tax return, allowing you to choose the method that best fits your needs. The two primary options are electronic filing (e-file) and paper filing. To see if you qualify for free e-filing, review the INfreefile Overview & Eligibility page, which lists current income requirements and participating providers.

Electronic Filing (E-file)

E-filing is the fastest, most secure way to submit your return. Benefits include:

• Faster processing—Refunds are typically issued within 10–14 days.
• Error reduction—Built-in checks help identify mistakes before submission.
• Immediate confirmation—you receive a receipt when your return is accepted.
• Payment convenience—You can schedule an electronic payment directly from your bank account.

Options for e-filing include:

• INfreefile—A free program for eligible taxpayers through the Indiana Department of Revenue.
• Commercial software—programs such as TurboTax, H&R Block, and TaxAct.
• Tax professionals—certified preparers who can e-file your state and federal returns.

Paper Filing

Paper filing is slower and requires more manual work, but it is still an option. To file by paper:

• Complete the correct forms and schedules for your situation.
• Sign and date the return.
• Attach W-2s, 1099s, and other required documentation.
• Mail your return to the address listed in the 2020 IT-40 instructions, based on whether you are sending a payment or expecting a refund.

Choosing the correct method is an important decision. E-filing is generally the preferred choice for speed and accuracy, while paper filing may be suitable for those who prefer traditional submission or have limited internet access.

Payment Options and Deadlines

If you owe taxes for the 2020 Indiana tax year, you have several ways to pay. Choosing a secure and timely method will help you avoid penalties and interest charges.

Electronic Payment Methods

• INTIME portal—Pay directly through the Indiana Taxpayer Information Management Engine at in.gov/dor.
• Electronic Funds Withdrawal (EFW) – Schedule a bank account withdrawal when you e-file.
• Credit or debit card—Pay online via INTIME (convenience fees may apply).
• eCheck – Electronic check payment through INTIME with minimal or no fees.

Traditional Payment Methods

• Check or money order—Make payable to “Indiana Department of Revenue” and write your Social Security number and “2020 IT-40” on the memo line. Include with your paper return or Form IT-40V if mailing separately.
• Cash—Accepted only at the Indiana Department of Revenue’s Indianapolis office.

Deadlines and Penalties

For 2020, the extended payment deadline was July 15, 2021, due to COVID-19 relief measures. Payments made after this date were subject to:

• Late payment penalty—10% of the unpaid tax or $5, whichever is greater.
• Interest—accrued from the original due date until the tax is paid in full.

Paying on time is the best way to avoid unnecessary fees and protect your money.

Tracking Your Refund or Balance Due

After you submit your 2020 Indiana state tax return, you can track your refund or check any outstanding balance online and by phone. Monitoring your account helps you plan your finances and resolve issues promptly.

Checking Your Refund Status

Online – Use the Indiana Department of Revenue’s INTIME system at in.gov/dor/i-am-a/individual/check-refund/. You will need:

• Your Social Security number.
• The exact whole dollar amount of your refund.

Phone – Call 317-232-2240 and select Option 3 to access the automated refund line.

Processing Times

• E-filed returns—typically processed in 10–14 days.
• Paper-filed returns may take 10–12 weeks.
  Processing may be longer if your return has errors, missing information, or requires additional review.

Checking a Balance Due

• Log in to INTIME to view your balance and make a payment.
• Call the Indiana Department of Revenue at 317-232-2240 for account assistance.

Knowing how to find your refund or balance information helps you stay informed and take action quickly if adjustments are needed.

Final Filing Checklist

Before sending your 2020 Indiana state tax return, review this list to ensure everything is complete and accurate. Taking a few minutes to double-check can prevent delays, reduce the risk of penalties, and ensure you receive your refund promptly.

• Completed and signed Form IT-40 or IT-40PNR, depending on your residency status.
• All applicable schedules (Schedules 1–7, CT-40, IT-2210) are included.
• W-2s and 1099s are attached, showing Indiana wages and tax withholding from your employer.
• All eligible deductions and credits are claimed with supporting documentation.
• Social Security numbers verified for all taxpayers and dependents listed.
• Math is checked for accuracy on every form and schedule.
• The correct county code was entered based on the January 1, 2020, residence.
• The chosen payment method or direct deposit details are confirmed.
• Correct mailing address used if paper filing.
• A copy of your entire return is kept for your records.

Being ready with a complete and accurate return is the final step toward a smooth filing experience.

Frequently Asked Questions

What happens if I miss the deadline for July 15, 2020?

If you missed the extended 2020 filing deadline, you should file your return immediately to reduce penalties and interest. Indiana charges a late filing penalty of 10% of the unpaid tax or $5, whichever is greater. If you are owed a refund, there’s no penalty, but you must claim it within three years of the original due date.

Can I e-file my 2020 Indiana tax return for free?

Yes. Many taxpayers qualified for free filing through Indiana’s INfreefile program in 2020, available to those with an adjusted gross income of $72,000 or less. Even if you didn’t qualify, some commercial tax preparation providers offered no-cost or low-cost filing for simple returns. Check the Indiana Department of Revenue’s website for details on eligibility and current filing options.

What deductions do Indiana taxpayers often miss?

Commonly missed deductions include the renter’s deduction (up to $3,000), the Indiana non-taxable portion of unemployment compensation 2020, and the military service deduction for eligible income. Other overlooked deductions may involve education expenses and certain retirement income exemptions. Reviewing the official tax return instructions helps ensure you claim all deductions for which you qualify, maximizing your potential refund or reducing your balance due.

How do I request an extension for my Indiana tax return?

Indiana grants an automatic extension if you have a federal one, but this does not extend your time to pay. You must pay at least 90% of your state taxes by the original due date to avoid penalties and interest. To make an extension payment, file Form IT-9. You should submit your completed return by the extended deadline to remain compliant.

Can I file jointly if I moved to or from Indiana mid-year?

Yes, but the form you use depends on your residency status. Married couples may file jointly using Form IT-40PNR if one spouse is a part-year resident or nonresident. Alternatively, you may file separately—one using IT-40 and the other IT-40PNR. Comparing both options can help you find the choice that results in a lower overall tax liability for the year.

As a small business owner, do I need to file separately?

It depends on your business type. Sole proprietors include business income and expenses on their tax return. Partnerships file Form IT-65, and S corporations file Form IT-20S, with income passed to owners. Regardless of structure, ensure you keep complete records, prepare all required forms, and submit them by the deadline to remain compliant and avoid potential issues with the IRS or state.

How long does it take to receive my Indiana tax refund?

For e-filed 2020 returns, refunds were typically issued in 10–14 days. Paper-filed returns could take 10–12 weeks or longer, especially if there were errors or missing information. COVID-19–related delays extended some processing times. You can track your refund through the INTIME portal or by phone. Having accurate and complete payment and income information helps ensure faster refund processing by the Indiana Department of Revenue.