Indiana Income Tax Deduction Regarding the Civil Service Retirement System

A bill was passed in Indiana that provides Federal Civil Service retirees receiving compensation under the Civil Service Retirement System (CSRS) a tax deduction of up to $8,000 effective for tax year 2015 and a tax deduction of up to $16,000 effective for tax year 2016 and thereafter on Indiana State income taxes. The retiree(s) must be at least sixty-two (62) years of age before the end of the applicable taxable year. The Civil Service Annuity Deduction is under “Other Deductions”. The code for this deduction is “601”. Refer to the IT-40 Full-Year Resident Individual Income Tax Booklet, which can be obtained from the Indiana Department of Revenue website, regarding requirements and procedures for claiming this deduction. The booklet also provides examples on how to calculate the amount of deduction that may be received. Instructions regarding the deduction are on page 19 of the IT-40 Full-Year Resident Individual Income Tax Booklet under “Line 11 – Other Deductions”. If you feel you were entitled to take the deduction, but inadvertently failed to take it, you may be able to file an amended return in order to receive the deduction. Consult with your tax advisor and/or the Indiana Department of Revenue.

 

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