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Qualifying for the Automatic Taxpayer Refund Credit

Posted 5:08 PM by

The Indiana General Assembly has passed legislation providing for an Automatic Taxpayer Refund (ATR) credit for tax year 2012. This credit is a refundable credit and is $111 per eligible taxpayer ($222 for an eligible married couple filing a joint return). In order to qualify for the credit, you must meet all three of the following qualifications:

  1. Timely filed (including extensions) a full-year Indiana resident income tax return for tax year 2011;
  2. Timely file (including extensions) a full-year Indiana resident income tax return for tax year 2012;
  3. Owe some tax to the state for 2012. 

How do I determine if I am eligible for the credit, and how do I calculate it? 

In order to determine if you qualify for the credit, you can walk through the following steps: 

Step 1: Determine if you meet the prior year filing requirement (view flowchart)

Step 2: Determine if you meet the current year filing requirement (view flowchart)

Step 3: Determine if you have a modified state tax liability

In order to claim the ATR credit, you must have a modified state tax liability. Your modified state tax liability is your gross income tax liability less the following credits: 

  • College Contribution Credit
  • Credit for Taxes Paid to Other States
  • Unified Tax Credit for the Elderly
  • Earned Income Credit
  • Lake County Residential Income Tax Credit
  • Other Specific Credits

If your modified state tax liability is greater than zero, continue to Step 4. If it is less than zero, STOP. Neither you nor your spouse (if married filing jointly) can take the credit. 

Step 4: Determine your ATR credit

If you are single or married filing separately, your ATR credit is $111. If you are married filing jointly, continue below: 

  1. If you timely filed a 2011 Indiana full-year resident income tax return AND you are timely filing a 2012 Indiana state income tax return, the credit associated with you is $111. If not, the credit associated with you is zero.
  2. If your spouse timely filed a 2011 Indiana full-year resident income tax return AND your spouse is timely filing a 2012 Indiana state income tax return, the credit associated with your spouse is $111. If not, the credit associated with your spouse is zero.

Add the results from 1 and 2 above to get the total ATR credit associated with you and your spouse.

What else do I need to know? 

It is important to note that dependents are not eligible to claim the ATR unless they file their own state tax return. Also, you must have a tax liability in order to qualify. This liability is determined before withholding is taken into account but after credits, deductions and exemptions. 

In order to qualify, as noted above, your income tax returns must be “timely filed.” In order to be timely flied, the following must have occurred:

  • Your 2011 Indiana tax return must have been filed by the 4/17/12 due date, unless it was extended. 
  • Your 2012 Indiana tax return must be filed by the 4/15/13 due date, unless it was extended. 

If your return(s) were extended, the return must have been (or will be) filed within the extension period. 

Examples

  1. Brandon has $22,000 wage income and claims a $1,000 exemption. His state tax due before credits is $714 ($22,000 - $1,000 = $21,000 X .034 state tax rate = $714 modified state tax liability). His state withholding credit is $800. Even though Brandon had more than $714 withheld, he still qualifies for the $111 ATR credit. With the $111 ATR credit and his $86 overpayment of taxes, his total refund is $197.
  2. Olivia has $742 wage income and claims a $1,000 exemption. Her state tax due before credits is zero ($742 - $1,000 = -$258 = no modified state tax liability). Her withholding credit is $25. Since she doesn’t have a modified state tax liability, she is not eligible for the ATR credit. Olivia’s refund is $25.
  3. Jim had a valid state extension of time to file (he filed a Form IT-9 as well as a federal Form 4868), which extended the time he had to file his 2011 state tax return to Nov. 15, 2012. He filed on June 11, 2012. Therefore, his 2011 state return was timely filed and, assuming he meets the other eligibility conditions, he would be able to claim the ATR credit. 
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