Indiana residents are required to file and pay income taxes each and every year. If you fail to file your taxes or make payments, you are subject to penalties and interest payments on the taxes owed. The penalties on late filing and paying can be rather harsh, although extensions can give you more filing time if necessary.
You must file an income tax return for Indiana if you live in the state year 'round and the total amount of your income exceeds your exemptions. The second is if you live out of state, but work in Indiana or receive income from Indiana. You do need to file to receive any refund you are eligible for, but it is not specifically required by the state in that circumstance.
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Indiana state income tax forms need to be submitted by April 15th to not be considered late. You may request a filing extension, but this does not push back the payment due date. An Indiana tax extension can be requested by sending in Form IT-9. The maximum amount that you could extend the filing date is 60 days after the tax due date.
Late Filing Penalties
Penalties are assessed on late Indiana income tax forms if you don't remit full payment or you owe over 10 percent of your total tax liability to the county and state when you file a late return. The amount you are fined depends on the amount of tax you owe. As of February 2011, the penalty amount is 10 percent of your owed tax, or $5. The higher number is generally picked for your penalty.
In addition to the 10 percent upfront penalty, an additional penalty is added to the tax payment if it is not paid immediately. This interest rate changes from year to year and is calculated by adding 2 percent to the state's investment yield. As of February 2011, the interest rate for underpayment of Indiana taxes is 9 percent. The total amount of interest you owe starts from the day the tax is overdue, until the day you actually pay the tax.