my wife usually works through lunch and does not take a break. she does this so she can get caught up on paperwork, etc and get home at a decent time. her employer has not been paying her for this time. they said it was state law to deduct time for a lunch. i say they are incorrect. any thoughts???

Not in Indiana, there isn't.
If you are over 18 years of age, Indiana law does not require your employer to give time off for lunch or breaks.
http://www.state.in.us/labor/wagehour/estandfaq.html#breaks

However, whether or not a law existed, if she is working through her scheduled meal period, that is work time for which she must be compensated. However, if the employer states she must take a meal break, she takes one.

state law also says that for every 8 hours worked an employee is allowed
a 20min break but whether the employee uses that break is up to them they are not being payed to work during their breaks unless told buy there boss

Normally, I would not respond to a post that is addressing an original question that is over two months old, but David, where do you get the law that requires an unpaid break of 20 minutes in Indiana? The FAQ I quoted appears to be very clear and comes directly from the Indiana Dept. of Labor website.

I stand by my original response and don't want any Indiana employees reading this "update" to be misled by David's mis-statment of the law.

David appears to be confusing his employer's policy with the law.