Instructions For Form Ia 1040 - Iowa Individual Income Tax Form

26. IOWA NET INCOME.

Nonresident Example 2:

Subtract line 25 from line 15 and enter the difference on this line.

Laura lived in Illinois the entire tax year. She earned $25,000 in

If line 26 is $1,000 or more or you are subject to Iowa lump-sum or

wages from Iowa and won $5,000 at an Iowa casino. She will report

minimum tax, complete lines 27 through 33. If line 26 is less

all of her income on the IA 1040 as all-source income. Only the

than $1,000 and you are not subject to Iowa lump-sum or

gambling winnings will be reported on the IA 126 as her Iowa-source

minimum tax, you are not required to file an Iowa income tax return.

income.

Married taxpayers must combine their Iowa income amounts for

Iowa has a reciprocal agreement with Illinois, which means that

purposes of the $1,000 filing threshold. However, if you had Iowa tax

wages and salaries are taxed by the individual’s state of residence. All

withheld and are requesting a refund, or choose to file an Iowa return

income received from gambling in Iowa is taxable to Iowa regardless

even if you aren’t required to do so, put 100% on line 29, complete the

of the person’s state of residence.

remainder of the schedule, and put the credit amount on line 48 of the IA

Part-year Resident Example:

1040.

Jill lived and worked in Iowa the first six months of the tax year. In

Nonresident Example 1:

addition to her wages, she received interest income from an Iowa

Chad is a resident of Nebraska and works in Iowa. His income includes

bank. Jill then moved to Missouri, where she was employed for the

wages earned in Iowa and interest income from a Nebraska bank.

rest of the year. She continued to receive interest income from the

Chad will report the wages and interest on the IA 1040 as all-source

Iowa bank. Jill will report all of her income from both states on the IA

income. He will list his wages only on the IA 126 as his Iowa-source

1040 as all- source income. On the IA 126, she will report only

income.

the wages and interest income earned while an Iowa resident as

Iowa-source income. The interest income earned the last half of the

year is not considered Iowa-source income since Jill was no longer

an Iowa resident.

IOWA SCHEDULE IA 130

Out-of-state Tax Credit

Schedule IA 130, the Iowa Out-of-state Credit Computation, is only

Example 2 - Part-Year Iowa Residents Only

for residents or part-year residents of Iowa who earned income while

Benny lived in Iowa until the end of June. July 1 he moved to Missouri.

an Iowa resident which was taxed by another state or foreign country.

He worked all year in the state of Missouri. Benny earned a salary of

Note: The Iowa income percentage is rounded to the nearest tenth of

$30,000 for the year, $15,000 while he lived in Iowa and $15,000 while

a percent.

he lived in Missouri. Benny also earned $10,000 farm rental income

Example 1 - Full-Year Iowa Residents Only

from farmland located in Iowa. Line 51 of the IA 1040 is $1,292. On

the Missouri state return, the tax imposed* on his income was $1,000.

Jennifer lived in Iowa all year but worked in both Iowa and Nebraska.

Column

She earned $10,000 in Iowa. She also earned $15,000 in Nebraska

A You

that was taxed by Nebraska. Jennifer will report $25,000 on line 15 of

or Joint

the IA 1040 as gross income. Line 51 of the IA 1040 is $1,050. On the

1. Amount of gross income you received that was

Nebraska state return the tax imposed* on her income was $450.

taxed by Iowa and taxed by the other

$15,000

Column

state/foreign country.

A You

2. Gross taxable income for residents from line 15,

25,000

or Joint

IA 1040.

1. Amount of gross income you received that was

3. Divide line 1 by line 2 and enter the percentage

60%

taxed by Iowa and taxed by the

other

$15,000

(not to exceed 100.0%)

state/foreign country.

4. Tax from line 51, IA 1040 (less lump-sum tax and

2. Gross taxable income for residents from line 15,

1,292

minimum tax)

25,000

IA 1040.

5. Multiply line 4 by percentage on line 3

3. Divide line 1 by line 2 and enter the percentage

775

60%

(not to exceed 100.0%)

6. Enter the tax imposed* by the other state or

4. Tax from line 51, IA 1040 (less lump-sum tax and

1,000

1,050

foreign country

minimum tax)

7. Enter the total amount of gross income taxed

5. Multiply line 4 by percentage on line 3

30,000

by the other state/foreign country.

630

8. Divide line 1 by line 7 and enter the percentage

6. Enter the tax imposed* by the other state or

50%

(not to exceed 100.0%)

450

foreign country

9. Multiply line 6 by the percentage on line 8.

7. Enter the smaller of line 5 or 6. This is your Out-

500

of-state Tax Credit. Enter this amount on line 57,

450

10. Enter the smaller of line 5 or 9. This is your

IA 1040

Out-of-state Tax Credit. Enter this amount on

500

* “Tax imposed” is the tax calculated from the tax formula/tables on

line 57, IA 1040

the other state/foreign country’s tax return, less any non- refundable

Expanded Instructions are at

credits. Do not reduce this figure by the tax withheld or estimated tax

payment made to the other state/foreign country.

Page 10

41-002k (09/18/14)

Instructions For Form Ia 1040 - Iowa Individual Income Tax Form - 2014 Page 11

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