Iowa Withholding Tax Booklet And Tax Tables - 2005 Page 5
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28Iowa Department of Revenue
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Other nonresident income
The payer or withholding agent may withhold on a one-time basis. The payer should complete an
Iowa Business Tax Registration form stating this to be a one-time report. The withholding
payment may be sent in with the completed application.
The following additional types of income to nonresidents are subject to Iowa withholding:
o compensation paid to entertainers performing in Iowa - with exceptions - (but not
payments to entertainment corporations)
See "Wages of nonresidents engaged in film production or television production..." for
further information.
o rental payments received from Iowa property
o taxable Iowa-source income paid to a beneficiary of an Iowa estate or trust
o Iowa-source income received by a nonresident partner or shareholder of a partnership or
S corporation doing business in Iowa
o income derived from any business of a temporary nature such as contracts for
construction or fees paid for services in Iowa
Do not withhold from nonresidents working in Iowa as employees of railroads and trucking firms
in interstate commerce if they are working in other states as well. Withholding should be made
for the state of the employee’s residence for these nonresidents.
Nonwage withholding requirements
"Nonwage income" includes pensions, annuities, supplemental unemployment benefits, sick pay
benefits and other nonwage income payments to Iowa residents. Iowa income tax must be
withheld in cases where Federal income tax is withheld. In situations where no Federal income
tax is withheld, the receiver of the payment may choose to have Iowa withholding apply.
Iowa withholding is not required when payment amounts or taxable amounts of nonwage
incomes fall below certain levels, when payments are not subject to Iowa income tax, or when no
Federal income tax withholding is required on those payments.
State income tax is not required to be withheld if the amount of the distribution is $500 per
month or less or if the taxable amount is $500 or less and the person receiving the distribution is
eligible for the partial exemption of retirement benefits. In instances where the distribution
amount or the taxable amount is more than $500 per month but less than $6,000 for the year, no
state income tax is required to be withheld, if the person receiving the distribution is eligible for
a partial exemption of retirement benefits.
Withholding on nonwage income may be made at a flat rate of 5 percent or according to a
schedule available from Taxpayer Services. Withholding agents should be aware that in certain
cases the 5 percent flat rate may be excessive.
Winnings from gambling
Tax must be withheld from lottery winnings and winnings from games of skill, games of chance
and raffles in excess of $600, pari-mutuel winnings of more than $1,000, and winnings in excess
of $1,200 from slot machines on riverboats or at racetracks.
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