Expanded Instructions

02/20/23

1040 Instructions

Step 1 ...................................................................... 5

Step 2 ...................................................................... 6

Step 3 ...................................................................... 8

Step 4 .................................................................... 10

Step 5 .................................................................... 11

Step 6 .................................................................... 23

Step 7 .................................................................... 38

Step 8 .................................................................... 45

Step 9 .................................................................... 54

Step 10 .................................................................. 85

Step 11 .................................................................. 95

Step 12 .................................................................. 97

Step 13 ................................................................ 100

Other Information

New for 2022 .......................................................................................................................................................... 3

Conformity with The Internal Revenue Code (IRC)................................................................................................. 4

Who Must File? ....................................................................................................................................................... 4

Amending Tax Returns ........................................................................................................................................ 101

Are You a Resident of Iowa for Tax Purposes? ................................................................................................... 101

Certified Tax Returns for Nonresidents .............................................................................................................. 103

Confidentiality ..................................................................................................................................................... 103

Credits: Refundable or Nonrefundable - What's the Difference? ...................................................................... 103

Do You Owe Tax? Here Are Your Payment Options ........................................................................................... 103

Estimated Payments ........................................................................................................................................... 105

Extension Requests ............................................................................................................................................. 106

Farmers and Commercial Fishers ........................................................................................................................ 106

Federal Bonus Depreciation / Section 179 ......................................................................................................... 107

How to Prorate .................................................................................................................................................... 107

Injured Spouse .................................................................................................................................................... 108

Iowa 2210 / 2210S General Information ............................................................................................................ 109

Iowa and Illinois Reciprocal Agreement ............................................................................................................. 112

Iowa Income Tax Responsibilities of Native Americans ..................................................................................... 112

Iowa Tax Responsibilities of Servicemembers and their Spouses ...................................................................... 113

Iowans Paid in Foreign Currency ........................................................................................................................ 120

Mailing Address for Returns and Payments ....................................................................................................... 120

Net Operating Losses .......................................................................................................................................... 120

Nonresidents and Part-Year Residents ............................................................................................................... 121

Nonresidents with Gambling Winnings .............................................................................................................. 121

Record Keeping ................................................................................................................................................... 121

Refunds May Be Used to Pay Debt ..................................................................................................................... 121

Supporting Documentation ................................................................................................................................ 123

Use Tax ................................................................................................................................................................ 123

What to Do If You Do Not Receive Your W-2 ...................................................................................................... 124

New for 2022

For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity, meaning the state

will automatically conform with any changes made to the Internal Revenue Code (IRC), except as specified by

Iowa law.

Step 5

Line 14

Subtract to the extent included, up to $1,000, the amount of:

1. Premium pay received by a certified peace officer who was designated by the governor of the State

of Iowa as an eligible worker.

2. Premium pay received by a correctional officer or medical staff member at a correctional facility who

was designated by the governor of the State of Iowa as an eligible worker.

3. Premium pay received by a teacher employed by an independently accredited school or a teacher

employed by the State of Iowa who was designated by the governor as an eligible worker.

4. Teacher retention payment received by a teacher that was funded from moneys received by the State

of Iowa from the elementary and secondary school emergency relief fund pursuant to the federal

Coronavirus Response and Relief Appropriations Act or the American Rescue Plan Act of 2021.

5. Teacher retention payment received by a teacher employed by a private school or specially accredited

school, that was funded from the private sector worker premium pay program administered by the

department of education that was funded from the State of Iowa moneys.

6. Recruitment and retention bonus received by a child care worker through the recruitment and

retention bonus program administered by the department of human services.

Step 7

Line 27

In 2021, the federal Child Tax Credit was refundable for federal income tax purposes. Taxpayers who received

a refund in 2022 from their 2021 federal income tax return are not required to add back any of the portion of

the federal refund attributable to the refundable portion of the Child Tax Credit.

In 2021, the federal Child and Dependent Care Credit was partially refundable for federal income tax

purposes. Taxpayers who received a refund in 2022 from their 2021 federal income tax return are not

required to add back any of the portion of the federal refund attributable to the refundable portion of the

federal Child and Dependent Care Credit.

Line 32

The qualified business income deduction has increased from 50% to 75% of the federal deduction.

Line 33

The DPAD 199A(g) deduction has increased from 50% to 75% of the federal deduction.

Step 8

Line 37

Taxpayers who itemize their deductions are allowed a charitable mileage rate of 50 cents per mile beginning

July 1, 2022, which is an increase from 39 cents per mile.

Step 9

Line 52

Taxpayers who wish to claim the Farm to Food Donation Tax Credit are no longer required to submit their

authorized food donation receipts to the Department of Revenue by January 15 and receive a tax credit

certificate prior to claiming the tax credit. Instead, taxpayers may make tax credit claims directly on their Iowa

tax return by using their authorized food donation receipts to complete the IA 178 Farm to Food Donation Tax

Credit Form and including that IA 178 form with their Iowa tax return.

Step 10

Line 62

Report any Iowa Composite Credits reported on IA Schedule CC on this line. Include IA Schedule CC (41-178)

with your return.

Track Your Return: Use Where's My Refund to check the status of individual income tax returns and amended

individual income tax returns you've filed within the last year or over the phone at 515-281-3114 or 800-367-

3388.

Conformity with The Internal Revenue Code (IRC)

For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity, meaning the state

will automatically conform with any changes made to the Internal Revenue Code (IRC), except as specified by

Iowa law.

For the most part, the calculation of Iowa net income is still the same as the calculation for federal adjusted

gross income (AGI). However, the calculation of Iowa net income will be different from the federal AGI

calculation when it comes to certain items described later in these instructions, such as depreciation for

certain assets placed in service before tax year 2021, section 179 special election deductions, and the business

interest expense limitation.

Disclaimer: Please be advised that this is an informational document. It should not be relied upon or otherwise

cited as precedent. This information is subject to change at any time. If a member of the public wishes to

request a binding decision, he or she must file a Petition for Declaratory Order pursuant to Iowa

Administrative Code rule 701—7.24.

Who Must File?

You must file an Iowa return if... you were a resident or part-year resident of Iowa in 2022 and meet any of the

following requirements. Nonresidents, see items f. and g.

In meeting the filing requirements below, you must add back:

• the pension exclusion (line 21, IA 1040)

• the reportable Social Security amount from step 4, IA 1040

• any amount of lump sum distribution separately taxed on federal form 4972, and

• any net operating loss carryforward

Note to married couples:

Incomes of both spouses must be included when determining who must file.

a) You had a net income (line 26, IA 1040) of more than $9,000 and your filing status is single. ($24,000 if

65 or older on 12/31/22)

b) You had a net income (line 26, IA 1040) of more than $13,500 and your filing status is other than single.

($32,000 if you or your spouse is 65 or older on 12/31/22)

c) You were claimed as a dependent on another person’s Iowa return and had a net income (line 26, IA

1040) of $5,000 or more.

d) You were in the military service with Iowa shown as your legal residence even though stationed

outside of Iowa unless you are below the income thresholds above. For information about military

spouses, see Military Spouses Residency Relief Act.

e) You were subject to Iowa lump-sum tax.

f) You were a nonresident or part-year resident and your net income from Iowa sources [line 26, IA 126]

was $1,000 or more, unless below the income thresholds above. In the case of married nonresidents,

the spouses' combined income is used to determine if their income is high enough to require them to

file an Iowa return. To understand “Iowa-source income,” see the instructions for lines 1 through 26 of

the IA 126.

g) You were a nonresident or part-year resident and subject to Iowa lump-sum tax or Iowa alternative

minimum tax (even if Iowa-source income is less than $1,000).

Note: If you do not meet any of the above requirements but you had Iowa tax withheld and you wish to

receive a refund, you must file an Iowa return.

Step 1

Before You Begin

Step: 1

Step Subject: Name and Address

Make sure you have received all W-2s, 1099s, and other tax documents needed to prepare your return.

Important: Enter your Social Security Number(s) in the appropriate boxes on the form. Otherwise, we may be

unable to process your return.

The Iowa Department of Revenue may require proof of any item listed on a return or schedule.

Filing Period

If your filing period is other than calendar year 2022, enter the beginning and ending dates of your fiscal tax

year on the line provided above the name and address boxes on the return.

Name and Mailing Address

Enter your name and current mailing address on the tax return. If using a foreign mailing address, in place of

the domestic city, state, ZIP, include the foreign city, country, and postal code.

Provide the Department with your updated address if you move after your return is filed. Send an email to

idrindividualtax@iowa.gov

Note: The email address entered will NOT be used to request or provide confidential information without your

authorization.

If You or Your Spouse is 65 or Older on 12/31/22 - Check the box.

County

Enter the number of the county you lived in as of December 31, 2022. If you do not know your county number,

view a list of districts by county and number.

• Nonresidents and part-year residents who moved out of Iowa before December 31, 2022, should enter

"00" as your county number.

• Part-year residents who moved into Iowa should enter the number of the Iowa county in which you

lived on December 31, 2022.

• Military personnel should enter the county number of their Iowa residence, even if the service

member is not physically present in Iowa on the last day of the tax year.

School District Number

Enter the district in which you lived on December 31, 2022. View a list of districts by county and number. This

is not necessarily the district where your children attended school. Even if you do not have children, you must

enter this number.

Other possible resources to identify your school district information include:

• Your voter registration card

• Search “school surtax” from the Iowa Tax Mapper

• Your county assessor’s website

Nonresidents, Part-Year Residents, and Military Personnel

• Nonresidents: Those who did not live in Iowa at all during 2022 should enter "0000" for the school

district number. You are not subject to school district surtax on line 54.

• Part-year residents who moved into Iowa should enter the Iowa school district in which you lived on

the last day of 2022. You may be subject to school district surtax on line 54.

• Part-year residents who moved out of Iowa before December 31, 2022, should enter "9999." You are

not subject to school district surtax on line 54.

• Military personnel should enter the school district number of their Iowa residence, even if the service

member is not physically present in Iowa on the last day of the tax year. You may be subject to school

district surtax on line 54.

Foreign Currency

Taxpayers who are paid in foreign currency must convert the currency to U.S. dollars as required for federal

tax purposes.

Rounding to Whole Dollars

Use whole dollars to complete your return instead of dollars and cents. To round, drop amounts under 50

cents and increase amounts from 50 to 99 cents to the next dollar.

For example, $129.49 becomes $129 and $235.50 becomes $236.

If you need to add two or more amounts to enter on a line, add them together first, then round.

For example, if you received two W-2 forms, one showing wages of $5,000.55 and the other for $18,500.73,

add them for a total of $23,501.28. The amount you enter on line 1 of the IA 1040 would be $23,501.

Step 2

Filing Status

Step: 2

Step Subject: Filing Status

Your filing status on the Iowa return is usually the same filing status as on your federal return. However,

married taxpayers have the option of either filing jointly (status 2), married filing separately on a combined

return (status 3) or married filing separate returns (status 4) on the Iowa return, no matter how they filed on

the federal return.

If you and your spouse both have income, you may owe less tax by filing status 3 or 4.

Status 1. Single

Check filing status 1 if you were unmarried, divorced, or legally separated on December 31, 2022, and do not

meet the requirements for any other filing status. All single filers must answer the question, "Were you

claimed as a dependent on another person's Iowa return?"

If this question is not answered, you will be taxed as a dependent.

Status 2. Married Filing Joint Return

Check filing status 2 if you are married and want to report your income, deductions, and exemptions together

in one column. Both spouses must sign the return.

Married taxpayers filing a joint return

Both spouses are jointly and severally liable for the total tax due on the return, except when one spouse is

eligible for relief from joint and several liability under criteria established pursuant to section 6015 of the

Internal Revenue Code.

Please note:

a) You must have been married on December 31, 2022, or

b) If your spouse died during 2022 and you did not remarry during the year, you may file status 2, 3, or 4.

Nonresidents and Part-Year Residents of Iowa - Married taxpayers may file using status 2, 3, or 4 for their

Iowa return even if only one spouse had income from Iowa sources.

Spouse with debts - If a spouse has outstanding debts that may be automatically paid (offset) with your

refund, be sure to read our Refunds May Be Used to Pay Debt information.

Status 3. Married Filing Separately on Combined Return

Check filing status 3 if you are married and want to file separately on one return. If you receive a refund, it will

be made payable to both spouses. Both spouses must sign the return.

Married taxpayers filing separately on a combined return

Both spouses are jointly and severally liable for the total tax due on the return, except when one spouse is

eligible for relief from joint and several liability under criteria established pursuant to section 6015 of the

Internal Revenue Code.

Spouse with debts

If your spouse has outstanding debt that may be automatically paid (offset) with your refund, be sure to read

our Refunds May Be Used to Pay Debt information.

Taxpayers using filing status 3 or 4 may have to prorate (divide) certain items between them on the return.

These items include federal income tax refunds, additional federal income tax paid, etc. This information is

included with instructions for most lines of the return.

Nonresidents and Part-Year Residents of Iowa - Married taxpayers may file using status 2, 3, or 4 for their

Iowa return even if only one spouse had income from Iowa sources.

Status 4. Married Filing Separate Returns

Check filing status 4 if you and your spouse file separate tax returns. Write your spouse's Social Security

Number, name, and net income in the spaces provided at the top of the return in Step 2. The processing of

refunds, alternate tax calculations, or low income exemptions will be delayed without this information or

supporting schedules.

Taxpayers using filing status 3 or 4 may have to prorate (divide) certain items between them on the return.

These items include federal income tax refunds, additional federal income tax paid, etc. This information is

included with instructions for each line of the return.

Nonresidents and Part-Year Residents of Iowa - Married taxpayers may file using status 2, 3, or 4 for their

Iowa return even if only one spouse had income from Iowa sources.

Married Separate Filers:

Married taxpayers filing married filing status 3 or 4 must use the combined income of both spouses in

determining eligibility for exemption from tax.

If either spouse has a net operating loss that is carried back or forward, then the other spouse cannot use the

low income exemption. If the spouse with the net operating loss chooses not to carry the loss back or forward,

then the other can claim the low income exemption. A statement must be attached to the return saying that

the spouse with the net operating loss will not carry it back or forward.

If one spouse itemizes deductions, then both spouses must itemize deductions, even if separate Iowa returns

are filed.

Status 5. Head of Household

Check filing status 5 if you are filing as head of household for federal income tax purposes. If you have a

qualifying person (as defined by the Internal Revenue Service) living with you who you did not claim as a

dependent on this return, enter the person's name and Social Security Number. If you are filing as a qualifying

widow(er) with a dependent child for federal income tax purposes, you cannot file as head of household on

your Iowa return.

Status 6. Qualifying Widow(er) with Dependent Child

Check filing status 6 if you meet the federal filing requirements for qualifying widow(er).

Step 3

Exemption Credits

Step: 3

Step Subject: Exemption Credits

YOU (and spouse if filing status 2)

a. Personal Credit

If you are filing single (status 1) or married filing separately on a combined return (status 3) or married filing

separate returns (status 4) or qualifying widow(er) (status 6), enter 1 in the Personal Credit space.

If you are filing married filing joint (status 2) or head of household (status 5), you are eligible for an extra credit

and should enter 2 in the Personal Credit space.

Add the number of personal credits and multiply by $40. Enter this amount on the $ line.

Note to dependents filing their own returns:

You may claim a $40 personal exemption credit even if you are claimed as a dependent on another person's

Iowa return.

b. Additional Personal Credit: 65 or older or blind

If you were 65 or older on or before January 1, 2023, you may take an additional personal credit.

If your spouse was 65 or older on or before January 1, 2023, and you are filing a joint return (status 2), you

may take an additional personal credit for your spouse.

If you were blind on December 31, 2022, you may take an additional personal credit.

If your spouse was blind on December 31, 2022, and you are filing a joint return (status 2), you may take an

additional personal credit for your spouse.

Add the number of credits for 65 or older and blind and multiply by $20. Enter this amount on the $ line.

c. Dependents: Consult IRS Publication 17 to learn who qualifies as a dependent.

Enter the number of dependent children and other dependents you are claiming for federal income tax

purposes. Add the number of dependent credits and multiply by $40. Enter this amount on the $ line.

Federal tax law determines whether or not a person is a dependent. Consult IRS Publication 17 to learn who

qualifies as a dependent. The IRS has guidelines that also determine which parent/guardian can claim a

dependent when separate returns are filed (such as in the case of divorced parents). The Iowa tax law follows

federal guidelines.

d. Dependent Name(s)

Enter the first name(s) of the claimed dependents. Also enter their last name(s) if different than yours.

e. Total

Add the dollar amounts and enter on the TOTAL line and on line 43, column A.

SPOUSE (Complete only if married filing separately on a combined return, filing status 3.)

a. Personal Credit

Enter 1 in the first space and multiply by $40. Enter $40 on the $ line.

b. Additional Personal Credit: 65 or older and / or blind

If your spouse was 65 or older on or before January 1, 2023, your spouse may take an additional personal

credit.

If your spouse was blind on or before December 31, 2022, your spouse may take an additional personal credit.

Add the number of credits for 65 or older and blind and multiply by $20. Enter this amount on the $ line.

c. Dependents

Enter the number of dependent children and other dependents the spouse is claiming for federal income tax

purposes. Add the number of dependent credits and multiply by $40. Enter this amount on the $ line.

Federal tax law determines whether or not a person is a dependent. Consult IRS Publication 17 to learn who

qualifies as a dependent. The IRS has guidelines that also determine which parent/guardian can claim a

dependent when separate returns are filed (such as in the case of divorced parents). The tax law follows

federal guidelines.

d. Dependent Name(s)

Enter the first name(s) of the claimed dependents. Also enter their last name(s) if different than yours.

e. Total

Add the dollar amounts and enter on the TOTAL line and on line 43, column B.

Married Separate Filers:

You may divide the number of dependents you claim between you and your spouse. However, you may not

divide any one dependent between spouses. Each spouse must claim their own exemption credits and may

not claim any unused part of their spouse's credit.

Step 4

Reportable Social Security Benefits

Step: 4

Step Subject: Reportable Social Security Benefits

Iowa does not tax Social Security benefits. While Social Security benefits are excluded from income when

computing tax, some Social Security benefits are included as income in determining whether a taxpayer has

sufficient income to file an Iowa return, and are included as income for purposes of computing the alternate

tax on line 39. NOTE: This also affects you if you are single and use the Tax Reduction Worksheet. The

reportable Social Security benefit is calculated using the worksheet below and entered on Step 4 of the IA1040.

1. Enter the amount from Box 5 of form(s) SSA-1099. If you filed a joint federal return, enter

the totals for both spouses. Do not include Railroad Retirement benefits from form RRB-1099

here.

2. Enter one-half of line 1 amount

3. Add amounts from the federal form 1040 on lines 1, 2b, 3b, 4b, 5b, 7 and 8

4. Add one-half of Railroad Retirement Net Social Security Equivalent benefits from Box 5 of

RRB-1099*

5. Add any depreciation and section 179 adjustment from IA 1040 line 14 and all other Iowa

nonconformity adjustments to compute correct amount

6. Enter the amount from your federal 1040, line 2a

7. Add lines 2 through 6

8. Enter total adjustments from federal form 1040, Schedule 1, lines 11 through 20, line 23,

plus the total other adjustments reported on line 26

9. Subtract line 8 from line 7

10. Enter one of the following amounts based on the federal filing status used on form 1040

• Single, head of household, qualifying widow(er): enter $25,000

• Married filing joint: enter $32,000

• Married filing separate: enter -0- if you lived with your spouse at any time in 2022 or

$25,000 if you did not live with your spouse at any time in 2022

10.

11. Subtract line 10 from line 9. If zero or less, enter -0-

If line 11 is zero, stop here. None of the Social Security benefits are reportable.

If line 11 is more than zero, go to line 12

11.

12. Enter one-half of line 11

12.

13. Iowa Reportable Social Security benefits: Enter the smaller of line 2 or line 12 and enter on

IA 1040, step 4

13.

* Notes: Depreciation / Section 179 / and All Other Iowa Net Income Decoupling

Iowa taxpayers who received Social Security benefits in 2022 and claimed depreciation / section 179 on their

federal returns or have other Iowa net income nonconformity may have to recompute their reportable

benefits on the worksheet. For other Iowa nonconformity adjustments see line 14 and IA Schedule A.

Those who need to recompute the reportable Social Security benefits should add the adjustment from line 5

of Schedule IA 4562A and all other Iowa net income nonconformity to the other amounts shown on line 5 of

the Social Security Worksheet from the federal return and the RRB-1099. The rest of the form is then

completed with the amounts normally used to complete the worksheet from the federal 1040.

Include the following incomes or adjustments to income on line 5 if applicable.

(These were excluded from federal AGI):

• foreign-earned income

• income excluded by residents of Puerto Rico or American Samoa

• proceeds from Savings Bonds used for higher education and

• employer-provided adoption benefits.

Railroad Retirement Benefits

Although Railroad Retirement benefits are not taxable, one-half of the Net Social Security Equivalent Benefits

from Box 5 of the RRB-1099 received must be used to determine the amount of Social Security benefits that

are reportable to Iowa.

Interest from Federal Securities

For purposes of determining reportable Social Security benefits, you must also include interest from federal

securities.

Married Separate Filers:

a. If both spouses received Social Security benefits, the reportable amount is allocated between the

spouses in the ratio of the benefits received by one spouse to the total benefits received. (Examples of

how to prorate)

b. If only one spouse received benefits, that spouse will report the calculated portion of the benefits.

Step 5

Wages, Salaries, Tips, etc.

Line: 1

Step: 5

Step Subject: Gross Income

Filing Status 3

If using filing status 3 (married filing separately on a combined return), complete both columns A and B of the

IA 1040.

All Other Statuses

All other filing statuses complete only column A (you or joint).

All Taxpayers

All taxpayers, including nonresidents, must report income from all sources (unless specifically exempt, such as

interest from federal securities) for the entire year in this section.

Nonresidents and Part-Year Residents

Nonresidents and part-year residents must also complete Iowa Schedule IA 126. Report only Iowa-source

income on the Schedule IA 126, lines 1-26. This schedule will result in a credit for the amount of tax based on

income earned outside of Iowa.

1. WAGES, SALARIES, TIPS, ETC.

Report the same W-2 income as shown on your federal income tax return, including military income. See line

24 for allowable military adjustments.

Nonresident Servicemember

As a result of federal legislation, certain nonresident servicemembers do not include compensation for military

service on line 1 of the IA 1040 (nor is it reported on the IA 126). In general, this applies to active duty military

and does not include the National Guard or reserve personnel.

Military Spouses

See Tax Responsibilities of Servicemembers and their Spouses

Married Separate Filers:

W-2 income is reported by the spouse earning the income.

Taxable Interest Income

Line: 2

Step: 5

Step Subject: Gross Income

Include the same amounts of interest income reported on your federal return with the following

modifications. Include a copy of your Iowa Schedule B if total Iowa taxable interest is more than $1,500.

The following lists are taken from Iowa Administrative Code rules 701—40.2 and 701—40.3.

A. Add interest from all state and municipal securities that you own. Also include interest

from state and municipal securities you receive from any trust or mutual fund.

However, interest from certain Iowa state and municipal securities is exempt from Iowa tax and should not be

included on this line.

The following securities are exempt:

• Aviation Authority Bonds, Iowa Code section 330A.16

• Beginning Farmer Loan Program Bonds, Iowa Code section 175.17(10)

• Community College Bond Program Bonds, Iowa Code section 260C.71(6)

• Community College Residence Halls and Dormitories Bonds, Iowa Code section 260C.61

• County Health Center Bonds, Iowa Code section 331.441(2)"C"(7)

• E911 Emergency Telephone Service Program Bonds, Iowa Code section 34A.20(6)

• Interstate Bridges Bonds, Iowa Code section 313A.36

• Iowa Board of Regents Bonds for buildings and facilities, Iowa Code chapters 262.41, 262.51, 262.60

and 262A.8

• Iowa Higher Education Loan Authority, Iowa Code section 261A.27

• Iowa Municipality Urban Renewal Bonds, Iowa Code section 403.9(2)

• Iowa Rural Water District Revenue Bonds and notes, Iowa Code section 357A.15

• Low Income Housing Bonds, Iowa Code section 403A.12

• Prison Infrastructure Revenue Bonds, Iowa Code section 16.177(8)

• Regents Institutions Medical and Hospital Buildings at University of Iowa Bonds, Iowa Code section

263A.6

• Soil Conservation Districts Revenue Bonds, Iowa Code section 161A.22

• Quad Cities Interstate Metropolitan Authority Bonds, Iowa Code section 28A.24

• Sewage Treatment Works Revenue Bonds, Iowa Code section 16.131(6)

• Underground Storage Tank Fund Revenue Bonds, Iowa Code section 455G.6(14)

• Vision Iowa Program, Iowa Code section 12.71

• Iowa Utilities Board and Consumer Advocate Building Bonds, Iowa Code section 12.91(9)

• School Infrastructure Program Bonds, Iowa Code section 12.81(8)

• Appropriation Bonds, Iowa Code section 12.87(8)

B. Deduct interest received from Federal securities (for example U.S. Savings Bonds, U.S.

Treasury Notes).

Do not subtract interest from repurchase agreements of U.S. Government securities. The following list

contains widely held United States Government obligations, but is not intended to be all-inclusive.

The following are exempt:

a. United States Government obligations: United States Treasury - Principal and interest from bills, bonds,

and notes issued by the United States Treasury exempt under 31 USCS section 3124[a].

1. Series E, EE, F, G, H and I bonds

2. United States Treasury bills

3. U.S. Government certificates

4. U.S. Government bonds

5. U.S. Government notes

b. Territorial obligations:

1. Guam - Principal and interest from bonds issued by the Government of Guam (48 USCS section

1423[a]).

2. Puerto Rico - Principal and interest from bonds issued by the Government of Puerto Rico (48

USCS section 745).

3. Virgin Islands - Principal and interest from bonds issued by the Government of the Virgin Islands

(48 USCS section 1403).

4. Northern Mariana Islands - Principal and interest from bonds issued by the Government of the

Northern Mariana Islands (48 USCS section 1681(c)).

c. Federal agency obligations:

1. Commodity Credit Corporation - Principal and interest from bonds, notes, debentures, and other

similar obligations issued by the Commodity Credit Corporation (15 USCS section 713a–5).

2. Banks for Cooperatives - Principal and interest from notes, debentures, and other obligations

issued by Banks for Cooperatives (12 USCS section 2134).

3. Farm Credit Banks - Principal and interest from systemwide bonds, notes, debentures, and

other obligations issued jointly and severally by Banks of the Federal Farm Credit System (12

USCS section 2023).

4. Federal Land Bank Association - Principal and interest from bonds, notes, debentures, and other

obligations issued by the Federal Land Bank Association (12 USCS section 2098).

5. Financial Assistance Corporation - Principal and interest from notes, bonds, debentures, and

other obligations issued by the Financial Assistance Corporation (12 USCS section 2278b–10[b]).

6. Production Credit Association - Principal and interest from notes, debentures, and other

obligations issued by the Production Credit Association (12 USCS section 2077).

7. Federal Deposit Insurance Corporation (FDIC) Principal and interest from notes, bonds,

debentures, and other such obligations issued by the Federal Deposit Insurance Corporation (12

USCS section 1825).

8. Federal Financing Bank - Interest from obligations issued by the Federal Financing Bank.

Considered to be United States Government obligations (12 USCS section 2288, 31 USCS section

3124[a]).

9. Federal Home Loan Bank - Principal and interest from notes, bonds, debentures, and other such

obligations issued by any Federal Home Loan Bank and consolidated Federal Home Loan Bank

bonds and debentures (12 USCS section 1433).

10. Federal Financing Corporation - Principal and interest from notes, bonds, debentures, and other

such obligations issued by the Federal Financing Corporation (12 USCS section 2288(b)).

11. Financing Corporation (FICO) - Principal and interest from any obligation of the Financing

Corporation (12 USCS Sections 1441[e][7] and 1433).

12. General Services Administration (GSA) - Principal and interest from General Services

Administration participation certificates. Considered to be United States Government

obligations (31 USCS section 3124[a]).

13. Housing and Urban Development (HUD). Principal and interest from War Housing Insurance

debentures (12 USCS section 1739[d]).

• Principal and interest from Rental Housing Insurance debentures (12 USCS section

1747g[g]).

• Principal and interest from Armed Services Mortgage Insurance debentures (12 USCS

section 1748b[f])

• Principal and interest from National Defense Housing Insurance debentures (12 USCS

section 1750c[d]).

• Principal and interest from Mutual Mortgage Insurance Fund debentures (12 USCS

section 1710[d]).

14. National Credit Union Administration Central Liquidity Facility - Income from notes, bonds,

debentures, and other obligations issued on behalf of the National Credit Union Administration

Central Liquidity Facility (12 USCS section 1795k[b]).

15. Resolution Funding Corporation - Principal and interest from obligations issued by the

Resolution Funding Corporation (12 USCS Sections 1441[f][7] and 1433).

16. Student Loan Marketing Association (Sallie Mae) - Principal and interest from obligations issued

by the Student Loan Marketing Association. Considered to be United States Government

obligations (20 USCS section 1087–2[1], 31 USCS section 3124[a]).

17. Tennessee Valley Authority - Principal and interest from bonds issued by the Tennessee Valley

Authority (16 USCS section 831n–4[d]).

18. United States Postal Service - Principal and interest from obligations issued by the United States

Postal Service (39 USCS section 2005[d][4]).

19. Certificates on Government Receipts.

The following are not considered federal securities and are taxable:

Federal Agency Obligations:

• Building and Loan Associations

• Credit Unions, federal or state

• Export-Import Bank of the United States

• Federal Agricultural Mortgage Corporation (Farmer Mac)

• Federal Home Loan Mortgage Corporation (Freddie Mac) Securities

• Federal Housing Administration

• Federal income tax refunds, interest

• Federal National Mortgage Association

• Federal National Mortgage Association (Fannie Mae) Securities

• Government National Mortgage Association (Ginnie Mae) Securities

• Merchant Marine (Maritime Administration)

• Money Market Certificates

• Mortgage Participation Certificates

• Savings and Loan Associations, federal or state

• Small Business Administration

Obligations of International Institutions:

• Asian Development Bank

• Inter-American Development Bank

• International Bank for Reconstruction and Development (World Bank)

Other Obligations:

• Washington D.C. Metro Area Transit Authority

Married Separate Filers:

Divide interest income based on ownership of the account or certificate.

a. Jointly held: Divide equally between spouses.

b. Held in the name of only one spouse: Allocate interest wholly to that spouse.

Ordinary Dividend Income

Line: 3

Step: 5

Step Subject: Gross Income

Include a copy of your federal or Iowa Schedule B if your Iowa taxable dividends are more than $1,500. Report

the same ordinary dividends as you reported on line 3b of your federal return with the following

modifications:

a. Add all dividends from mutual funds, investment trusts, or regulated investment companies investing

in state and municipal bonds.

b. Deduct that portion of any net dividends from a mutual fund, investment trust, or regulated

investment company that is attributable to direct federal securities. You cannot take this deduction

unless you are provided a statement from the fund giving the percentage of net dividends attributable

to direct federal securities. If a return is filed on paper, a copy of the statement must be included with

the return to take this deduction.

Interest income from repurchase agreements involving federal securities cannot be deducted.

Married Separate Filers:

Divide dividends based on registered ownership of stock.

a. Jointly held: Divide equally.

b. Held in the name of only one spouse: Allocate dividends wholly to that spouse.

Alimony Received

Line: 4

Step: 5

Step Subject: Gross Income

Include the same alimony as shown on your federal return.

Married Separate Filers:

Reported by the spouse who received the alimony.

Business Income / (Loss)

Line: 5

Step: 5

Step Subject: Gross Income

Report the net business income or loss from federal Schedule C. Include a copy of the federal schedule.

The IA 4562A&B may need to be completed if the taxpayer claimed depreciation or section 179 deductions on

the federal return.

Taxpayers who had to make adjustments for Iowa’s nonconformity to federal law in 2018 or 2019 may need to

complete form IA 101 in 2020 and later years. See the IA 101 Nonconformity Adjustments form for more

information.

For tax year 2020 and later, Iowa is not conformed to the business interest expense limitation in IRC section

163(j) See the IA 163 for more information.

If one spouse has a loss, the couple may want to determine if filing status 2 is to their advantage.

Schedule C filers may need an Iowa Sales and Use Tax Permit. Businesses selling tangible personal property

performing taxable services, or selling specified digital products must have a permit to properly charge,

collect, and remit sales tax.

The Iowa Department of Revenue may require proof of any item listed on a return or schedule.

Military Spouses

See Tax Responsibilities of Servicemembers and Their Spouses

Married Separate Filers:

Reported by the spouse deriving the income or loss.

Capital Gain / (Loss)

Line: 6

Step: 5

Step Subject: Gross Income

Enter 100% of any capital gain or loss as reported on federal form 1040, line 7.

A copy of your federal Schedule D and federal form 8949 (if applicable) must be included with this return if

required for federal purposes.

Iowa tax law follows the federal guidelines on the exclusion of gain on the sale of a principal residence.

Married Separate Filers:

Taxpayers who filed separate federal returns should report capital gain or loss as reported for federal tax

purposes.

If a joint federal return was filed, each spouse must report capital gain on the basis of ownership of the

property sold or exchanged. The combined net capital gain or loss must be the same as reported on the joint

federal return.

If a joint federal return was filed and both spouses have capital losses, each spouse may claim up to a $1,500

capital loss plus any unused portion of their spouse's $1,500 loss limitation. If both spouses are reporting

capital losses, the sum of both spouses' losses may not exceed $3,000.

Capital Gain Deduction

Do not take the capital gain deduction on this line. Qualified taxpayers will take the capital gain deduction on

IA 1040, line 23. For more information regarding the Iowa capital gain deduction, see IA 100A - IA 100F Capital

Gain Deduction Information and Links to Forms & Instructions (41-161).

Other Gains / (Losses)

Line: 7

Step: 5

Step Subject: Gross Income

If you sold or exchanged assets used in a trade or business and completed federal form 4797, enter 100% of

the gain or loss as shown on federal form 1040, schedule 1, line 4. Include a copy of federal form 4797.

Married Separate Filers:

Divide gains or losses based on ownership of the asset sold or exchanged.

Taxable IRA Distributions

Line: 8

Step: 5

Step Subject: Gross Income

Enter the amount of taxable IRA distributions as shown on your federal return.

Pension / Retirement Income Exclusion

Do not take the pension / retirement income exclusion on this line. Qualified taxpayers will take the pension /

retirement income exclusion on the IA 1040 line 21.

Married Separate Filers:

Taxable IRA distributions should be reported by the spouse whose name is on the account.

Taxable Pensions AND Annuities

Line: 9

Step: 5

Step Subject: Gross Income

The amounts of pensions and annuities taxable for Iowa purposes are generally the same as are taxable for

federal purposes, with the following exceptions.

Military Retirement Pay

Retirement pay for military service in the United States Armed Forces, the Armed Forces Military Reserve, or

the National Guard is eligible for exemption from Iowa income tax and is not included on line 9, without

regard for age or disability.

The Army, Navy, Air Force, Marine Corps, and Coast Guard make up the Armed Forces. Only military

retirement pay received from the Defense Finance and Accounting Service (DFAS), or a similar source, is

eligible for the exemption.

Retirement pay received from other sources, including the Office of Personnel Management (OPM), does not

qualify for the exemption. In particular, retirement pay resulting from participation in the Civil Service

Retirement System (CSRS) or the Federal Employees Retirement System (FERS) does not qualify for the

exemption.

For more details, see Iowa Administrative Code rule 701—302.80

State or Local Government Employee

If you are a state or local government employee who retired after December 31, 1994, your taxable pensions

and annuities on your Iowa return may be different than on your federal return. In these cases, see the 1099-R

issued by Iowa Public Employees Retirement System (IPERS), for the taxable amount.

Railroad Retirement Benefits

Railroad Retirement benefits paid by the Railroad Retirement Board are not taxable on the Iowa return. These

benefits should not be included on this line.

Pension / Retirement Income Exclusion

Do not take the pension / retirement exclusion on this line. Qualified taxpayers will take the pension /

retirement income exclusion on IA 1040 line 21.

Married Separate Filers:

The taxable portion of pensions and annuities is reported by the spouse who received the income.

Rents, Royalties, Partnerships, Estates, etc.

Line: 10

Step: 5

Step Subject: Gross Income

Report the income or loss from federal Schedule E. Any modifications to federal partnership income and / or S

corporation income should be shown on IA 1040 line 14 or line 24. Report modifications that increased the

income on line 14. Report modifications that decreased the income on line 24. Include a copy of federal

Schedule E.

The IA 4562A&B may need to be completed if the taxpayer claimed or received federal depreciation or section

179 deductions.

Taxpayers who had to make adjustments for Iowa’s nonconformity to federal law in 2018 or 2019 may need to

complete form IA 101 in 2020 and later years. See the IA 101 Nonconformity Adjustments form for more

information.

For tax year 2020 and later, Iowa is not conformed to the business interest expense limitation in IRC section

163(j). See the IA 163 for more information.

The Iowa Department of Revenue may require proof of any item listed on a return or schedule.

Married Separate Filers:

Divide income or loss from Schedule E based upon ownership of the assets or business interest producing the

income or loss, or the individual named as beneficiary.

Farm Income / (Loss)

Line: 11

Step: 5

Step Subject: Gross Income

Enter the income or loss from federal Schedule F. Include a copy of federal Schedule F. The IA 4562A&B may

need to be completed if the taxpayer claimed depreciation or section 179 deductions on the federal return.

Taxpayers who had to make adjustments for Iowa’s nonconformity to federal law in 2018 and 2019 may need

to complete form IA 101 in 2020 and later years. See the IA 101 Nonconformity Adjustments form for more

information. For tax year 2020 and later, Iowa is not conformed to the business interest expense limitation in

IRC section 163(j). See the IA 163 for more information.

The Iowa Department of Revenue may require proof of any item listed on a return or schedule.

Married Separate Filers:

Farm income must be reported by the spouse who claims it for self-employment tax purposes on the federal

Schedule SE. If the other spouse claims a share of the farm income, then that spouse must attach a worksheet

showing how that share was determined based on capital contribution, management and control, and services

rendered.

Unemployment Compensation

Line: 12

Step: 5

Step Subject: Gross Income

Enter the amount of unemployment compensation benefits reported on federal 1040, Schedule 1, line 7. Do

not include unemployment compensation and sickness insurance benefits paid by the Railroad Retirement

Board.

Married Separate Filers:

If both spouses received unemployment benefits, each of the spouses should report the benefits received as

shown on the 1099-G(s) for each spouse.

Gambling Winnings

Line: 13

Step: 5

Step Subject: Gross Income

You must report the same amount of gambling winnings as reported on the federal 1040, Schedule 1, line 8b.

Report any Iowa tax withheld on IA 1040, line 63. Gambling losses may be reported as an itemized deduction

on Schedule A, but you cannot deduct more than the winnings you report.

Gambling losses: Gambling losses are deductible on IA 1040, Schedule A, line 25, only to the extent of

gambling winnings reported on IA 1040, line 13.

Married Separate Filers:

The spouse to whom the income was paid must report that income.

Other Income, Bonus Depreciation / Section 179 Adjustment

Line: 14

Step: 5

Step Subject: Gross Income

Enter taxable income not reported on lines 1-13. Include an explanation of the type of income.

Examples of income to be reported on line 14 include:

A. Babysitting income not reported on federal Schedule C.

B. NONCONFORMITY ADJUSTMENT: Expensing and depreciation adjustment from the IA 4562A and the

IA 4562B; include the IA 4562A and the IA 4562B with your return.

C. Capital gain from installment sales from sales in prior tax years: Accrual-method taxpayers may use the

installment method for reporting capital gain on their Iowa returns.

D. College Savings Iowa or Iowa Advisor 529 Plans: Amounts received from the cancellation of a

participation agreement or other non-qualifying withdrawals to the extent the amount was previously

deducted on the IA 1040. Qualifying withdrawals may include up to $10,000 per beneficiary per year

for tuition expenses of attending an accredited elementary or secondary (K-12) school in Iowa or an

out-of-state elementary or secondary school that educates a beneficiary who is a child “requiring

special education” under Iowa Code section 256B.2. The $10,000 per-beneficiary cap applies even if

the beneficiary receives money from multiple College Savings Iowa or Iowa Advisor 529 Plan accounts.

The $10,000 annual cap does not apply to withdrawals used to pay qualified education expenses

related to higher education. For tax years beginning on or after January 1, 2019, qualifying withdrawals

include withdrawals for certain expenses related to participation in an apprenticeship program and

withdrawals, up to $10,000, used to pay either principal or interest on a qualified education loan on

behalf of a beneficiary or a beneficiary’s sibling. If you withdrew funds from a 529 Plan to pay qualified

higher education expenses and you received a refund of those funds, the refund amount is considered

a qualifying withdrawal if it is recontributed to the same Iowa 529 Plan account from which it was

withdrawn within sixty (60) of the date of the refund. To be a qualifying withdrawal, the recontribution

amount cannot exceed the amount of the refund from the qualifying higher education institution.

E. Director's fees.

F. Drilling: Intangible drilling costs that were reported on federal form 6251.

G. Executor's fees.

H. First-time homebuyers account non-qualifying withdrawals. Non-qualifying withdrawals from your

Iowa First-time Homebuyer Savings Account that were previously deducted on the IA 1040 must be

added back on this line, along with any applicable penalty. Non-qualified withdrawals required to be

added back here are assessed a penalty equal to 10% of the amount of the withdrawal, unless the non-

qualifying withdrawal was made by reason of the death of the account holder or certain other

circumstances. If an account holder makes a non-qualifying withdrawal, they are not permitted to

claim a deduction for any future contribution to any First-time Homebuyer Savings Account. All

withdrawals (qualifying and non-qualifying) from your First-time Homebuyer Savings Account must be

reported to the Department on the Iowa First-time Homebuyer Savings Account Withdrawal Form

within 90 days of the date of withdrawal.

I. Partnership income and / or S corporation income: Modifications that increase the income reported on

IA 1040, line 10.

J. Refundable Iowa tax credits received in the current tax year which were included as income on the

federal 1040 must be added back.

K. Refunds: State income tax refunds other than Iowa to the extent that the tax refunded in the current

tax year was deducted on a prior Iowa return.

L. Wells: Percentage depletion from an oil, gas, or geothermal well that was reported on federal form

6251.

M. Other income as reported on the federal form 1040, Schedule 1, line 8. Enter taxable income not

reported on lines 1-13. Do not include any federal net operating loss adjustment.

N. Net Premium Tax Credit / Health Coverage Tax Credit: The Net Premium Tax Credit from the 2020

federal 1040, Schedule 3, line 9 and the Health Coverage Tax Credit from the 2021 federal 1040,

Schedule 3, line 13 will be reported as Other Income on the 2022 IA 1040, line 14. The Net Premium

Tax Credit and the Health Coverage Tax Credit are reportable income to the extent these credits were a

reimbursement for health insurance premiums deducted from Iowa income in a prior year.

The Iowa 1040 departs from the federal 1040 in the treatment of health insurance premiums by

allowing taxpayers to elect to deduct qualifying health insurance premiums as an adjustment to Iowa

gross income. The Iowa return allows a deduction for health insurance premiums on IA 1040, line 18,

rather than reporting those same premiums as a medical expense deduction on the IA 1040 Schedule A

for Iowa Itemized Deductions.

If the deduction is taken on the IA 1040 Schedule A, then the federal tax guidance should be followed

when addressing the complications due to the impact of the Federal Excess Advance Premium Tax

Credit repayment, the Net Premium Tax Credit, and the Health Coverage Tax Credit.

However, if the deduction is taken on IA 1040, line 18, then the IA 1040, rather than the Iowa Schedule

A, must reflect the impact of the Federal Excess Advance Premium Tax Credit repayment, the Net

Premium Tax Credit, and the Health Coverage Tax Credit. The Iowa expanded instructions for this line

and IA 1040, line 18 set forth the Department’s guidance for the correct reporting of these amounts.

O. Iowa ABLE Savings Plan. Amounts received from cancellation of accounts or other non-qualifying

withdrawal to the extent the amount was previously deducted on the IA 1040

X. Other nonconformity adjustments. See IA 101 Nonconformity Adjustments Schedule. Include the IA

101 with your return.

Y. Any adjustment from IA 163 Interest Expense Adjustment resulting in a reduction to income. Include IA

163 with your return.

Z. RESERVED FOR FUTURE USE

AA. Subtract to the extent included, up to $1,000, the amount of:

1. Premium pay received by a certified peace officer who was designated by the governor of the State

of Iowa as an eligible worker.

2. Premium pay received by a correctional officer or medical staff member at a correctional facility

who was designated by the governor of the State of Iowa as an eligible worker.

3. Premium pay received by a teacher employed by an independently accredited school or a teacher

employed by the State of Iowa who was designated by the governor as an eligible worker.

4. Teacher retention payment received by a teacher that was funded from moneys received by the

State of Iowa from the elementary and secondary school emergency relief fund pursuant to the

federal Coronavirus Response and Relief Appropriations Act or the American Rescue Plan Act of

2021.

5. Teacher retention payment received by a teacher employed by a private school or specially

accredited school, that was funded from the private sector worker premium pay program

administered by the department of education that was funded from the State of Iowa moneys.

6. Recruitment and retention bonus received by a child care worker through the recruitment and

retention bonus program administered by the department of human services.

If you have questions about the eligibility of payments you received under the above listed programs please

contact your employer’s human resource department.

Married Separate Filers:

The spouse to whom the income was paid must report that income.

Modifications to partnership and S corporation income are allocated between spouses in the same manner as

that income was divided on IA 1040, line 10.

Gross Income

Line: 15

Step: 5

Step Subject: Gross Income

Add lines 1 through 14 and enter the total.

Step 6

Payments to an IRA, KEOGH, or SEP

Line: 16

Step: 6

Step Subject: Adjustments to Income

All Taxpayers

All taxpayers report adjustments from all sources in this section.

Enter the amount claimed on your federal tax return for payments made to your IRA, Keogh Plan, SEP, SIMPLE,

or Qualified Plans.

Nonresidents and Part-Year Residents

Nonresidents and part-year residents must also report Iowa-source adjustments to income on Schedule IA

126, lines 16-24.

Enter the amount claimed on your federal tax return for payments made to your IRA, Keogh Plan, SEP, SIMPLE,

or Qualified Plans.

Roth IRA

Payments made to a Roth IRA are not deductible.

Married Separate Filers:

a. If only one spouse has earned income, that individual can contribute up to $6,000 per year ($7,000 if

50 or older) to an IRA account of the nonworking spouse and up to $6,000 per year ($7,000 if 50 or

older) to an IRA account of the individual.

When claiming the deduction between spouses, the working spouse will usually claim all of the

deduction, not to exceed the federal limits for both spouses. However, if the nonworking spouse has

any earned income, then the nonworking spouse must claim the deduction to the extent of their

earned income. The working spouse will then claim the balance of the IRA contribution of both

spouses.

b. If both spouses earned income and made contributions to an IRA account, each spouse must claim

their own contribution, not to exceed $6,000 per spouse ($7,000 if 50 or older).

c. If both spouses made contributions to an IRA but only a portion of the contribution is deductible on the

federal return, the amount of the IRA deduction that is allowed for federal income tax purposes must

be allocated between the spouses in the ratio of the IRA contribution made by each spouse to the total

IRA contribution made by both spouses.

d. For Keogh Plans, SEPs, SIMPLE, or Qualified Plans, each spouse must claim their individual

contributions.

Deductible Part of Self-Employment Tax

Line: 17

Step: 6

Step Subject: Adjustments to Income

Enter the amount of self-employment tax that was deductible on your federal 1040, Schedule 1, line 15 in

computing federal adjusted gross income.

Married Separate Filers:

The deduction is allocated in the ratio of self-employment tax paid by each spouse to the total self-

employment tax paid.

Health Insurance Premium

Line: 18

Step: 6

Step Subject: Adjustments to Income

You may take a deduction for certain health insurance premiums on line 18 instead of IA 1040, Schedule A.

Your IA 1040, Schedule A cannot contain any health insurance premiums which are used as a deduction on line

18. Typically, employer health insurance premiums are made on a pre-tax basis when they are deducted from

wages. These premiums are not eligible to be claimed on line 18 or IA 1040, Schedule A.

Enter 100% of the amount paid for:

• health insurance premiums paid with post-tax dollars

• supplemental health insurance, such as:

o Medicare B supplemental medical insurance

o Medicare D voluntary prescription drug insurance

• dental insurance premiums paid with post-tax dollars

• long-term nursing home coverage premiums paid with post-tax dollars regardless of age

Do NOT include:

• “Medicare tax withheld” on your W-2

• premiums paid with pre-tax dollars

• premiums which are later reimbursed, in the same tax year

Federal Health Insurance Credits

Any Excess Advance Premium Tax Credit repayment from the 2021 federal form 1040, Schedule 2, line 2 will

be entered on IA 1040, line 18 in the year paid. Any repayment calculated on your 2022 federal return cannot

be included on the 2022 IA 1040, line 18.

The Net Premium Tax Credit from the 2022 federal form 1040, Schedule 3, line 8, and the Health Coverage Tax

Credit from the 2022 federal form 1040, Schedule 3, line 12c will be reported as Other Income on the 2023 IA

1040. The federal Net Premium Tax Credit and the federal Health Coverage Tax Credit are reportable income

to the extent these credits were a reimbursement for health insurance premiums deducted from Iowa income

in a prior year.

The Iowa 1040 departs from the federal 1040 in the treatment of health insurance premiums by allowing

taxpayers to elect to deduct qualifying health insurance premiums as an adjustment to Iowa gross income. The

Iowa return allows a deduction for certain health insurance premiums on IA 1040, line 18, rather than

reporting those same premiums as a medical expense deduction on the IA 1040 Schedule A for Iowa Itemized

Deductions.

If the deduction is taken on the IA 1040 Schedule A, then the federal tax guidance should be followed when

addressing the complications due to the impact of the Federal Excess Advance Premium Tax Credit repayment,

the Net Premium Tax Credit, and the Health Coverage Tax Credit. The Iowa expanded instructions for this line

and IA 1040, line 14 set forth the Department’s guidance for the correct reporting of these amounts.

Premiums Paid with Pretax Dollars

This deduction is not available to individuals who have paid health or dental insurance premiums on a pre-tax

basis. Pre-tax occurs when an employer subtracts the amount of the health or dental insurance premium from

an employee's gross wages before withholding federal and state income taxes and calculating FICA. See your

payroll department if you do not know whether or not your health or dental insurance was paid on a pre-tax

basis.

The federal Affordable Care Act requires employers to report the cost of coverage under an employer-

sponsored group health plan. This reporting is for informational purposes only and will provide employees

useful and comparable consumer information on the cost of their health care coverage paid by the employer

in box 12 of the W2, code DD. The code DD amount is paid by employers and is not used for tax purposes.

Married Separate Filers:

If one spouse is employed and has health or dental insurance premiums paid through their wages, that spouse

will claim the entire deduction. If both spouses pay health or dental insurance premiums through their wages,

each spouse will claim what that individual paid.

If both spouses have self-employment income, the deduction for self-employed health or dental insurance

must be allocated between the spouses in the ratio of each spouse's self-employment income to the total self-

employment income of both spouses. If health or dental insurance premiums are paid directly by one spouse,

that spouse will claim the entire deduction. For this net income calculation, do not include line 18, the health

or dental insurance deduction.

Penalty on Early Withdrawal of Savings

Line: 19

Step: 6

Step Subject: Adjustments to Income

The form 1099-INT given to you by your bank or other savings institutions will show the amount of any penalty

you were charged because you withdrew funds from your time savings deposit before its maturity. Enter this

amount here. Include interest income from the time deposit on IA 1040, line 2.

Married Separate Filers:

Divide the penalty amount between spouses based upon registered ownership of the time deposit.

• Jointly held: Divide the penalty equally between spouses.

• Held in the name of only one spouse: Allocate the entire penalty to that spouse.

Alimony Paid

Line: 20

Step: 6

Step Subject: Adjustments to Income

Enter the amount of alimony payments or separate maintenance payments that were deductible on your

federal tax return.

Married Separate Filers:

Only the spouse liable for these payments can deduct the alimony paid.

Pension / Retirement Income Exclusion

Line: 21

Step: 6

Step Subject: Adjustments to Income

If you or your spouse receive a pension, an annuity, a self-employed retirement plan, deferred compensation,

IRA distribution, or other retirement plan benefits, you may be eligible to exclude from Iowa income tax part

or all of the retirement income that is taxable on your federal return. The Roth conversion income, included in

net income, is eligible for this exclusion.

Social Security benefits, railroad retirement benefits, and military retirement pay are not included. Since

railroad retirement benefits and military retirement pay are not reported on IA 1040, line 9, an exclusion does

not apply on line 21. However, if you are receiving military retirement pay, you may still be eligible to exclude

other non-military pension income.

The exclusion is up to $6,000 for individuals who file status 1, 5, or 6 and up to $12,000 for married taxpayers

who file status 2, 3, or 4. (If, for example, an individual has $5,000 in pension / retirement income, the

exclusion will be the actual $5,000, not the maximum of $6,000.)

To take this exclusion the pensioner or retirement income recipient must meet one of the

following conditions:

a. 55 years of age or older on December 31, 2022, or

b. disabled, or

c. a surviving spouse or a survivor having an insurable interest in an individual who has qualified for the

exclusion in 2022 on the basis of age or disability. A survivor other than the surviving spouse is considered

to have an "insurable interest" if the survivor is a son, daughter, mother, or father of the annuitant or

pensioner.

Only the pension income of the spouse who meets the eligibility requirements can be shown on line 21. Please

see the examples below for further guidance.

EXAMPLE 1: A married couple elected to file separately on the combined return form. One spouse was 52

years of age and received a pension income of $20,000. The other spouse was 55 years of age and received no

pension income. Since the spouse receiving the pension income was not 55 years of age, no exclusion is

allowed on the Iowa return.

EXAMPLE 2: A married couple elected to file separately on the combined return form. One spouse was 52

years of age and received a pension income of $10,000. The other spouse was 55 years of age and received a

pension income of $8,000. Since only one spouse receiving the pension income was 55 years of age, an

exclusion of $8,000 is allowed on the Iowa return. The exclusion of $8,000 is allowed since a married couple is

allowed a combined exclusion of up to $12,000.

EXAMPLE 3: A married couple elected to file a joint return. One spouse was 52 years of age and received a

pension income of $10,000. The other spouse was 55 years of age and received a pension income of $5,000.

Since only one spouse receiving the pension income was 55 years of age, an exclusion of $5,000 is allowed on

the Iowa return.

EXAMPLE 4: A spouse dies during the year at the age of 60 without receiving any pension income. The

surviving spouse is not disabled, is 50 years old, and receives a pension from a previous employer. The

surviving spouse is not eligible for any pension exclusion. Since the surviving spouse is the only one receiving

the pension income, the eligibility of the deceased spouse doesn't allow the survivor to take the exclusion.

Had the pension income been attributable to the deceased spouse, then the surviving spouse could take the

exclusion.

EXAMPLE 5: A 54-year old single filer receives $5,000 from a deceases parent’s pension. The deceased parent

would have qualified for the pension exclusion. The 54-year old also receives pension income of their own in

the amount of $10,000. The 54-year old can take the pension exclusion in the amount of $5,000 based upon

the insurable interest in the parent who would have qualified.

EXAMPLE 6: Same facts as example 5, except the 54-year old is married and the amount of the parent's

pension income received is $15,000. The 54-year old spouse does not meet the pension exclusion

requirements either. The allowable pension exclusion is $12,000.

Married Separate Filers:

If both spouses have pension income, and both meet the eligibility requirements, the exclusion of up to

$12,000 is prorated between them in the ratio that each spouse's pension income relates to the total pension

income received by both spouses. If only one spouse has pension income and meets the eligibility

requirements, that spouse takes the entire exclusion of up to $12,000. The spouse who has no pension income

receives no exclusion.

Moving Expense Deduction

Line: 22

Step: 6

Step Subject: Adjustments to Income

Enter moving expenses reported on the 2022 federal 1040, Schedule 1, line 14. Include a copy of federal form

3903.

Married Separate Filers:

This deduction must be divided between spouses based on earned income received after their move. If one

spouse can show that the move was made for that spouse, that spouse is entitled to the entire deduction.

Iowa Capital Gain Deduction for Certain Business / Farm Assets / ESOP Stock

Only

Line: 23

Step: 6

Step Subject: Adjustments to Income

This is a deduction of qualifying net capital gain realized in 2022. Note: Line 23 can be more than the net total

reported on Schedule D. Unrelated losses are not to be included in the computation of the deduction. An

example of an unrelated loss is the sale of common stock at a loss.

The Iowa capital gain deduction is subject to review by the Iowa Department of Revenue. The deduction must

be reported on one of six forms by completing the applicable Capital Gain Deduction Worksheet:

a. To claim a deduction for capital gains from the qualifying sale of cattle, horses, or breeding livestock,

complete the IA 100A.

b. To claim a deduction for capital gains from the qualifying sale of real property used in a farm business,

complete the IA 100B.

c. To claim a deduction for capital gains from the qualifying sale of real property used in a non-farm

business, complete the IA 100C.

d. To claim a deduction for capital gains from the qualifying sale of timber, complete the IA 100D.

e. To claim a deduction for capital gains from the qualifying sale of a business, complete the IA 100E.

f. To claim a deduction for capital gains from the qualifying sale of employer securities to a qualified Iowa

employee stock ownership plan (ESOP), complete the IA 100F.

The completed form must be included with the IA 1040 to support the Iowa capital gain deduction. The

Department will use this form to verify that the taxpayer qualifies for the deduction. The Department may

request additional information if needed.

Complete a separate IA 100B-100F for each distinct property sale, although multiple livestock sales can, in

some instances, be reported on one IA 100A (see IA 100A instructions). Complete the applicable form each

year of a qualifying installment sale. Complete the applicable form even if the gain was passed-through from a

separate entity.

The sale of assets by a C corporation generally does not qualify for the Iowa capital gain deduction. However,

the gain from a corporate liquidation under Internal Revenue Code (IRC) section 331, or from certain stock

sales which are treated as an acquisition of assets under IRC section 338, may qualify for the Iowa capital gain

deduction.

For taxpayers filing separately on the same return, each spouse must complete the appropriate IA 100 form

for the Iowa capital gain deduction claimed based on the spouse’s ownership share in the property.

For more information on the Iowa capital gain deduction, see the instructions for the respective IA 100 form,

Iowa Administrative Code rule 701—302.38, and the Capital Gain Flowcharts.

Eligible Property Sales

The Iowa capital gain deduction is available for the net capital gain from qualifying sales of the following

properties:

a. Cattle, Horses, and Breeding Livestock

A taxpayer may deduct the net capital gain from the sale of cattle and horses used for breeding, draft, dairy,

or sporting purposes and held for at least 24 months. A taxpayer also may deduct the net capital gain from the

sale of other livestock used for breeding purposes and held for at least 12 months. To qualify for the

deduction, the taxpayer must receive greater than 50% of their gross income from farming and ranching in the

tax year. However, the sale of qualifying livestock to a lineal descendant of the taxpayer eliminates the

requirement to have in excess of 50% of gross income from farming and ranching.

b. Real Property Used in a Farm Business

A taxpayer may deduct the net capital gain from the sale of real property used in a farm business and held for

at least 10 years. Additionally, the taxpayer must materially participate in the farm business. Typically, the

taxpayer must materially participate in the farm business for the 10 years prior to the sale. Alternatively, a

retired or disabled farmer is treated as materially participating in the farm business for the current year if the

farmer materially participated for five of the eight years prior to retirement or disability.

c. Real Property Used in a Non-Farm Business

A taxpayer may deduct the net capital gain from the sale of real property used in a business and held for at

least 10 years. Additionally, the taxpayer must materially participate in the business, typically for the 10 years

prior to the sale.

d. Timber

A taxpayer may deduct the net capital gain from the sale of timber held for at least 12 months. “Timber”

means timber that qualifies for capital gain treatment under section 1231 of the Internal Revenue Code.

Timber includes evergreen trees, such as Christmas trees, that are more than six years old at the time they are

cut and sold for ornamental purposes.

e. Business

A taxpayer may deduct the net capital gain from the sale of a business held for at least 10 years. The sale of a

business means the sale of all or substantially all of the tangible personal property or service of the business.

Service of the business is intangible personal property used in the business for the production of income such

as client lists, goodwill, patents, trade names, and similar items. This means that the sale of the assets of a

business during the tax year must represent at least 90% of the fair market value of all of the tangible personal

property of the business on the date of sale of the business assets. Additionally, the taxpayer must materially

participate in the business, typically for the 10 years prior to the sale. However, the sale of a business to a

lineal descendent of the taxpayer eliminates the requirement for material participation in the business.

f. ESOP

A taxpayer may deduct 50% of the net capital gain from the sale of exchange of employer securities of an Iowa

corporation to a qualified Iowa ESOP. To be eligible, the Iowa ESOP must own at least 30% of all outstanding

employer securities issued by the Iowa corporation after completion of the transaction.

Non-Qualifying Capital Gain Sales

Capital gains from sales of the following properties typically do not qualify for the Iowa capital gain deduction:

• Investment property, such as real property held for speculation but not used in a business

• Bonds and stocks, other than a qualifying sale of employer securities of an Iowa corporation to an Iowa

ESOP

• Ownership interests and capital stock in a business, other than a qualifying sale of employer securities

of an Iowa corporation to an Iowa ESOP

• Merchandise and inventory of a business

Installment Sales

In the case of installment sales of qualifying property, only installments received in the 2022 tax year qualify

for the capital gain deduction on the 2022 return. Eligibility for the deduction is determined at the time of the

installment sale. Accrual-method taxpayers: See instructions for IA 1040, line 14.

Net Operating Losses

For tax years beginning on or after January 1, 1998, the capital gain deduction otherwise allowable is not

allowed in computing a net operating loss (NOL) deduction for purposes of carrying the net operating loss

deduction to another tax year. Further, when applying an NOL from tax year 1998 or later, the capital gain

deduction is not allowed in the carryback or carryforward tax year and must be added back to that year’s

income to the extent of the NOL.

Married Separate Filers:

Divide the capital gain deduction based on ownership of the asset.

a. Jointly held: Divide equally between spouses.

b. If other than jointly held: Divide between spouses based on percentage of ownership.

Other Adjustments

Line: 24

Step: 6

Step Subject: Adjustments to Income

Enter the total of other allowable adjustments as described below. Include an explanation for each

adjustment.

Do not include any deduction for the small business health insurance tax credit that was not allowed as a

deduction on the federal return.

a. Accrual method

Taxpayers who had capital gains in 2022 that were reported on the installment method for federal tax

purposes and the entire gain was reported for Iowa in a prior year do not have to report installments.

b. Active duty military pay

Members of the armed forces, armed forces military reserve, or the national guard in an active duty status can

exclude pay received from the federal government for military service performed, to the extent it was

included in line 15, Gross Income.

c. Alternative motor vehicle deduction

Alternative motor vehicle deduction of $2,000 for taxpayers who are eligible for the federal Alternative Motor

Vehicle Credit under Internal Revenue Code section 30B and who complete federal form 8910.

d. Capital gain from installment sales reported on the 2001 Iowa return using the accrual

method

The installment method for reporting capital gain for accrual accounting taxpayers is adopted for Iowa

individual income tax purposes for tax years beginning on or after January 1, 2002. However, if you used the

accrual method of accounting and reported the entire capital gain on the 2001 Iowa return which was

reported on the installment method for federal tax purposes, deduct the amount reported of any additional

installments from that capital gain on this line.

e. Capital or ordinary gain from involuntary conversion related to eminent domain

An exclusion of both capital gain and ordinary gain is available for individual income taxpayers relating to

capital or ordinary gain income realized by a taxpayer as a result of the involuntary conversion of property due

to eminent domain. Eminent domain relates to the authority of certain government agencies or

instrumentalities of government to condemn private property for any public improvement, public purpose, or

other public use.

If there is no ordinary or capital gain recognized for tax purposes because the converted property is replaced

with property that is similar to, or related in use to, the converted property, there is no exclusion allowed for

Iowa tax purposes until the remaining gain is recognized for federal tax purposes or until the time of

disposition of the replacement property. Any exclusion allowed for Iowa tax purposes does not alter the basis

of the property as established for federal tax purposes, so the basis will remain the same for both federal and

Iowa tax purposes.

f. Claim of Right Deduction

If income was repaid in the 2022 tax year and was reported and taxed on a prior Iowa return, that income may

be deducted on the 2022 tax return. However, it may be to your advantage to take a credit on line 62. You

may take either the deduction on line 24 or take a credit on line 62, but not both.

Example 1: A taxpayer reported $7,000 in unemployment benefits on the 2021 Iowa return. The taxpayer’s

2021 AGI exceeded $150,000 without including the unemployment income. The taxpayer did not qualify for

the unemployment exclusion. In early 2022 the taxpayer was notified that $4,000 of the unemployment

benefits had to be repaid. The benefits were repaid by the end of 2022. The taxpayer may claim a $4,000

income adjustment on line 24 of the 2022 Iowa return.

Example 2: A taxpayer received $20,000 Iowa unemployment benefits in 2021. $10,200 of those benefits were

excluded from tax. The taxpayer had to repay $15,000 of unemployment. $20,000 - $10,2000 = $9,800 of

benefits were reported and taxed in 2021. The taxpayer may claim a $9,800 income adjustment on line 24 of

the 2022 Iowa return.

g. College Savings Iowa or Iowa Advisor 529 Education Savings Plans

If you or your spouse participate in the College Savings Iowa 529 Plan (Iowa Educational Savings Plan Trust) or

the Iowa Advisor 529 Plan, each may deduct an amount contributed not to exceed $3,522 per beneficiary. This

deduction is only available for contributions to Iowa 529 plans.

You must be the "participant" in the Iowa 529 plan in order to deduct your contributions. If you are not the

"participant" in the Iowa 529 plan, you may not deduct your contributions to that plan.

Example: Adam and Tara have 2 children; Charlie and Ruth. Adam opens two 529 accounts – one for Charlie

and one for Ruth. Tara also opens two 529 accounts one for Charlie and one for Ruth. Both Adam and Tara can

take up to $3,522 per child’s account. Adam and Tara each are eligible for a deduction of up to $7,044. Adam

and Tara’s total potential deduction amount is $14,088.

Only contributions to these two Iowa 529 plans qualify for a deduction on the Iowa return; however, a rollover

from another state's 529 plan to one of the Iowa plans qualifies toward the deduction for Iowa income tax. If

you received a refund of any qualified higher education expenses from an eligible educational institution and

recontributed the refund amount consistent with Iowa Code section 422.7(32)(c)(1)(f)(i), you may not deduct

the recontribution amount when calculating your Iowa net income and the recontribution amount will not be

considered when determining whether you have met the annual deduction cap.

Be sure you have properly shown these contributions as a deduction for one of these plans. Most computer

software programs will ask for this information and correctly indicate the appropriate reason for the

deduction.

Individuals making a contribution on or before the Iowa income tax return filing deadline (April 30 for calendar

year tax filers), excluding extensions, can elect to have that contribution treated as though it was made on the

last day of the preceding calendar year, which allows them to claim the income tax deduction for the most

recently completed tax year.

h. Disability income exclusion

You may exclude from Iowa tax a portion of the disability pay you received in 2022 if you meet ALL of the

following conditions:

• You received disability pay, and

• You were not yet 65 when your tax year ended, and

• You retired on disability and were totally and permanently disabled when you retired, and

• On January 1, 2022, you had not yet reached the age when your employer's retirement program would

have required you to retire.

If you meet all of these conditions, obtain form IA 2440. You MUST complete form IA 2440 to take this

exclusion. A doctor's statement must accompany each year's return attesting to the taxpayer's complete and

permanent disability.

i. NONCONFORMITY ADJUSTMENT: Domestic production activities deduction resulting from

a tax year beginning prior to January 1, 2019 (EXPIRED)

RESERVED FOR FUTURE USE

j. First-Time Homebuyer Savings Account qualifying contributions

You may deduct up to $2,181 ($4,363 for married filing jointly) in qualifying Iowa First-Time Homebuyer

Savings Account contributions made during the tax year. This deduction limitation is based on the account

holder, so even though you may have contributed to multiple accounts for more than one beneficiary, your

total deduction may not exceed $2,181 ($4,363 for married filing jointly).

Contributions are only deductible if they are made to accounts that have been designated as First-Time

Homebuyer Savings Accounts by submitting the Account Holder and Designated Beneficiary Form to the

Department. The Account Holder and Designated Beneficiary Form must be submitted to the Department by

April 30 of the calendar year following the year in which you opened the account to the address on that form.

For example, if you opened the account in 2022, the form is due no later than April 30, 2023. The April 30

deadline applies even if you are a fiscal year filer. The Account Holder and Designated Beneficiary Form must

be submitted to the Department separately from your 2022 Iowa income tax return.

Taxpayers are also required to complete an Iowa Department of Revenue annual report form and include it

with their Iowa income tax return.

Complete and send a Withdrawal Form, 41-163 to the Iowa Department of Revenue when money is

withdrawn. Note: this form must be submitted to the Department within ninety (90) days of the date of any

withdrawal of funds in any amount from the First-Time Homebuyer Savings Account.

Interest and earnings income from a qualified First-Time Homebuyer Savings Account are exempt from Iowa

individual income tax.

k. Employer Social Security Credit from federal return

If your business was in the food or beverage industry and you claimed a credit for a portion of employer Social

Security tax on employee tips, you may claim a deduction on line 24 for this credit.

l. Federal Alcohol Fuel & Cellulosic Biofuel Credit from federal return

If you claimed an Alcohol Fuel Credit on your federal tax return, enter the amount of your Alcohol Fuel Credit

here and include a copy of federal form 6478.

m. Foreign-earned income exclusion or foreign housing deduction from federal form 2555

Do not include any amount of foreign-earned income exclusion or foreign housing deduction already reported

on IA 1040, line 14, code "m".

n. Gains or losses from distressed sale transactions

o. Health savings account deduction from federal form 1040, Schedule 1, line 13.

p. Injured veterans program, contributions to

Do not put on IA Schedule A.

An Injured Veteran's Grant Program is available through the Iowa Department of Veterans Affairs. Money

appropriated for these grants will be given to veterans injured in a combat zone after September 11, 2001.

The grants cannot exceed $10,000 per injured veteran. The Department of Veterans Affairs may also receive

money from any public or private source for purposes of providing grants to injured veterans.

A deduction is allowed for the amount paid by a taxpayer to the Department of Veterasn Affairs for the

purposes of providing grants to the Injured Veterans Grant Program. Do not claim these amounts on the Iowa

Schedule A.

q. Injured veterans program, grants from

The amount of Department of Veterans Affairs grant money received by an injured veteran that is included in

the veteran's federal adjusted gross income is not included in the veteran's Iowa net income.

r. In-home health care

To the extent included in Iowa gross income, deduct any State Supplementary Assistance payments received

for unskilled in-home health-related care services to a family member.

s. Iowa Veterans Trust Fund

Income from the Iowa Veterans Trust Fund for the following items can be excluded from Iowa individual

income tax:

Travel expenses directly related to follow-up medical care for wounded veterans and their spouses

Unemployment assistance during a period of unemployment due to prolonged physical or mental illness or

disability resulting from military service

t. Military exemptions

Information: See Tax Responsibilities of Servicemembers and Their Spouses

u. Net operating loss, Iowa

Residents: Enter any Iowa net operating loss carryforward or carryback and include the IA 123 and supporting

documentation, if any.

Nonresidents: Enter any Iowa-source net operating loss carryforward or carryback on your Schedule IA 126.

Nonresidents do not enter net operating losses on the IA 1040 return. Include the IA 123 and supporting

documentation, if any.

See Iowa Net Operating Loss Worksheet for additional information on the carryforward or carryback

provisions.

v. Organ transplant expenses

A deduction in computing Iowa adjusted gross income is allowed for taxpayers for unreimbursed expenses

relating to a human organ transplant. The taxpayer, while living, who donates all or part of a designated

human organ can claim a deduction for unreimbursed expenses such as travel expenses, lodging expenses,

and lost wages.

The deduction is limited to $10,000, and a taxpayer can only claim this deduction once. If a taxpayer claims

this deduction for Iowa tax purposes, the taxpayer cannot also claim these same unreimbursed expenses as an

itemized deduction for medical expenses on the Iowa return.

w. Partnership income and / or S corporation income: Modifications that decreased the

income (including Biodiesel Production Refund)

Enter modifications that decrease the income reported on IA 1040, line 10.

Any biodiesel production refund received is not included as income for Iowa individual income tax purposes.

x. Segal AmeriCorps Education Award Payments

Federal Segal AmeriCorps education award payments are excluded from Iowa individual income tax.

y. Speculative shell buildings

If you are the owner of a qualifying speculative shell building, enter the difference between the depreciation

taken on this building on your federal return and the depreciation that you could take under the accelerated

cost recovery system of the Internal Revenue Code if the building were classified as 15-year property. Include

a worksheet showing this calculation.

z. Student Loan Interest Deduction from federal return

Enter the same figure that is allowed on your federal form 1040, Schedule 1, line 21.

aa. Victim compensation awards

To the extent included in federal adjusted gross income, the following items can be excluded from Iowa

adjusted gross income for individual income tax:

• Amounts of victim compensation awards paid under the victim compensation program administered

by the Department of Justice under Iowa Code section 915.81

• Amounts of victim restitution payments received pursuant to Iowa Code chapters 910 and 915

• Amounts of damages awarded by a court, and received by a taxpayer, in a civil action filed by the

victim against an offender

bb. Wages paid to certain individuals (ex-offenders & disabled)

If you operate a business, you may qualify for an additional deduction of 65% of the wages paid in the first 12

months up to a maximum deduction of $20,000 per qualifying new employee. This deduction is in addition to

the wage deduction you were allowed on federal Schedule C. To qualify, the new employee(s) must be

disabled or an ex-offender on parole, probation, or in a work release program. All types of businesses may

qualify for this deduction for hiring qualifying ex-offenders. However, the deduction for hiring qualifying

persons with disabilities is restricted to certain small businesses.

Further information is available online:

• Benefit for hiring ex-offenders

• Benefit for hiring persons with disabilities

cc. Work Opportunity Credit

If you claimed a Work Opportunity Credit on your federal income tax return, enter the amount here.

dd. Other federal adjustments

Other federal adjustments from Schedule 1, Part II, prior to the calculation of federal 1040 line 11 (federal

AGI) not taken elsewhere on the IA 1040.

Report excess deductions of IRC section 67(e) expenses from estates and non-grantor trusts federal Schedule

K-1 (Form 1041), box 11, code A as reported on federal Schedule 1, line 24.

ee. Educator Expenses

Eligible educators can deduct out-of-pocket educator expenses of up to $200 in excess of the federal

deduction limitation, not to exceed a total of $500 per eligible educator. Report your qualifying educator

expenses as allowed on federal 1040, Schedule 1, line 11, plus any other qualifying out-of-pocket educator

expenses in excess of the federal deduction limitation. However, your total deduction cannot exceed $500 per

eligible educator.

ff. Tuition and Fees Deduction (Expired)

RESERVED FOR FUTURE USE

gg. Nonresident Electric Utility Worker Training and Emergency Response Work Reciprocity

The income a nonresident individual earns for performing emergency response work for an electric utility in

Iowa under a mutual aid agreement between Iowa and the state in which the nonresident lives is excluded

from Iowa individual income tax. Income received by a nonresident individual for training by an electric utility

in Iowa is also excluded.

hh. Rapid Response to State Disasters

Out-of-state businesses and individuals performing disaster or emergency-related work in Iowa are not subject

to Iowa income tax or withholding. The disaster response period starts ten days before the state-declared or

presidential-declared disaster and ends sixty days after the end of the declared state disaster or emergency.

ii. Iowa ABLE (Achieving a Better Life Experience) Savings Plan Trust

Contributions to a qualified ABLE savings plan trust account made during 2022, on behalf of a designated

beneficiary, are deductible from Iowa individual income tax up to a maximum amount, $3,522, allowed per

beneficiary per year for purposes of the Iowa ABLE savings plan trust in Iowa Code chapter 12I. Interest and

earnings income from an ABLE savings plan trust account are exempt from Iowa individual income tax.

jj. Charitable Contributions (Expired)

RESERVED FOR FUTURE USE. The additional federal charitable donation deduction for taxpayers who do not

itemize their deductions for federal tax purposes is not allowed for Iowa purposes. See line 37 for information

about charitable contribution deductions for taxpayers who elect to itemize their deductions for Iowa tax

purposes.

kk. Broadband Infrastructure Grant

Enter the amount of a federal, state, or local grant provided to a communications service provider during the

tax year, to the extent included on Schedule C, line 1, if the grant was used to install broadband infrastructure

that facilitates broadband service in targeted service areas at or above the download and upload speeds.

ll. Iowa Qualifying COVID-19 Grants

Enter the amount of an Iowa qualifying COVID-19 grant eligible for exclusion from Iowa income. The exclusion

applies only to the extent the qualifying COVID-19 grant was included in your federal income tax and reported

as taxable income on this Iowa return. The exclusion is reported as an adjustment on line 24, regardless of the

line where the grant income is reported on the IA 1040.

mm. Legislative Per Diem Deduction

Enter the amount of qualifying legislative per diem deduction. State of Iowa legislators who live greater than

50 miles from the Iowa state Capitol building are allowed a deduction equal to the federal per diem rate in IRC

162(h)(1)(B) for each “legislative day” as defined in IRC 162(h)(2) (not including any per diem payments

excluded from taxable wages).

State of Iowa legislators who live within 50 miles of the Iowa state Capitol building are allowed a deduction

equal to $50 per “legislative day” as defined in IRC 162(h)(2) (not including any per diem payments excluded

from taxable wages).

NOTE: Do not deduct any per diem payments that were not included in taxable wages. Actual expenses that

exceed the federal per diem or $50 per diem, as applicable, are not deductible.

Married Separate Filers:

When the adjustment is attributable to a specific spouse, it is taken by that spouse.

When the adjustment is not attributable to any one spouse, it must be prorated based on the net income

amounts on line 26. Calculate through line 26 as if the adjustment in question were excluded.

If the adjustment is attributable to a dependent, such as the student loan interest deduction, it is prorated

based on net income before the adjustment in question.

Total Adjustments

Line: 25

Step: 6

Step Subject: Adjustments to Income

Add lines 16 through 24.

Net Income

Line: 26

Step: 6

Step Subject: Adjustments to Income

Subtract line 25 from line 15 and enter the result.

Qualifications for Exemption from Tax

If you qualify for the low income exemption as explained below, enter the words “low income exemption” in

the area to the left of your net income figure on line 26. Skip lines 27-54, then enter zero on line 55 and

complete the remainder of the return.

If you do not owe tax:

Even if you owe no tax, you must file an income tax return to receive a refund of any refundable Iowa tax

credits or any Iowa tax withheld.

If you are exempt from tax:

If you are exempt from tax, you may want to change your IA W-4 form with your employer to eliminate state

withholding from your wages. Use our Withholding Estimator to review your W-4.

Income included to determine exemption:

The following items must be included when determining if you are eligible for the $9,000 exemption or the

$13,500 exemption ($24,000 or $32,000 if 65 or older on 12/31/22).

• The incomes of both spouses must be combined to determine if you meet this exemption from tax.

• The amount of any pension exclusion that is taken on line 21 of the IA 1040.

• Any reportable Social Security benefits from step 4 of the IA 1040.

• Any amount of lump-sum distribution separately taxed on federal form 4972.

Note: Carryforward of net operating loss claimed on the IA 1040 must be added back to net income line 26 to

determine who must file.

Filing Status 1, Single:

If you are using filing status 1 (single), you are exempt from Iowa tax if you meet either of the following

conditions:

• Your net income from all sources, line 26, is $9,000 or less and you are not claimed as a dependent on

another person's Iowa return ($24,000 if you are 65 or older on 12/31/22).

• Your net income from all sources, line 26, is less than $5,000 and you are claimed as a dependent on

another person's Iowa return.

All Other Filing Statuses:

If you are filing married filing jointly, married filing separately on a combined return, head of household, or

qualifying widow(er), you are exempt from Iowa tax if you meet the following condition:

• Your net income from all sources, line 26, is $13,500 or less and you are not claimed as a dependent on

another person's Iowa return ($32,000 if you or your spouse is 65 or older on 12/31/22).

Nonresidents and Part-Year Residents

In addition to the exemption provisions above, if you were a nonresident or part-year resident and had net

income from Iowa sources of less than $1,000 (see note below) you are exempt from Iowa tax. To review

instructions for "Iowa-source income," see the instructions for lines 1-26 of the IA 126. If you had Iowa tax

withheld and are requesting a refund, or choose to file an Iowa return even though you aren't required to do

so, you must complete the entire IA 1040 and the entire IA 126.

Note: If you were a nonresident or part-year resident and subject to Iowa lump-sum tax or Iowa alternative

minimum tax (even if Iowa-source income is less than $1,000), you are required to file an Iowa return reporting

the Iowa lump-sum or Iowa alternative minimum tax even if you have no regular Iowa income tax liability.

Illinois Residents

See reciprocal agreement.

Military Spouses

See Tax Responsibilities of Servicemembers and their Spouses.

Married Separate Filers:

Married taxpayers filing married filing separately on a combined return or married filing separate returns must

use the combined income of both spouses in determining eligibility for exemption from tax.

If either spouse has a net operating loss that is carried back or forward, then the other spouse cannot use the

low income exemption. If the spouse with the net operating loss chooses not to carry the loss back or forward,

then the other can claim the low income exemption. A statement must be included with the return saying that

the spouse with the net operating loss will not carry it back or forward.

Step 7

Federal Income Tax Refund / Overpayment Received in 2022

Line: 27

Step: 7

Step Subject: Federal Tax Addition and Deduction

If you received a refund of federal income tax during 2022:

You must report the amount on this line. It must be reported even if you used the standard deduction on the

prior year's Iowa return. The federal refund must be included on this line because you benefited from being

able to deduct federal taxes on the prior year's Iowa return, which reduced your Iowa taxable income for that

year. The amount reported on this line should not exceed the total amount of any federal tax deduction taken

on the prior year(s) Iowa return.

Include the following:

• The refund you received from your 2021 federal tax return.

• To find the amount you received, check your records or call the IRS at 1-800-829-1040. This

information is not available from the Iowa Department of Revenue.

• Any federal refunds received in 2022 for other years that were amended or filed late.

• Any portion of the federal refund received in 2022 due to excess FICA payments or the Fuel Tax Credit

from federal form 4136 if they were claimed as a federal tax payment on line 31 of the 2021 or 2020

Iowa returns or line 33 of Iowa returns prior to 2020.

• Any portion of the federal refund that represents overpayment of Deemed Repatriation of Deferred

Foreign Income.

Federal estimated tax

If you chose to have any part of an overpayment of federal income tax credited to estimated tax payments for

2022, the amount should be claimed as 2022 estimated tax paid on line 31. The total federal overpayment

must also be reported on line 27.

Do not include the portion of the federal refund attributable to the following:

• Recovery Rebate Credit

• Earned Income Tax Credit

• Refundable portion of the Child Tax Credit (tax year 2021 only)

• Additional Child Tax Credit

• First-Time Homebuyer Credit

• Existing Homebuyer Credit

• Refundable Education Credit

• Refundable Adoption Tax Credit

• Refundable Child and Dependent Care Credit (tax year 2021 only)

You moved to Iowa in 2022:

You are filing an Iowa return for 2022 for the first time because you moved into Iowa during the year. A refund

of federal tax received in 2022 is not reported if the tax was not deducted from Iowa income in a prior year.

You were a nonresident:

You were a nonresident for the tax year of the refund and were not required to file an Iowa return for that year.

You did not deduct federal tax in the refund year:

The refund you received was from a year in which you did not take a deduction for the payment of federal tax

because your income was less than the minimum amount for paying Iowa tax or your tax for that year was

calculated using the alternate tax computation.

Married Separate Filers:

If the refund received in 2022 was from a jointly-filed federal return, it must be divided between spouses in

the ratio of the spouses' net incomes in the year for which the refund was issued.

Example: A 2021 federal refund received in 2022 would be prorated using the spouses' net incomes from the

2021 Iowa return.

For purposes of reporting on line 27, the refund must be prorated in this manner even if the refund itself was

divided between spouses in some other way, either by mutual agreement or other requirement.

Example of how to prorate:

• Your income is $10,500

• Spouse's income is $15,500

• Total: $26,000

• Federal refund: $1,200

Divide your income by total income: $10,500 divided by $26,000 = 40%

The spouse's income is, therefore, 60% of their combined income.

In this example, line 27 is $720 (60%) of the federal refund for the spouse, and $480 (40%) of the federal

refund for you.

Self-Employment / Household Employment / Other Federal Taxes

Line: 28

Step: 7

Step Subject: Federal Tax Addition and Deduction

Taxpayers can deduct their entire withholding, estimated payment, and additional federal tax paid amounts

on line 31. However, certain amounts must be added back on line 28, including the following:

• Excess advance premium tax credit repayment reported on the federal 1040, Schedule 2, line 2

• Federal self-employment tax reported on the federal 1040, Schedule 2, line 4

• Total additional Social Security and Medicare tax reported on the federal 1040, Schedule 2, line 7

• Additional tax on IRAs or other tax-favored accounts reported on the federal 1040, Schedule 2, line 8

• Federal household employment taxes reported on the federal 1040, Schedule 2, line 9

• Repayment of first-time homebuyer credit reported on the federal 1040, Schedule 2, line 10

• Additional Medicare tax from federal form 8959 reported on the federal 1040, Schedule 2, line 11

• Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance from Form

W-2, box 12, reported on the federal 1040, Schedule 2, line 13

• Interest on tax due on installment income from the sale of certain residential lots and timeshares

reported on the federal 1040, Schedule 2, line 14

• Interest on the deferred tax on gain from certain installment sales with a sales price over $150,000

reported on the federal 1040, Schedule 2, line 15

• Recapture of low-income housing credit reported on the federal 1040, Schedule 2, line 16

• Other additional federal taxes reported on the federal 1040, Schedule 2, line 18

Additional Medicare tax withholding from line 24 of federal form 8959, net investment income tax from

federal form 8960, and federal section 965 net tax liability payments are not added back on line 28.

If a taxpayer has elected to pay federal section 965 net tax liability in installments for federal purposes, that

taxpayer may only include the actual amount of the federal installment payment paid in 2022 in calculating

the Iowa deduction for 2022. It is acceptable to report on line 28 either the current year’s self-employment /

household employment tax / other federal taxes or the prior year’s, as long as the reporting method is

consistent from one year to the next.

Married Separate Filers:

Federal taxes attributable to a specific spouse are claimed by that spouse. For example, each spouse must

claim their own federal self-employment tax. Federal taxes not attributable to any one spouse must be

prorated between the spouses based on the net income of the year for which they are paying the federal tax.

For example, the household employment taxes are divided between spouses in the ratio of their respective

net incomes.

Addition for Federal Taxes

Line: 29

Step: 7

Step Subject: Federal Tax Addition and Deduction

Add lines 27 and 28 and enter the total. If no federal refund or self-employment / household employment tax

/ other federal taxes are reportable to Iowa, enter zero.

Total

Line: 30

Step: 7

Step Subject: Federal Tax Addition and Deduction

Add lines 26 and 29.

Federal Tax Withheld, Federal Estimated Tax Payments, And Federal Taxes Paid

in 2022 for 2021 and Prior Years

Line: 31

Step: 7

Step Subject: Federal Tax Addition and Deduction

Report on line 31 all federal tax withheld, estimated tax payments, and federal taxes paid in 2022.

Federal Tax Withheld

Enter the amount(s) listed in the box labeled “Federal income tax withheld” on the W-2 or 1099 form(s) that

you received.

Federal income tax includes additional Medicare tax withholding from line 24 of federal form 8959. The

additional Medicare tax withholding is included on line 31.

Taxpayers can deduct their entire withholding amount on line 31. However, certain amounts must be added

back on line 28, including the following: