2006 Iowa Income Tax Information 2006
Additional Expanded Instructions are available online at www.state.ia.us/tax.
Due date
Iowa income tax returns are due April 30, 2007.
Farmers and commercial fishers
If at least 2/3 of your income is from farming or commercial
fishing, you may avoid penalty for underpayment of estimated tax
in one of the following ways: (1) Pay the estimated tax in one
payment on or before January 16, 2007, and file the Iowa income
tax return by April 30, 2007, or (2) file the Iowa income tax return
and pay the tax due in full on or before March 1, 2007.
Who must file?
You must file an Iowa return if you were a resident or part-year
resident of Iowa in 2006 and meet any of the following requirements.
Nonresidents, see items f. and g.
NOTE: In meeting the filing requirements below, both incomes
of husband and wife must be included, and any “pension/retirement
income exclusion” (line 21 of the IA1040) must be added back.
a. You had a net income (line 26 of the IA1040) of more than
$9,000 and your filing status is single.
b. You had a net income (line 26 of the IA1040) of more than
$13,500 and your filing status is other than single.
c. You were claimed as a dependent on another person’s Iowa
return and had a net income (line 26 of the IA1040) 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.
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 of the IA126) was $1,000
or more, unless below the income thresholds above
g. You were a nonresident or part-year resident and subject to
Iowa lump-sum tax or Iowa minimum tax (even if line 26 of
IA 126 is less than $1,000).
Nonresidents and part-year residents
An Illinois resident working for wages or salary in Iowa should
complete and file the IA 44-016 “Employee’s Statement of
Nonresidence in Iowa” with the employer so that the employer will
withhold Illinois income tax.
Iowa will tax any Iowa-source income received by an Illinois
resident that is not from wages or salaries. Illinois will tax any
Illinois-source income received by an Iowa resident that is not from
wages or salaries. Examples: gambling winnings and unemployment
compensation.
If Illinois income tax has been mistakenly withheld from the
wages or salary of an Iowa resident, the Iowa resident must file an
Illinois income tax return to get a refund.
Illinois residents who have had Iowa income tax withheld in error
from their wages and have no other Iowa-source income must file
an Iowa income tax return requesting a refund. They should complete
Steps 1, 2, and 3 of the IA1040, show “0” on line 1 of Step 4 and
line 26 of Step 5, write “Illinois resident tax withheld in error” on
the face of the return. On the back of the IA1040 on lines 61, 67,
68, 69 and 70, enter the Iowa tax withheld, sign the return and attach
copies of W-2s to the front of the return. Copies of Federal and
Illinois returns must be attached.
Note to electronic filers: You must complete the entire IA1040
and IA126 in order to receive a refund when Iowa tax is withheld
in error.
Extension requests
Iowa does not have an extension form to obtain additional time
to file. To avoid the late-filing penalty, at least 90% of your total
tax liability must be paid by April 30, 2007; you will automatically
have until October 31, 2007, to file your return. You may, however,
owe a 2210 penalty for failure to make estimate payments. You will
owe interest on any tax due after April 30, 2007. If you need to
make a tax payment to meet the 90% requirement, see payment
options on the back cover of this booklet.
If you are a nonresident or a part-year resident with income from
Iowa sources, you must complete both the IA1040 and the IA126.
See instructions, page 9.
Information is available on the department’s Web site in the 2006
Expanded Instructions.
Iowa and Illinois reciprocal agreement
Injured spouse
Any wages or salary made by an Iowa resident working in Illinois
is taxable only to Iowa and not to Illinois. Any wages or salary made
by an Illinois resident working in Iowa is taxable only to Illinois
and not to Iowa.
An Iowa resident working for wages or salary in Illinois should
complete and file Illinois form IL-W-5-NR “Employee’s Statement
of Nonresidence in Illinois” with the employer so that the employer
will withhold Iowa income tax.
NEW FOR 2006
Line 24: New deductions include (1) Alternative motor vehicle
deduction (2) Grants from injured veterans program (3) Contributions to injured veterans program (4) Capital or ordinary gain from
involuntary conversion related to eminent domain
Note: At the time of printing, the Educator Expenses and Tuition
and Fees deductions are no longer available. If Congress
reinstates these deductions for Federal purposes, they may also
be taken on line 24 of the IA 1040.
Expanded Instructions are at
www.state.ia.us/tax
Military income
The Federal “injured spouse” form is not recognized by the State
of Iowa when using filing status 2 or filing status 3. If your spouse’s
refund will be used to pay a Federal, state, county or city debt, we
suggest each spouse file an IA 1040 long form, filing status 4. This
will prevent your refund from being applied to your spouse’s debt.
Federal return
Including a copy of your Federal return with your Iowa return
may help processing your Iowa return. This is not necessary if you
file electronically.
Line 65: Early Childhood Development Tax Credit may be
claimed instead of the Child Dependent Care Credit. Only one
may be claimed.
Lines 54 and 66: New form IA 148 Tax Credits Schedule must be
completed. The complete lists of these credits, including new ones
for 2006, are online in the 2006 Expanded Instructions.
Checkoffs: A new Veterans Trust Fund checkoff has been added.
The Keep Iowa Beautiful and Volunteer Firefighters checkoffs
have been combined.
Iowa Schedule A: At the time of printing, the itemized deduction
for state sales and use tax paid is no longer available.
41-002a (10/5/06)
2006 IA1040 INSTRUCTIONS
STEP 1 NAME / ADDRESS / SOCIAL SECURITY NUMBER
residence, even if the service member is not physically present in Iowa
USE THE PEEL-OFF LABEL ON THE BACK COVER OF THE
BOOKLET IF YOU HAVE ONE. If the name or mailing address is
on the last day of the tax year.
incorrect, make the corrections directly on the label. Enter your
SCHOOL DISTRICT NUMBER: The list of school district names,
information on the form if you did not receive a label.
numbers and rates starts on page 16. The district to select is the one in
ENTER YOUR / SPOUSE’S SOCIAL SECURITY NUMBER.
which you lived on December 31, 2006. This is not necessarily the
COUNTY: The list of Iowa counties and their numbers starts on page
district where your children attended school. If the number on the label
16. If the number on the label is not correct, make the correction
is not correct, make the correction directly on the label. Nonresidents:
directly on the label. Enter the number of the county in which you
Those who did not live in Iowa at all during 2006 should enter “0000”
lived on December 31, 2006. Nonresidents and part-year residents
for the school district number. Part-year residents who moved into
who moved out of Iowa before December 31, 2006, should enter
Iowa should enter the Iowa school district in which you lived on the
“00.” Part-year residents who moved into Iowa should enter the
last day of 2006. If you moved out of Iowa before December 31,
number of the Iowa county in which you lived on December 31, 2006.
2006, enter “9999.” Military personnel should enter the school district
Military personnel should enter the county number of their Iowa
number of their Iowa residence, even if the service member is not
physically present in Iowa on the last day of the tax year.
STEP 2 FILING STATUS
Married Taxpayers may reduce their tax liability by using filing status 3 or 4.
STATUS 1. Use if you were unmarried, divorced, or legally separated
STATUS 3. If you are married and want to file separately on one form.
on December 31, 2006, and you do not meet the requirements for any
STATUS 4. If you and your spouse file separately on two separate
other filing status.
forms.
STATUS 2. (a) You were husband and wife on December 31, 2006, or
STATUS 5. If you are filing as head of household for Federal income
(b) Your spouse died during 2006 and you did not remarry during the
tax purposes.
year. If your spouse died during 2006 and had income, you can also
STATUS 6. If you meet the requirements for qualifying widow(er) for
file status 3 or 4.
Federal income tax purposes.
STEP 3 EXEMPTIONS
Dependents filing their own returns should claim a $40 personal exemption credit even though they are claimed as a dependent on another
person’s Iowa return.
STEP 4 GROSS INCOME
If you use filing status 3 (married filing separately on combined return), complete both columns A and B of the IA1040. All other filing
statuses need to complete only column A. ALL taxpayers, including nonresidents and part-year residents, report income from ALL
SOURCES in this section. Nonresidents and part-year residents also report Iowa-source income on Schedule IA126.
LINE 1. Report the same W-2 income as shown on your Federal
income tax return, including military income. See online Expanded
Instructions, line 24 for allowable military adjustments.
MARRIED SEPARATE FILERS: W-2 income is reported by the spouse
earning the income.
LINE 2. Include the same amounts of interest income reported on your
Federal return with the following modifications:
a. Add interest from state and municipal securities unless specifically
exempt from Iowa tax. The following securities are exempt: Aviation
Authority Bonds, IA Code Sec. 330A.16; Beginning Farmer Loan
Program Bonds, IA Code Sec. 175.17; Community College Bond
Program Bonds, IA Code Sec. 260C.71(6); Community College
Residence Halls and Dormitories Bonds, IA Code Sec. 260C.61;
County Health Center Bonds, IA Code Sec. 331.441(2)C(7); E911
Emergency Telephone Service Program Bonds, IA Code Sec.
34A.20(6); Interstate Bridges Bonds, IA Code Sec. 313A.36; IA
Board of Regents Bonds for buildings and facilities, IA Code
Chapters 262.41, 262.51 and 262.60; IA College Super Savings
Plan Bonds, IA Code Chapter 262A; IA Higher Education Loan
Authority, IA Code Sec. 261A.27; IA Municipality Urban Renewal
Bonds, IA Code Sec. 403.9(2); IA Rural Water District Revenue
Bonds and Notes, IA Code Sec. 357A.15; Local Government Flood
Damage Program, IA Code Sec. 16.183(4); Low Income Housing
Bonds, IA Code Sec. 403A.12; Municipal Investment Recovery
Bonds, IA Code Sec. 16.173(4); Prison Infrastructure Revenue
Bonds, IA Code Sec. 16.177(8); Regents Institutions Medical and
Hospital Buildings at University of IA Bonds, IA Code Sec. 263A.6;
Soil Conservation Districts Revenue Bonds, IA Code Sec. 161A.22;
Quad Cities Interstate Metropolitan Authority Bonds, IA Code
Chapter 28A.24; Sewage Treatment Works Revenue Bonds, IA Code
Sec. 16.131(6); Underground Storage Tank Fund Revenue Bonds,
IA Code Sec. 455G.6(14); Vision IA Program, IA Code Sec. 12.71;
3
Warehouse Project Revenue Bonds, IA Code Chapter 123.159; IA
Utilities Board and Consumer Advocate Building Bonds, IA Code
Sec. 422.7(45); Honey Creek Premier Destination Park Bonds, IA
Code Sec. 463C.12(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
are taxable: Government National Mortgage Assoc. (Ginnie Mae)
Securities; Federal National Mortgage Assoc. (Fannie Mae)
Securities; Federal Home Loan Mortgage Assoc. (Freddie Mac)
Securities; Money Market Certificates.
MARRIED SEPARATE FILERS: Divide interest income based on
ownership of the account or certificate.
1. Jointly held: divide equally between spouses.
2. Held in the name of only one spouse: allocate interest wholly to
that spouse.
LINE 3. Report the same dividends as you reported on 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 Federal securities.
MARRIED SEPARATE FILERS: Divide dividends based on registered
ownership of stock.
1. Jointly held: divide equally between spouses.
2. Held in the name of only one spouse: allocate dividends wholly
to that spouse.
LINE 4. Include the same alimony as is shown on your Federal return.
MARRIED SEPARATE FILERS: Reported by the spouse
who received the alimony.
41-002b (9/25/06)
not taxable on the Iowa return. Do not subtract any Iowa pension
exclusion on this line. See line 21.
MARRIED SEPARATE FILERS: The taxable portion of pensions and
annuities is reported by the spouse who received the income.
LINE 10. Report the income or loss from Federal Schedule E and
attach a copy.
MARRIED SEPARATE FILERS: Divide income or loss from Schedule
E based upon ownership of the asset-producing income or partnership
interest or individual named as beneficiary.
LINE 11. Enter the income or loss from Federal Schedule F. Attach a
copy to your Iowa return.
MARRIED SEPARATE FILERS: Farm income must be reported by
the spouse who claims it for self-employment tax purposes on the
Federal Schedule SE.
LINE 12. Enter the amount of unemployment compensation benefits
that was taxable on your Federal return, except for 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 for each spouse.
LINE 13.
Iowa does not tax Social Security benefits in the same
manner as the Internal Revenue Service. To compute the amount of
Social Security benefits that are taxable to Iowa, complete the worksheet
below.
LINE 5. Report the net business income or loss from Federal Schedule
C or C-EZ. Attach a copy of the Federal form.
MARRIED
SEPARATE
FILERS:
Reported
by
the
spouse deriving the income or loss.
LINE 6. Enter 100% of any capital gain or loss as reported on line 13
of your Federal 1040. Do not subtract any Iowa capital gain deduction
on this line. See line 23. Attach a copy of your Federal Schedule D.
MARRIED SEPARATE FILERS: Taxpayers who filed separate Federal
returns should report capital gains or losses as reported for Federal tax
purposes. If a joint Federal return was filed, each spouse must report
capital gains 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.
LINE 7. If you sold or exchanged assets used in a trade or business
and completed Federal form 4797, enter 100% of the gain or loss.
Attach a copy of Federal form 4797.
MARRIED SEPARATE FILERS: Divide gains or losses based on
ownership of the asset sold or exchanged.
LINE 8. Enter the amount of taxable IRA distributions as shown on
your Federal return.
MARRIED SEPARATE FILERS: Taxable IRA distributions should be
reported by the spouse whose name is on the account.
LINE 9. The same amounts of pensions and annuities are taxable
for Iowa as are taxable on your Federal return, except Railroad
Retirement benefits paid by the Railroad Retirement Board. These are
Line 13 Social Security Worksheet
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. ................................. 1. _________________
2. Enter one-half of line 1 amount. ........................................................................................................................................ 2. _________________
3. Add amounts from the Federal 1040 on lines 7, 8a, 9a, 10, 11, 12, 13, 14, 15b, 16b, 17, 18, 19, and 21, plus
one-half of any Railroad Retirement Social Security benefits from RRB-1099.* If filing Federal 1040A, use lines
7, 8a, 9a, 10, 11b, 12b and 13, plus one-half of any Railroad Retirement Social Security benefits from RRB-1099.
Include any bonus depreciation adjustment from line 14 of the Iowa 1040 to compute correct amount. ........................ 3. _________________
4. Enter the amount from line 8b of your Federal 1040 or 1040A. ....................................................................................... 4. _________________
5. Add lines 2, 3, and 4. ......................................................................................................................................................... 5. _________________
6. Enter total adjustments from Federal 1040, lines 23 through 32, line 34, plus any write-in adjustments you
entered on the dotted line next to line 36. If filing Federal 1040A, use the total of lines 16, 17, and 19. ........................ 6. _________________
7. Subtract line 6 from line 5. ................................................................................................................................................. 7. _________________
8. Enter one of the following amounts based on the Federal filing status used on form 1040 or 1040A. ............................ 8. _________________
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 anytime in 2006 or $25,000 if you
did not live with your spouse at any time in 2006.
9. Subtract line 8 from line 7. If zero or less, enter -0-. If line 9 is zero, none of the Social Security benefits are taxable. 9. _________________
10. Enter one-half of line 9. ................................................................................................................................................... 10. _________________
11. Taxable Social Security benefits: Enter the smaller of line 2 or line 10 here and on line 13 of form IA1040. .............. 11. _________________
*Include the following incomes or adjustments to income on line 3 if applicable. (These were excluded from Federal AGI.): Foreign earned
income, income excluded by residents of Puerto Rico, American Samoa and proceeds from Savings Bonds used for higher education and
employer-provided adoption benefits. Although Railroad Retirement benefits are not taxable, one-half of the benefits received must be used to
determine the amount of Social Security benefits that are taxable to Iowa. For purposes of determining taxable Social Security benefits, you must
also include interest from Federal securities.
MARRIED SEPARATE FILERS:
a. If both spouses received Social Security benefits, the taxable amount is allocated between the spouses in the ratio of the benefits received by
one spouse to the total benefits received.
b. If only one spouse received benefits, that spouse should report the portion of the benefits that is taxable.
LINE 14. Enter taxable income not reported on lines 1-13. Write an
explanation of the type of income. Examples of income to be reported
include:
a. Baby-sitting income not reported on Federal Schedule C or C-EZ.
b. Bonus depreciation adjustment from the IA 4562A; attach the IA
4562A to your return.
c. Capital gains from installment sales in 2006: Accrual-method
taxpayers may now use the installment method for reporting capital
gains on their Iowa returns.
d. College Savings Iowa: Income received from the cancellation of a
participation agreement to the extent the amount was previously
deducted on line 24 of the IA 1040.
e. Director’s fees
f. Drilling: Intangible drilling costs that were reported on Federal
form 6251 less any amounts amortized in the tax year.
g. Executor’s fees
4
41-002c (9/15/06)
h. Gambling winnings: You must report the full amount of gambling
winnings. Report any Iowa tax withheld on line 61 of the IA1040.
Gambling losses may be reported as an itemized deduction on
Schedule A, but you cannot deduct more than the winnings you
report.
i. Partnership income and/or S Corporation income: Modifications
that increased the income.
j. Refundable Iowa Credits received in 2006 which were included as
income on the federal 1040 must also be added back. This includes
Cow-Calf refunds received in 2006 (unless reported on Federal
Schedule F).
k. Refunds: State income tax refunds other than Iowa to the extent
that the tax refunded in 2006 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 line 21 of the Federal 1040.
MARRIED SEPARATE FILERS: The spouse to whom the income
was paid must report that income.
STEP 5 ADJUSTMENTS TO INCOME
All taxpayers report adjustments from all sources in this section.
NONRESIDENTS AND PART-YEAR RESIDENTS also report Iowa-source adjustments to income on the Schedule IA126.
LINE 16. Enter the amount claimed on your Federal tax return for
payments made to your IRA, Keogh Plan, SEP, SIMPLE, or Qualified
Plans. Payments to a ROTH IRA are not deductible.
MARRIED SEPARATE FILERS:
a. If only one spouse has earned income, that individual can contribute
up to $4,000 per year ($5,000 if 50 or older) to an IRA account of
the nonworking spouse and up to $4,000 per year ($5,000 if 50 or
older) to an IRA account of the individual.
b. If both spouses earned income and made contributions to an IRA
account, each spouse must claim his or her own contribution, not
to exceed $4,000 per spouse ($5,000 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 his or her individual contributions.
LINE 17. Enter the amount of self-employment tax that was deductible
on line 27 of your Federal 1040 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.
LINE 18. Enter 100% of the amount paid for health and dental
insurance premiums. This includes all supplemental health insurance,
such as Medicare B supplemental medical insurance (not “Medicare tax
withheld” on your W-2) and long-term nursing home coverage. Schedule
A may not contain any health insurance premiums which were used as a
deduction on line 18. Note that no deduction is available to any individual
who paid health insurance premiums on a pretax basis.
MARRIED SEPARATE FILERS: If one spouse is employed and has
health insurance premiums paid through his/her wages, that spouse will
claim the entire deduction. If both spouses pay health insurance premiums
through their wages, each spouse will claim what he/she paid.
If both spouses have self-employment income, the deduction for selfemployed health insurance must be allocated between the spouses in the
ratio of each spouse’s self-employment income to the total selfemployment income of both spouses. If health insurance premiums are
paid directly by one spouse, that spouse will claim the entire deduction.
If both spouses paid through a joint checking account, the deduction
would be allocated between the spouses in the ratio of each spouse’s net
income to the total net income of both spouses. For this net income
calculation, do not include line 18, the health insurance deduction.
LINE 19. Enter the amount of any penalty you were charged because
you withdrew funds from your time savings deposit before its maturity.
MARRIED SEPARATE FILERS: Divide the penalty amount between
spouses based upon registered ownership of the time deposit.
LINE 20. 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.
5
LINE 21. If you or your spouse receive a pension, an annuity, a selfemployed 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. Social Security benefits are not included. The exclusion
can be 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. To take this
exclusion you or your spouse must meet one of the following conditions:
a. 55 years of age or older on December 31, 2006, or
b. disabled, or
c. a surviving spouse or a survivor having an insurable interest in an
individual who would have qualified for the exclusion in 2006 on
the basis of age or disability.
MARRIED SEPARATE FILERS: If both spouses have pension income,
whether both or only one meet the eligibility requirements, the exclusion
of up to $12,000 is prorated between them in the ratio that each
spouse’s pension relates to the total pension received by both spouses. If
only one spouse has pension income, that spouse would take the entire
exclusion of up to $12,000. The spouse who has no pension income
would receive no exclusion, even if that spouse is the one who meets the
eligibility requirements.
LINE 22. Enter the deduction for moving expenses incurred in 2006.
Attach 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.
LINE 23. This is a 100% deduction of qualifying net capital gains
realized in 2006. Capital gains from the sales of stocks, bonds, and
investment property do not qualify for the capital gain deduction even if
sold to lineal descendants of the owners of the property. Non-farm rental
property may qualify. New changes to the holding period requirements
may be found in the online Expanded Instructions.
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.
LINE 24.
Enter the total of other allowable adjustments as listed
below. Attach an explanation for each adjustment.
a. Accrual method
b. Alternative motor vehicle deduction of $2,000 for those completing
Federal form 8910 (Alternative Motor Vehicle Credit)
c. Beneficiaries, exemption of payments to
d. Capital gains from installment sales
e. Capital or ordinary gain from involuntary conversion related to
eminent domain
f. Claim of Right deduction may be taken on line 24 or line 66,
but not both
g. College Savings Iowa, up to $2,500 per beneficiary
h. Disability income exclusion, attach IA 2440
i. Domestic production activities deduction, see Federal return
41-002d (10/6/06)
j. Employer Social Security credit from Federal return
v. Speculative shell buildings
k. Federal alcohol fuel credit from Federal return
w. Student Loan Interest Deduction from Federal 1040, line 33
l. Foreign-earned income exclusion and/or foreign housing deduction
x. Wages paid to certain individuals
y. Work Opportunity Credit from Federal return
from Federal return
z. Other Federal Adjustments prior to the calculation of Federal
m. Gains or losses from distressed sale transactions
n. Health savings account deduction from Federal return
1040 line 38 (Federal AGI) not already taken on the IA 1040
o. Injured veterans program, contributions to (do not put on IA Sch. A)
MARRIED SEPARATE FILERS: When the adjustment is attributable
p. Injured veterans program, grants from
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
q. In-home health care
income amounts on line 26. Calculate through line 26 as if the adjustment
r. Military exemptions
s. Net operating loss, Iowa
in question were excluded. If the adjustment is attributable to a dependent,
t. Organ transplant expenses
such as the tuition and fees deduction, it is prorated based on net income
u. Partnership income and/or S corporation income: Modifications that
before the adjustment in question.
decreased the income
Line 26 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. Enter zero on line 58 and complete the remainder of the return.
The following income must be included when determining if you are
eligible for the $9,000 exemption or the $13,500 exemption.
a. The incomes of both husband and wife must be combined to
determine if you meet this exemption from tax.
b. The amount of any pension exclusion that is taken on line 21 of the
IA1040.
c. Any amount of lump-sum distribution separately taxed on Federal
form 4972.
d. Any net operating loss carryover.
FILING STATUS 1, SINGLE: If you are using filing status 1 (single),
you are exempt from Iowa tax if you meet any of the following three
conditions:
a. 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.
b. 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.
c. You were a nonresident or part-year resident and had net income
from Iowa sources of less than $1,000. To understand “Iowa-source
income,” see the instructions for lines 1-26 of the IA126. If Iowa
tax was withheld you must complete the IA1040 and the IA126 in
order to receive a refund of the tax.
ALL OTHER FILING STATUSES: If you are filing jointly, separate
on a combined return, head of household, or qualifying widow(er), you
are exempt from Iowa tax if you meet either of the following conditions:
a. 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.
b. You were a nonresident or part-year resident and had net income
from Iowa sources of less than $1,000. To understand “Iowa-source
income,” see the instructions for lines 1-26 of the IA126, page 9 of
this booklet. You must complete the IA1040 and the IA126 in order
to receive any refund. Illinois residents: See inside front cover,
reciprocal agreement.
STEP 6 FEDERAL TAX ADDITION AND DEDUCTION
LINE 27. Any Federal income tax refund received during 2006 must
b. If any part of the Federal tax payments on lines 31, 32 or 33
be reported on this line. To find out the amount of your Federal refund,
include Federal Household Employment taxes, then Federal
you must contact the IRS at 1-800-829-1040 or www.irs.gov. If you
Household Employment taxes must be added back on line 28.
chose to have any part of an overpayment of Federal income tax credited
MARRIED SEPARATE FILERS: Each spouse must claim his or her
to estimated tax payments for 2006, the amount should be claimed as
own self-employment tax. Household Employment taxes are divided
2006 estimated tax paid on line 32. The total overpayment must be
between husband and wife in the ratio of their respective net incomes.
reported on line 27. Any portion of the Federal refund received due to
LINE 31. Enter the amount listed in the box labeled “Federal income
the motor vehicle fuel tax credit must be reported on the Iowa return.
tax withheld” on the W-2 or 1099 form(s) that you received.
Do not include the Federal refund in the following situations:
MARRIED SEPARATE FILERS: Each spouse may claim only his or
• Do not include any part of the refund received from earned income her own Federal income tax withheld from wages.
LINE 32. Enter the Federal estimated income tax payments made in
credit or the additional child tax credit.
• You are filing an Iowa return for 2006 for the first time because you 2006. Include any credit applied from your 2005 Federal income tax
overpayment.
moved into Iowa during the year. A refund of Federal tax received
MARRIED SEPARATE FILERS: All Federal estimated tax payments
in 2006 is not reported if the tax was not deducted from Iowa
made in 2006 are divided between spouses in the same ratio as their
income in a prior year.
incomes not subject to Federal withholding for the 2006 tax year.
• The refund you received was from a year in which you did not take LINE 33.
a deduction for the payment of Federal tax because your income
a. Enter the amount of additional Federal income tax paid during 2006
was less than the minimum amount for paying Iowa tax or your tax
for tax year 2005 and any other years before 2005. The amount of
for that year was calculated using the alternate tax computation.
additional Federal income tax paid is deductible only if Iowa income
• You were a nonresident for the tax year of the refund and were not
tax returns were required to be filed for the year for which the additional
Federal income tax was paid. Include only the actual Federal tax
required to file an Iowa return for that year.
payments made in 2006, but DO NOT include penalties and interest.
MARRIED SEPARATE FILERS: If the refund received in 2006 was
MARRIED SEPARATE FILERS: The additional Federal tax paid
from a jointly-filed Federal return, it must be divided between the
must be divided between the spouses in the ratio of the spouses’ Iowa
spouses in the ratio of the spouses’ Iowa net incomes in the year for
net incomes for the prior years for which they paid additional Federal
which the refund was issued.
income tax.
LINE 28.
b. FICA payments in excess of $5,840.40 for Social Security tax for
a. If any part of the Federal tax payments on lines 31, 32 or 33 include
each person and the motor vehicle fuel tax credit from the 2006
self-employment tax, then the self-employment tax must be added
Federal return can be deducted as a Federal tax payment on line 33.
back on line 28.
6
41-002e (10/6/06)
STEP 7 ITEMIZED OR STANDARD DEDUCTION
You may itemize deductions or claim the Iowa standard deduction, whichever is larger. You may itemize deductions on your Iowa return even if
you did not itemize deductions on your Federal return.
MARRIED SEPARATE FILERS: If one spouse uses the standard deduction, then both spouses must use the standard deduction, even if separate
Iowa returns are filed.
3. Subtract line 2 from line 1. This is the
If itemizing, taxpayers that have Federal Bonus
LINE 37.
deductible amount for line 37. ............................ 3. ____________
Depreciation on form IA 4562A must complete the Iowa Schedule A
rather than using a copy of the Federal Schedule A. At the time of
Older Vehicles: For qualifying automobiles (model year 1995 or older)
printing, the itemized deduction for state sales and use tax paid is no
and multipurpose vehicles (model year 1992 or older) the deductible
longer allowed on either the Federal or Iowa Schedule A.
amount is 60% of the registration fees paid in 2006.
Mortgage Interest Credit Deduction: Taxpayers with the mortgage
interest credit can claim on their Iowa return a deduction on line 9b of
Iowa Itemized Deduction Worksheet form IA 41-104 must be used
Schedule A for all home mortgage interest paid in the tax year and not
if your Federal AGI is more than $150,500 ($75,250).
just the home mortgage interest that was deducted on the Federal Schedule
See online 2006 Expanded Instructions.
A. School Tuition Tax Credit Contributions: Do not include as an
LINE 38. If your total itemized deductions on line 37 includes Iowa
itemized deduction any contributions for which a credit is claimed on
income tax, enter the amount of Iowa income tax.
line 54 of the IA 1040. Injured Veterans Grant Program
MARRIED SEPARATE FILERS: Iowa income tax deduction must be
Contributions: These contributions do not qualify as itemized deductions.
divided between husband and wife in the ratio of their respective net
Health Insurance Premiums: Do not include as an itemized deduction
incomes.
any health insurance premiums shown on line 18 of the IA 1040.
Other deductions include the following:
LINE 40.
Vehicle Registration Fee Deduction. If you itemize deductions, a
a. Expenses Incurred for Care of a Disabled Relative
portion of the automobile registration fee you paid in 2006 may be
b. Adoption Expenses
deducted as personal property tax on your Iowa Schedule A, line 6, and
c. Mileage Deduction for Charitable Purposes: Iowa allows you an
Federal Schedule A, line 7. This deduction is for registration fees paid
additional deduction for automobile mileage driven for charitable
based on the value of qualifying automobiles and multipurpose vehicles.
organizations. Calculate the deduction as follows:
Multipurpose vehicles are defined as motor vehicles designed to carry
1. Number of miles x 34¢/mile ...................... 1. _____________
not more than ten people, and constructed either on a truck chassis or
2. Less charitable mileage deduction
with special features for occasional off-road operation [Iowa Code
entered on Federal or Iowa Schedule A ........ 2. _____________
Section 321.1(44)]. Registration fees on the following vehicles are not
3. Equals additional mileage deduction
deductible: pickups, motor trucks, work vans, ambulances, hearses,
for charitable purposes. .............................. 3. _____________
non-passenger-carrying vans, campers, motorcycles, or motor bikes.
MARRIED SEPARATE FILERS: The total deduction claimed by both
See 2006 Expanded Instructions online.
spouses for each relative with a disability may not exceed $5,000.
Newer Vehicles: Use the following worksheet to calculate the
This deduction must be divided between husband and wife in the ratio
deductible amount of registration fees paid in 2006 for qualifying
of their respective net incomes.
automobiles (model year 1996 or newer) and multipurpose vehicles
LINE 41. Mark the correct box to show the deduction method used.
(model year 1993 or newer).
STANDARD: Tax year 2006, standard deduction is:
Line 37 Vehicle Registration Deduction Worksheet
Filing Status 1:
$1,650
1. Enter the actual registration fee paid ................... 1. _____________
Filing Status 3 & 4:
$1,650 for each spouse
2. Take the weight of your vehicle and divide it by
Filing Status 2, 5 or 6: $4,060
250. The weight is found on your registration. ... 2. _____________
STEP 8 TAX CALCULATION
The tax tables begin on page 11 for all filing statuses.
LINE 43.
If you are married filing separately and one spouse has a net
Alternate Tax Calculation: For filing statuses 2, 3, 4, 5, and 6. If the
operating loss that will be carried back or forward, then you cannot
combination of your net income from line 26 PLUS any pension
use the alternate tax computation. If the spouse with the net operating
exclusion taken on line 21 exceeds $13,500, you may owe less tax by
loss elects not to carry the net operating loss back or forward, then you
completing the worksheet below to compute your tax liability. Enter
can use the alternate tax computation. A statement must be attached to
this alternate tax on line 43 if it is less than the tax from the tax table.
the return saying that the spouse with the net operating loss will not
This is not available to status 1 filers.
carry it back or forward.
ALTERNATE TAX CALCULATION
IA 1040, you will not be allowed the alternate tax calculation.) Divide
1. Enter the total of net income from line 26 and pension exclusion
the alternate tax between spouses in the ratio of the net income of each
spouse to the combined net income of both spouses.
from line 21 of the IA1040. Filing statuses 3 or 4: Enter combined
LINE 44. Enter 25% of Federal tax from form 4972
totals of both spouses. ............................................ 1. _____________
2. Subtract $13,500 from line 1. ............................. 2. _____________
LINE 45. The Iowa Minimum Tax is imposed, for the most part, on
— $13,500
3. Income subject to alternate tax. ........................... 3. _____________
the same tax preference items and adjustments on which Federal
4. Multiply line 3 by 8.98% (.0898). ....................... 4. _____________
minimum tax is imposed. However, you may be subject to Iowa
Minimum Tax even if you have no liability for Federal minimum tax.
5. Using the tax tables, determine the tax on
If you had tax preference items and adjustments in 2006, see form IA
the taxable income from line 42 of the IA1040.
Status 3 and 4 filers: Calculate tax separately
6251 for further information.
and combine the amounts. ....................................... 5. _____________
NONRESIDENTS AND PART-YEAR RESIDENTS: If you
6. Compare the amounts on line 4 and line 5. Enter
have Iowa-source tax preferences or adjustments, you may
be subject to Iowa Minimum Tax. See form IA 6251.
the smaller amount here and on line 43, IA1040. ... 6. _____________
Enter 6.5% (0.065) of the Federal Earned Income Credit
MARRIED SEPARATE FILERS (including status 4): Use the combined
LINE 48.
net incomes of both spouses to compute the alternate tax. (If you are
claimed on your Federal return.
status 4 and do not provide the other spouse’s income in Step 2 of the
MARRIED SEPARATE FILERS: The Iowa Earned Income Credit must
7
41-002f (10/6/06)
Examples of extracurricular activities: sporting events, speech
be divided between husband and wife in the ratio of each spouse’s
activities, musical or dramatic events, driver’s education (if paid to a
earned income to the total earned income of both spouses. Earned
income includes wages, salaries, tips or other compensation and net
school), awards banquets, homecoming, prom (clothing does not
qualify), and other school related social events, etc.
earnings from self-employment. Any unused part of this credit cannot
For lists of items eligible and not eligible for the credit,
be used by the other spouse.
see 2006 Expanded Instructions on our Web site.
LINE 49. Taxpayers who have one or more dependents attending
Calculate the proper amount of expenses per dependent and multiply
Kindergarten through 12th grade in an accredited Iowa school may
take a credit for each dependent for amounts paid for tuition and
the amount – not to exceed $1,000 – by 25% (.25).
Example: Students Patty and Mark have qualifying expenses of
textbooks. Dependents must have attended a school in Iowa that is
$1,400 and $700 respectively. Their parents can take a credit of $250
accredited under section 256.11, not operated for a profit and adheres
(25% of $1,000 maximum) for Patty and $175 (25% of $700) for
to the provisions of the U.S. Civil Rights Act of 1964. The credit
Mark, for a total credit of $425.
amount is 25% of the first $1,000 paid for each dependent for tuition
LINE 52. Enter the amount of your nonresident/part-year resident
and textbooks. In the case of divorced or separated parents, only the
tax credit from Schedule IA126, line 33. A copy of Schedule IA126
spouse claiming the dependent can claim the amounts paid by that
spouse for tuition and textbooks for that dependent. Expenses for
and a copy of your Federal return must be attached. See instructions on
page 9. Examples are available in the Expanded Instructions. You may
textbooks or other items for home schooling, tutoring, or schooling
owe less tax by using filing status 3 or 4.
outside an accredited school do not qualify for the credit. “Tuition”
LINE 54. Enter the total of the credits from the IA 148 Tax Credits
means any charges for the expense of personnel, buildings, equipment
Schedule. See the 2006 Expanded Instructions online for the list of
and materials other than textbooks, and other expenses that relate to
the teaching of only those subjects legally and commonly taught in
credits. You must attach the IA 148 to the IA 1040.
LINE 56. Multiply the amount on line 55 by the surtax rate and enter
Iowa’s public elementary and secondary schools. “Textbooks” means
books and other instructional materials used in teaching those same
the result. Surtax rates are listed at the end of this booklet. The name
of your school district may be found on your voter registration card.
subjects. This includes fees, books and materials for extracurricular
activities.
STEP 9 CREDITS
LINE 61. Enter the total amount of income tax withheld for Iowa on
NONRESIDENTS AND PART-YEAR RESIDENTS - The Child and
your W-2s, W-2Gs, and/or 1099s.
Dependent Care Credit must be adjusted using the following formula:
LINE 62. Enter the total amount of 2006 Iowa estimated tax payments.
credit on
Iowa net income (line 26, IA126) x credit calculated
This includes any fourth quarter payment made in January 2007 and
above
line 65
All-source net income of you
any payments made with the IA 1040-V Payment Voucher for 2006.
and spouse (line 26, IA 1040)
Also include any overpayment from your 2005 income tax return that
If you are choosing the Early Childhood Development Tax Credit,
you applied to your estimated tax for 2006.
you
may take the credit equal to 25% of the first $1,000 of qualifying
LINE 63. All income an Iowa resident earns is taxable to Iowa to
expenses paid in 2006 for each dependent from the ages of three
the same extent that it is taxable on the Federal return even if the
through five. For the 2006 calendar year only, expenses incurred in
income was earned in another state or foreign country. If another state
November and December of 2005 may be included with the 2006
or foreign country taxes that same income, then the Iowa resident may
expenses.
be able to claim the Out-Of-State Tax Credit by completing the IA 130
Expenses that qualify include the following:
form.
LINE 64. Enter the amount of Motor Fuel Tax Credit from Schedule
• Services provided by a preschool, as defined in Code section 237A.1
IA 4136. The Federal Schedule 4136 cannot be used. The Iowa credit
• Books that improve child development, such as textbooks, music
does not apply to fuel used in on-road vehicles or pleasure boats. If
and art books, teacher’s editions and reading books
you have an Iowa Motor Fuel Tax Refund Permit Number and have
•
Instructional
materials required to be used in a lesson activity, such
claimed any refunds during the tax year, do not claim any credit on
as
paper,
notebooks,
pencils and art supplies
this line.
• Lesson plans and curricula
LINE 65. Only one of the following two credits may be taken:
Child and Dependent Care Credit OR Early Childhood Development
• Child development and educational activities outside the home, such
Tax Credit. Only taxpayers with a net income of less than $45,000 are
as drama, art, music and museum activities and the entrance fees
eligible to take one of these credits. If you are married, your net income
for such activities
and the net income of your spouse must be combined to determine if
Early childhood development expenses that do not qualify include:
you qualify, even if your spouse does not file an Iowa return.
• Food, lodging, or membership fees relating to child development
If you are choosing the Child and Dependent Care Credit, use
and educational activities outside the home
the following worksheet to calculate the credit.
• Services, materials, or activities for the teaching of religious tenets,
1. Enter the amount from line 9 of Federal form 2441 or line 9 of
doctrines, or worship, if the purpose of these expenses is to instill
Schedule 2 of Federal form 1040A. Note: Use the Child Care
those tenants, doctrines or worship
Credit prior to any Federal Alternative Minimum
MARRIED SEPARATE FILERS: In computing the credit, the
Tax calculation.
1. _______________
combined net income of both spouses must be used. The credit must
2. If total of line 26 of the IA1040, columns A and B, is:
be divided between husband and wife in the ratio of each spouse’s net
allowable %
allowable %
income to their combined net income.
Less than $10,000 ....... 75% $25,000 - $34,999 ... 50%
LINE 66. Enter the total of other credits from the IA 148 Tax
$10,000 - $19,999 ...... 65% $35,000 - $39,999 ... 40%
Credits Schedule. See the 2006 Expanded Instructions online for the
$20,000 - $24,999 ...... 55% $40,000 - 44,999 ... 30%
list of credits. You must attach the IA 148 to the IA 1040.
$45,000 and over: ..... 0%
=
Enter % here
2. _______________
3. Multiply line 1 by percentage on line 2. Enter the result here and
on line 65 of the IA1040.
3. _______________
8
Expanded Instructions are at
www.state.ia.us/tax
41-002g (9/15/06)
STEP 10 REFUND OR AMOUNT YOU OWE
LINE 74.
74a. 10% Penalty for Failure to Timely File a Return: If you do not file
your return by the due date and at least 90% of the correct tax is not
paid, you owe an additional 10% of the unpaid tax.
5% Penalty for Failure to Timely Pay the Tax Due: If you file your
return on time but do not pay at least 90% of the correct tax due, you
owe an additional 5% of the unpaid tax.
74b. Interest must be added to delinquent tax. Interest is added at a
rate of 0.8% per month beginning on the day after the due date of the
return and accrues each month until paid in full.
LINE 75. You have three paperless options to pay the amount
due. See the back cover of this booklet. You may also mail a check
or money order with an IA 1040-V Payment Voucher payable to:
Treasurer, State of Iowa. Write your Social Security Number on the
check or money order. Do not send in any payment of less than one
dollar.
STEP 11: POLITICAL CHECKOFF
Contributions to this checkoff do not reduce your refund or increase
your amount due. Contributing to this checkoff is not required. You
may assign $1.50 to a specific political party or to the Iowa Election
Campaign Fund for distribution to qualifying parties. A husband and
wife may each assign $1.50 to the party of his or her choice regardless
of the filing status of the return.
STEP 13:
COW/CALF REFUND
Form IA 132 and Expanded Instructions are on our Web site.
STEP 14: SIGNATURE
Returns are not processed and refunds are not issued if returns are not
signed. If you and your spouse file a joint or combined return, both of
you must sign.
2006 INSTRUCTIONS FOR SCHEDULE IA126
You will need to complete the IA 1040 Long Form lines 1 – 51 before you can complete the IA 126. The IA 1040 must be completed using allsource income. Nonresidents and part-year residents of Iowa will use the IA 126 to figure your Iowa source income. The credit from this form is
used to reduce total tax on your IA 1040. Please attach a copy of your Federal return.
For part-year Iowa residents, Iowa net income includes all income received while living in Iowa plus any Iowa-source income received while a
nonresident. For nonresidents, Iowa net income will include all income from Iowa sources. Complete lines 1-26 of the IA 126 using only income
from Iowa sources. Enter the amount of credit from line 33, IA 126 on line 52, IA 1040.
If you used filing status 3 (married filing separately on the combined return) on your IA 1040, you will divide your Iowa income between
spouses using the instructions given for the corresponding line on the IA 1040 for married separate filers.
1. WAGES, SALARIES, TIPS, ETC.
Iowa gross receipts divided by total gross receipts; multiply this ratio
times the total net income from Federal Schedule C or C-EZ. A sale
is considered an Iowa sale if goods are delivered or shipped to a point
within the state regardless of F.O.B. point.
Part-year residents: Include all W-2 income earned while an Iowa
resident, even if it was earned in another state, and any income for
services performed in Iowa while a nonresident of the state. If it was
earned in another state, you may also need to fill out the IA 130 when
you pay tax to the other state. You will need to check with that state for
their filing requirements.
Nonresidents: Report only Iowa-source income. If the portion of
employee compensation earned in Iowa by a nonresident is not reported
separately, allocate the compensation based upon the number of days
worked in Iowa to total work days.
6. CAPITAL GAIN OR (LOSS).
Part-year residents: Report all interest shown on the IA1040 which
accrued while an Iowa resident and any interest received while a
nonresident which was derived from a trade, business or profession
carried on within Iowa.
Nonresidents: Report only the interest derived from an Iowa trade,
business or profession.
Part-year residents: Include 100% of the capital gains or losses
from assets sold during the time they were Iowa residents. In addition,
capital gains or losses from assets sold while a nonresident of Iowa
should be reported on the basis of the instructions for nonresidents
that follow.
Nonresidents: Include in Iowa income 100% of capital gains or losses
from the following:
a. Sales of real or tangible personal property if the property was
located in Iowa at the time of the sale; or
b. Sales of intangible personal property if the taxpayer’s commercial
domicile is in Iowa.
NOTE: You may have a gain here even if you have a net loss on the
IA 1040.
3. DIVIDEND INCOME.
7. OTHER GAINS OR (LOSSES).
Part-year residents: Report all dividends received while an Iowa resident
and any dividends derived from an Iowa trade, business or profession
while a nonresident.
Nonresidents: Report the dividends derived from an Iowa trade, business
or profession.
Part-year residents: Report 100% of gains or losses from assets sold
or exchanged while an Iowa resident and any gains or losses from
Federal form 4797 while a nonresident if the property was located in
Iowa at the time of sale or exchange.
Nonresidents: Report any gains or losses from Federal form 4797 if
the property was located in Iowa.
NOTE: You may have a gain here even if you have a net loss on the
IA 1040.
2. TAXABLE INTEREST INCOME.
4. ALIMONY RECEIVED.
Part-year residents: Report all alimony or separate maintenance
payments received while an Iowa resident.
Nonresidents: Do not enter anything on this line.
8. TAXABLE IRA DISTRIBUTIONS.
Part-year residents: Report any taxable IRA distributions received
while an Iowa resident.
Nonresidents: Do not enter anything on this line.
5. BUSINESS INCOME OR (LOSS).
Part-year residents: Report all Federal Schedule C or C-EZ income
earned while an Iowa resident and any portion of business income or
loss earned while a nonresident attributable to a business conducted in
Iowa.
Nonresidents: Report the portion of business income or loss attributable
to a business conducted in Iowa. Attach a supporting schedule showing
9. TAXABLE PENSIONS AND ANNUITIES.
9
Pension is taxable to the state you live in when you receive it.
Part-year residents: Report any pension and annuity income reported
on line 9 of the IA1040 which was received while an Iowa resident.
Nonresidents: Do not enter anything on this line.
41-002h (10/9/06)
10. RENTS, ROYALTIES, PARTNERSHIPS, ESTATES, TRUSTS,
ETC.
c. Paid direct by taxpayer. Enter 100% of the health insurance
premiums that you paid while an Iowa resident.
Nonresidents:
a. Self-employed. Enter 100% of the health insurance premiums paid
by a self-employed individual by the ratio of Iowa self-employment
income to total self-employment income.
b. Deducted through wages. Enter 100% of the health insurance
premiums that were not withheld from your wages on a pretax basis
by the ratio of Iowa wages to total wages.
c. Paid direct by taxpayer. Multiply the health insurance premiums
that you paid by the ratio of your Iowa-source net income on line 26
of the IA 126 to total net income on line 26 of the IA 1040. For this
net income calculation, do not include line 18, the health insurance
deduction in the above-referenced net income amounts.
Part-year residents: Report all income shown on Federal Schedule E
which was earned or received while an Iowa resident and all rents and
royalties from Iowa sources and partnerships or S Corporation income
earned or received while a nonresident.
Nonresidents: Report all rents and royalties from Iowa sources and all
Iowa partnership or S Corporation income. See instructions for allocation
of business income on line 5 of this section.
11. FARM INCOME OR (LOSS).
Part-year residents: Report all net farm income earned or received
while an Iowa resident. Also report all net income from Iowa farm
activities while a nonresident using the instructions for nonresidents
given below.
Nonresidents: Report the total net income from the Iowa farm activities.
If farm activities were conducted both within and without Iowa, provide
a separate schedule showing allocation of the income and expenses to
Iowa.
19. PENALTY ON EARLY WITHDRAWAL OF SAVINGS.
Part-year residents: Deduct the amount of any penalty you were
charged because you withdrew funds from your time savings deposit
before its maturity while an Iowa resident or what was derived from an
Iowa trade, business or profession.
Nonresidents: Deduct the amount of any penalty you were charged
because you withdrew funds from your time savings deposit before its
maturity that was derived from an Iowa trade, business or profession.
12. UNEMPLOYMENT COMPENSATION.
Part-year residents: Report all unemployment benefits received while
an Iowa resident and those benefits received the rest of the year that
relate to past employment in Iowa.
Nonresidents: Report the unemployment benefits that relate to
employment in Iowa. If the unemployment benefits relate to employment
in Iowa and employment in another state, report the benefits to Iowa
on the basis of the Iowa salaries and wages to the total salary and
wages.
20. ALIMONY PAID.
Part-year residents: Deduct alimony paid while an Iowa resident.
Nonresidents: Deduct alimony paid in the ratio of Iowa gross income
to total gross income.
21. PENSION/RETIREMENT INCOME EXCLUSION.
13. TAXABLE SOCIAL SECURITY BENEFITS.
Part-year residents: If you qualify for this exclusion on the IA 1040,
you may exclude the amount of taxable retirement income received
while an Iowa resident, up to a maximum of $6,000 (if filing status 1,
5, or 6) or $12,000 (if filing status 2, 3, or 4).
Nonresidents: Iowa-source retirement income received by a nonresident
is not taxable to Iowa. Therefore, you do not qualify to take this
exclusion. Do not enter anything on this line.
Part-year residents: Report any Social Security income reported on
line 13 of the IA1040 which was received while an Iowa resident.
Nonresidents: Do not enter anything on this line.
14. OTHER INCOME.
Part-year residents: Report any income on line 14 of IA1040 which
was received while an Iowa resident or income from Iowa sources
while a nonresident. This includes gambling income and the Bonus
Depreciation Adjustment attributable to Iowa from the IA 4562A.
Nonresidents: Report all other taxable income from Iowa sources.
This includes gambling income.
22. MOVING EXPENSES.
Part-year residents who moved into Iowa can enter any moving
expenses from line 22 of the IA1040 that relate to the move to Iowa.
Part-year residents moving out of Iowa cannot take any deduction on
this line.
Nonresidents: Do not enter anything on this line.
16. PAYMENTS TO AN IRA, KEOGH OR SEP.
Part-year residents: Deduct the payments made to an IRA, Keogh or
SEP plan while an Iowa resident.
Nonresidents: Deduct the payments made to an IRA, Keogh or SEP
plan in the ratio of Iowa earned income to total earned income.
23.
IOWA CAPITAL GAIN DEDUCTION.
Enter 100% of qualifying capital gains that are attributable to Iowa
sources.
17. ONE-HALF OF SELF-EMPLOYMENT TAX.
24. OTHER ADJUSTMENTS.
Part-year residents: Deduct the portion of the self-employment tax
that is attributable to the self-employment income earned while an
Iowa resident.
Nonresidents: Deduct the portion of the amount allowed on your
Federal return in the ratio of your Iowa self-employment income to
your total self-employment income.
Deduct miscellaneous adjustments to income in the same ratio as the
income to which the adjustment relates was allocated to Iowa.
26. IOWA NET INCOME.
Subtract line 25 from line 15 and enter the difference on this line. If
line 26 is $1,000 or more or you are subject to Iowa lump-sum or
minimum tax, complete lines 27 through 33. If line 26 is less than
$1,000 and you are not subject to Iowa lump sum or minimum tax,
you are not required to file an Iowa income tax return. However, if you
had Iowa tax withheld and are requesting a refund, put 100% on line
29 and complete the remainder of the schedule.
18. HEALTH INSURANCE DEDUCTION.
Part-year residents:
a. Self-employed. Enter 100% of the health insurance premiums paid
by a self-employed individual while an Iowa resident.
b. Deducted through wages. Enter 100% of the health insurance
premiums that were not withheld from your wages on a pretax basis
while an Iowa resident.
Examples of how to complete the IA 126 and IA 130 are available
on our Web site in the 2006 Expanded Instructions.
IOWA SCHEDULE IA130
Schedule IA130, the State of Iowa Out-of-State Credit Computation, is
Instructions for Schedule IA 130 are printed on the IA 130 form and
only for residents or part-year residents of Iowa who earned income
are available on our Web site in the 2006 Expanded Instructions.
while an Iowa resident which was taxed by another state or foreign
country.
10
41-002i (8/4/06)
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State of Iowa
Department of Revenue
Hoover State Office Building
1305 E Walnut
Des Moines IA 50319
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Official Payments Corporation.
Call: 515-281-3114 or
1-800-367-3388 (Iowa,
Omaha, Rock Island, Moline)
Questions About eFiling:
515-281-8453 or 1-866-5033453, idrefile@iowa.gov
Please Support These Checkoffs
IA 1040: line 59
IA TeleFile: line 10
FIREFIGHTERS
VETERANS TRUST
MAILING ADDRESSES
Receiving Refund/No Tax Due
Iowa Income Tax
Refund Processing
Hoover State Office Bldg
Des Moines IA 50319-0120
Paying Additional Tax
Mail a check or money order
with an IA 1040-V Payment Voucher
Iowa Income Tax
Document Processing
PO Box 9187
Des Moines IA 50306-9187
Federal Tax Refund Amount
STATE FAIR
FISH/WILDLIFE
Contact the IRS at
1-800-829-1040 or www.irs.gov.
Hearing impaired TTY:
515-242-5942
Need Forms?
Online: www.state.ia.us/tax
Mail: 1-800-532-1531
Fax: 1-800-572-3943
2006 Iowa
Income Tax Returns
are due
Monday, April 30, 2007.
