Alternate Tax Calculation
You may owe less tax by completing the worksheet below to compute your tax liability. All filing statuses except filing status 1, Single, may qualify for the Iowa alternate tax calculation. Single taxpayers may be eligible for the Iowa income tax reduction; see Iowa Income Tax Reduction Worksheet. Carryover of Net Operating Loss claimed on the IA 1040 must be added back to net income line 26.
Special instructions for filing status 3, Married Filing Separately on a Combined Return, and filing status 4, Married Filing Separate Returns:
- Use the combined net incomes of both spouses.
- Prorate the alternate tax between spouses in the ratio of the net income of each spouse to the combined net income of both spouses using lines 7-11.
- If you are married filing separately and one spouse has a net operating loss that will be carried back or forward, then you cannot use the alternate tax computation. If the spouse with the net operating loss elects not to carry the net operating loss back or forward, then you can use the alternate tax computation. A statement must be included with the return saying that the spouse with the net operating loss will not carry it back or forward.
- If you are filing status 4 and do not provide the other spouse’s income in step 2 on the IA 1040, you will not be allowed the alternate tax calculation.
- The Alternate Tax Calculation Worksheet is available as a pdf at the following link: https://tax.iowa.gov/expanded-instructions/tax-or-alternate-tax-4