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Do I have to claim my federal tax refund on my Iowa return?

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Question
Do I have to claim my federal tax refund on my Iowa return?

Answer

If you received a refund of federal income tax during the tax year, you must report the amount. 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 paid on the prior year's Iowa return which reduces your Iowa taxable income.

Include the following: 

  • The refund you received from your prior year Federal tax return.
  • Any refunds received in the tax year for other years that were amended or filed late.

To find the amount of your Federal refund, contact the IRS at 1-800-829-1040. This information is not available from the Iowa Department of Revenue.

If you chose to have any part of an overpayment of Federal income tax credited to estimated tax payments for the tax year, the amount should be claimed as estimated tax paid. The total Federal overpayment must also be reported. A refund of Federal tax received in the tax year is not reported if the tax was not deducted from Iowa income in a prior year.

Do not include any part of the refund received from earned income credit or additional child tax credit:

  • You are filing an Iowa return for the first time because you moved into Iowa during the year. A refund of Federal tax received in the current tax year is not reported if the tax was not deducted from Iowa income in a prior 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.
  • You were a nonresident for the tax year of the refund and were not required to file an Iowa return for that year.

Married Separate Filers:

If the refund received in the tax year was from a jointly filed Federal return, it must be divided between the spouses in the ratio of the spouses' net incomes in the year for which the refund was issued. Example: A Federal refund received would be prorated using the spouses' net incomes from the Iowa return for the year that the refund is from.

Example of how to prorate:
Wife's income is $10,500
Husband's income is $15,500
Total: $26,000
Federal refund: $1,200

Divide wife's income by total income: $10,500 divided by $26,000 = 40%. The husband's income is, therefore, 60% of their combined income.

In this example, the total is $720 (60%) of the Federal refund for the husband, and $480 (40%) of the Federal refund for the wife.


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Views: 398 Created on: Jun 15, 2013
Date updated: Sep 17, 2014

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