Iowa requires people to claim federal tax refunds as taxable income on Iowa tax returns. Calculator, Numbers, Glasses

If you’re an Iowa resident all year, it’s simple: your federal tax refund is likely taxable in Iowa. (Though not always the whole thing.)

The reporting is a little more complicated if you moved to or from Iowa during the year, or if you’re a non-resident required to file an Iowa tax return.

Moved To Iowa

In the first year you move to Iowa, you DO NOT report your federal tax refund on your first Iowa tax return.

Example: You move to Iowa in 2014. On your first Iowa tax return for 2014, you will not report any refunds on the return.

Move Out Of Iowa

In the year you move out of Iowa, you WILL report your federal tax refund on your final Iowa tax return.

Non-Residents

If you’re a non-resident, the reporting depends on if you filed an Iowa tax return in the prior year.

If you didn’t file an Iowa tax return in the prior year, you don’t report any refunds on your current Iowa return. If you did file an Iowa tax return in the prior year, then you’d need to report your refund on your current Iowa return.

What If You Didn’t Get a Federal Refund?

If you owed the IRS instead of getting a refund, Iowa allows you to take a deduction for the additional tax paid.

The rules for taking the deduction for additional taxes paid are the same as outlined above for reporting refunds.

Image courtesy of www.SeniorLiving.Org

 

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”