Iowa Form IA-1040 Line by Line Guide
Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what's the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they're all constructed differently. What follows is a breakdown of Form IA 1040, the Iowa Individual Income Tax Return. If you don't live in Iowa, not to worry, we'll be tackling the other 34 states soon enough.
In the IA 1040, the Iowa department of revenue has created a mess of a form. The first thing you'll notice is the form doesn't just take your adjusted gross income from your federal 1040. It makes you figure it again. That is highly unusual. Further this Form has 13 steps, repeats itself constantly, and seems to tax its residents multiple times from multiple different sources. This get's a 1 on the user-friendly meter and is one of the worst in country.
As usual begin by filling in your name, address, date, social security and county number at the top. Then mark down your filing status and claim your exemptions. Iowa allows for a $40 exemption per dependent, and that's one of the lowest around. It simply doesn't pay to have kids in Iowa.
To figure your gross income, start by recording your wages, salaries, and tips from your W-2. If you've earned any taxable interest, record it on Line 2. Ordinary dividend income should go on Line 3, just attach a schedule b if it's more than $1,500. If you get alimony, put that amount in box 4. Any business income or loss needs to go on Line 5, just add a Schedule C to state how much.
On Line 6, record any capital gains from your Federal Schedule D, and any other gains on Line 7. If you received an IRA distribution, put the taxable amount on Line 8. Do the same for any taxable pensions or annuities on Line 9. Rents go on Line 10, farm income on Line 11, and unemployment compensation on Line 12.
On Line 13 record any taxable social security benefits. On Line 14 any other pay, (stuff like section 179 adjustments or gambling income), should find its way to this line. When you've gathered all that data add up Lines 1 though 14 to get your Iowa gross income, which then goes on Line 15.
Work through the next step to make adjustments to your income. Payments to an IRA go on Line 16 and half of the self-employment tax goes on Line 17. Line 18 is for a health insurance deduction, and Line 19 is for a penalty on an early savings withdrawal. If you pay alimony record how much on Line 20, pension exclusions on Line 21, and any moving expenses on Line 22.
If you've made an Iowa capital gain deduction, record it on Line 23, and any other adjustments on Line 24. Now add Lines 16 through 24 to get your total adjustments, which goes on Line 25. Then subtract Line 25 from Line 15 to get your net income, just put this figure on Line 26. Whew! Filling out this thing is like pulling teeth.
If you're going to get a federal refund, write down that amount on Line 27. If you paid a self tax, record it on Line 28. Then add Lines 27 and 28 with the total going on Line 29. Now add Lines 26 and 29 with the sum going on Line 30. Yep you've got it right, the Iowa 1040 will waste a ton of your time asking you stuff twice. And it will do it over and over and over again.
On Line 31 record your federal withholdings and on Line 32 any estimated tax payments you've already made for this year. If you made additional federal tax payments for this or a prior year, enter that amount on Line 33. Then add Lines 31 through 33 to get your deduction for federal taxes paid. Finish the section by subtracting Line 34 from Line 30 and record that amount on Line 35 and Line 36 on page 2.
Another funny thing about this form is it wouldn't let you use your adjusted gross income from your federal filing, but it lets you use your total itemized deductions from your Federal Schedule A. On Line 37 record your total itemized deductions from your federal form, and on Line 38 any Iowa income tax that was included on your federal Schedule A. Then subtract Line 38 from Line 37 with the balance going on Line 39.
If you're a glutton for punishment, you have the option to again do double the work by filling out an Iowa Schedule A in order to re-itemize your itemized deductions. Seriously?!
On Line 40 record any other deductions and on line 41 check off whether you itemized or you just used the standard deduction. When ready, subtract Line 41 from Line 36 to get your taxable income, which goes on Line 42.
To figure your tax, look the tax table in the instruction booklet. On Line 44 record the Iowa lump sum tax, here's a hint it's 25% of the federal tax from form 4972. On Line 45 record your Iowa minimum tax, then add lines 43 through 45 to get your total tax the sum of which goes on Line 46. That's right, it appears as if you're getting taxed from 3 different sources.
On Line 47, you'll again have to repeat yourself as you look back to get your exemption credits from step 3. Line 48 allows for a tuition and textbook credit for children in kindergarten to high school. Then add lines 47 and 48 to get your total credits and put that on amount on Line 49. Now subtract Line 49 (credits) from Line 46 (total tax) and record the balance on Line 50.
If you're a part time resident, attach form IA 126, federal form, and enter your credit on Line 51. Then subtract Line 51 from Line 50 with the total going on Line 52. If you have other nonrefundable Iowa credits put those amounts on Line 53. Finish up the step by subtracting Line 53 from Line 52 and put the balance on Line 54.
I feel for the residents of Iowa. Compared to other states, the amount of double work this form imposes on you is wacky. When you have 30 seconds to burn, check out the Kansas state tax form.
The fun continues with a school district surtax, just look up the percentage in booklet and multiply it by the amount on Line 54. Now, add this extra tax to your previous tax sources and put the total on Line 56 and carry forward this number to Line 57. If you feel like donating to some very good causes, it will either; reduce your refund or add to your liability, just enter the amount on Line 58. Once you're punished for your good deeds, add your total tax and contributions the sum of which goes on Line 59.
On Line 60, rerecord your Iowa withholdings and on Line 61 any estimated voucher payments. If you earned an out of state tax credit, attach IA 130 and put the total on Line 62. If you earned a fuel credit attach IA 4136 and enter that amount on Line 63. If it applies, record your child and dependent credit on Line 64 and the Iowa earned income credit on Line 65. If you have any other refundable credits, they go on Line 66.
Now add Lines 60 through 66 and put the total on Lines 67 and 68.
Mercifully, we're almost finished. If Line 68 is more than Line 59, subtract 59 from 68 to figure the amount you overpaid. Put this glorious number on Line 69, the amount you want refunded on Line 70, and the amount you want applied to next years return on Line 71. But, if Line 68 is less than Line 59, subtract Line 68 from Line 59 and put the amount you owe on Line 72. If you've incurred any penalties or interest, those amounts go on Lines 73 and 74. Finish the step by adding Lines 72 through 74 to get the total amount you still owe, just put the sum on Line 75.
If you want to donate to a political party, fill out step 11. All that's left is to sign, date, record your address, and phone number. If you used a tax pro to help you work through this mess have them do the same.
Because of its redundancy, IA 1040 is one of the absolute worst individual tax forms in the country and I should know, I've analyzed them all. Federal taxes are due by April 16 and it's no wonder Idaho gives you an extra two weeks to file. This form needs to be blown up and redesigned.
