A. Additional Tax to Enter
Enter the amount of additional federal income tax paid during 2018 for tax year 2017 and any other years before 2017. The amount of additional federal income tax paid is deductible only if Iowa income 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 payments made in 2018, but DO NOT include the following:
Federal income tax includes the net investment income tax on federal form 8960 and any payments made in 2018 associated with federal section 965 net tax liability.
Taxpayers can deduct their entire additional federal tax paid amount on line 33. However, certain amounts must be added back on line 28, including the following:
- Excess advance premium tax credit repayment reported on the federal 1040, Schedule 2, line 46.
- Federal self-employment tax reported on the federal 1040, Schedule 4, line 57.
- Unreported Social Security and Medicare tax on the federal 1040, Schedule 4, line 58.
- Additional tax on IRAs and other qualified retirement plans reported on the federal 1040, Schedule 4, line 59.
- Federal household employment tax reported on the federal 1040, Schedule 4, line 60a.
- First-time homebuyer credit repayment reported on the federal 1040, Schedule 4, line 60b.
- Individual responsibility payment reported on the federal 1040, Schedule 4, line 61.
- Additional Medicare tax from federal form 8959 reported on the federal 1040, Schedule 4, line 62a.
- Other additional federal taxes reported on the federal 1040, Schedule 4, line 62c.
Additional Medicare tax withholding from line 24 of federal form 8959, net investment income tax from federal form 8960, and federal section 965 net tax liability payments are not added back on line 28.
If a taxpayer has elected to pay federal section 965 net tax liability in installments for federal purposes, that taxpayer may only include the actual amount of the federal installment payment paid in 2018 in calculating the Iowa deduction for 2018. See Iowa Tax Reform Guidance: Deemed Repatriation of Deferred Foreign Income.
Refundable credits on the federal 1040 may be included on IA 1040, line 33, to the extent federal income tax was paid by applying the federal refundable credits, including:
- Earned Income Tax Credit
- Additional Child Tax Credit
Any refundable federal credits that reduce federal income tax liability are allowed as a federal tax deduction — up to the amount of the federal tax paid by the refundable credits — on the Iowa return.
In determining the order of applying the refundable federal tax credits, the federal Earned Income Tax Credit (EITC) should be applied first, followed by the Additional Child Tax Credit, and then any other refundable federal credits.
Example: The following example illustrates how a refundable federal Earned Income Tax Credit (EITC) on a timely-filed 2017 federal 1040 may affect line 33 of the 2018 Iowa return.
FIRST: Federal Tax Liability For Tax Year 2017
|Taxpayer's Federal Tax Liability for Tax Year 2017:||$2,000|
|Subtract Taxpayer's Federal Withholding:||- 500|
|Taxpayer's Unpaid Federal Tax Liability for Tax Year 2017:||1,500|
SECOND: Apply EITC To Unpaid Federal Income Tax Balance
|Federal EITC Calculated by Taxpayer for Tax Year 2017:||$ 2,500|
|Subtract the $1,500 Federal in Federal Income Tax the Taxpayer Still Owes for Tax Year 2017:||-1,500|
|Taxpayer Will Receive a Federal Refund of EITC:||$ 1,000|
THIRD: Line 33 On Iowa Return For 2018
|33. Additional federal tax paid in 2017 for Tax Year 2017||$ 1,500|
|The $1,500 federal tax liability paid by EITC for Tax Year 2017 is deductible on the 2018 Iowa return.|
Married Separate Filers:
The additional federal tax paid must be divided between spouses in the ratio of the spouses' Iowa net incomes for the prior years for which they paid additional federal income tax. (Examples of how to prorate)
B. FICA Payments
FICA payments in excess of $7,961.00 for Social Security tax for each person and the fuel tax credit from the 2018 federal return can be deducted as a federal tax payment on line 33. Any excess FICA tax and federal fuel tax credit refunded to you must be added back as a federal tax refund in the year received.
If you are self-employed, any self-employment tax you pay cannot cause an excess FICA payment.