For 2019 line 31 will now reflect all federal tax withheld, estimated tax payments, and federal taxes paid in 2019.
Federal Tax Withheld
Enter the amount(s) listed in the box labeled “Federal income tax withheld” on the W-2 or 1099 form(s) that you received.
Federal income tax includes additional Medicare tax withholding from line 24 of federal form 8959. The additional Medicare tax withholding is included on line 31.
Taxpayers can deduct their entire withholding amount on line 31. 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 24.
- Federal self-employment tax reported on the federal 1040, Schedule 2, line 4.
- Unreported Social Security and Medicare tax on the federal 1040, Schedule 2, line 5.
- Additional tax on IRAs and other qualified retirement plans reported on the federal 1040, Schedule 2, line 6.
- Federal household employment tax reported on the federal 1040, Schedule 2, line 7a.
- First-time homebuyer credit repayment reported on the federal 1040, Schedule 2, line 7b.
- Additional Medicare tax from federal form 8959 reported on the federal 1040, Schedule 2, line 8a.
- Other additional federal taxes reported on the federal 1040, Schedule 2, line 8c.
- 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 2019 in calculating the Iowa deduction for 2019.
Married Separate Filers:
Each spouse may claim only his or her own federal income tax withheld.
Federal Estimated Tax Payments Made in 2019.
Enter the federal estimated income tax payments made in 2019. You may include the credit applied from your 2018 federal income tax overpayment only if the overpayment is included on line 27. You can deduct only the federal estimated income tax payments made during calendar year 2019.
For example, include a federal estimated income tax payment for 2018 paid in January 2019, but not an estimated tax payment for 2019 paid in January 2020.
Federal income tax includes the net investment income tax on federal form 8960 and any payments made in 2019 associated with federal section 965 net tax liability.
Taxpayers can deduct their entire estimated payment amount on line 31. 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 24.
- Federal self-employment tax reported on the federal 1040, Schedule 2, line 4.
- Unreported Social Security and Medicare tax on the federal 1040, Schedule 2, line 4.
- Additional tax on IRAs and other qualified retirement plans reported on the federal 1040, Schedule 2, line 6.
- Federal household employment tax reported on the federal 1040, Schedule 2, line 7a.
- First-time homebuyer credit repayment reported on the federal 1040, Schedule 2, line 7b.
- Additional Medicare tax from federal form 8959 reported on the federal 1040, Schedule 2, line 8a.
- Other additional federal taxes reported on the federal 1040, Schedule 2, line 8c.
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 2019 in calculating the Iowa deduction for 2019.
Married Separate Filers:
All federal estimated tax payments made in 2019 are divided between spouses in the same ratio as their incomes not subject to federal withholding for the 2019 tax year.
Additional Federal Tax Paid in 2019 for 2018 and Prior Years
A. Additional Tax to Enter
Enter the amount of additional federal income tax paid during 2019 for tax year 2018 and any other years before 2018. 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 2019, but DO NOT include the following:
- penalties
- interest
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 31. 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 24.
- Federal self-employment tax reported on the federal 1040, Schedule 2, line 4.
- Unreported Social Security and Medicare tax on the federal 1040, Schedule 2, line 4.
- Additional tax on IRAs and other qualified retirement plans reported on the federal 1040, Schedule 2, line 6.
- Federal household employment tax reported on the federal 1040, Schedule 2, line 7a.
- First-time homebuyer credit repayment reported on the federal 1040, Schedule 2, line 7b.
- Additional Medicare tax from federal form 8959 reported on the federal 1040, Schedule 2, line 8a.
- Other additional federal taxes reported on the federal 1040, Schedule 2, line 8c.
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 2019 in calculating the Iowa deduction for 2019. See Iowa Tax Reform Guidance: Deemed Repatriation of Deferred Foreign Income.
Refundable Credits
Refundable credits on the federal 1040 may be included on IA 1040, line 31, 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 2018 federal 1040 may affect line 31 of the 2019 Iowa return.
FIRST: Federal Tax Liability For Tax Year 2018 |
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Taxpayer's Federal Tax Liability for Tax Year 2018: |
$2,000 |
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Subtract Taxpayer's Federal Withholding: |
- 500 |
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Taxpayer's Unpaid Federal Tax Liability for Tax Year 2018: |
1,500 |
SECOND: Apply EITC To Unpaid Federal Income Tax Balance |
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Federal EITC Calculated by Taxpayer for Tax Year 2018: |
$2,500 |
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Subtract the $1,500 Federal Income Tax the Taxpayer Still Owes for Tax Year 2018: |
-1,500 |
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Taxpayer Will Receive a Federal Refund of EITC: |
$1,000 |
THIRD: Line 31 On Iowa Return For 2019 |
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33. Additional Federal Tax Paid in 2019 for Tax Year 2018 |
$1,500 |
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The $1,500 federal tax liability paid by EITC for Tax Year 2018 is deductible on the 2019 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.
B. FICA Payments
FICA payments in excess of $8,240.00 for Social Security tax for each person and the fuel tax credit from the 2019 federal return can be deducted as a federal tax payment on line 31. 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.