IA 130 General Instructions

Instruction Year
2018

Individuals using filing status 3 (Married Filing Separately on a Combined Return) or status 4 (Married Filing Separate Returns) must complete a separate form IA 130 for each spouse.

Also see instructions for line 50, IA 1040. NOTE: The Iowa income percentage is rounded to the nearest tenth of a percent in accordance with rule 701-42.6.

Nonresidents

Nonresidents of Iowa may not claim this credit.

Part-year Residents

Part-year residents of Iowa may claim this credit ONLY if any income earned while an Iowa resident was also taxed by another state, local jurisdiction in another state, or foreign country.

Shareholders of S Corporations

Shareholders of S corporations who have income from the corporation that was apportioned outside Iowa by using the IA 134 (S Corporation Apportionment Tax Credit) cannot claim an out-of-state credit on this income.

Tax Imposed Amount

The tax imposed, line 6, is the tax as calculated from the tax formula / tables on the other state, local jurisdiction, or foreign country's tax return, less any nonrefundable credits. Do not reduce this figure by the refundable credits, tax withheld or estimated tax payment made to the other state, local jurisdiction, or foreign country. The credit or portion of the credit must not exceed the amount of the Iowa tax imposed on the same income that was taxed by the other state, local jurisdiction, or foreign country.

More Than One State or Foreign Country

You must complete a separate IA 130 for each state, local jurisdiction in another state, or foreign country. Separate IA 130s are not required for foreign taxes paid by mutual funds or other regulated investment companies.

Credit Amount

The credit or portion of the credit must not exceed the amount of the Iowa tax imposed on the same income which was taxed by the other state or foreign country.

Include the following with your Iowa return:

  • The IA 130
  • The income tax return you filed with the other state
  • If you are claiming the credit for taxes paid to a foreign country, include federal form 1116, Computation of Foreign Tax Credit if it is required with your federal return.

Minimum Tax or Lump-sum Distribution Tax

If you were assessed an alternative minimum tax or a special tax on a lump sum distribution by another state or local jurisdiction in another state, see the following special instructions.

Special Instructions for Minimum Tax or Lump-Sum Distribution Tax

Compute Separately

If you were assessed an alternative minimum tax or a special tax on a lump-sum distribution by another state or local jurisdiction in another state on items similarly taxed on your Iowa return, you must separately compute an out-of-state credit for each of these items. Do not include alternative minimum tax or a special lump-sum tax when computing the regular tax credit. Please write “Alternative Minimum Tax” or “Lump-sum Tax” next to the amount on line 6 of the IA 130.

Minimum Tax

Report the amount of preference items taxed by the other state or local jurisdiction in another state on line 1. However, a preference item may be included in line 1 only if it is also a preference item for Iowa purposes. Enter on line 2 the amount of Iowa preference items. Report on line 4 the alternative minimum tax figure from line 41, IA 1040. On line 6, report only the portion of the alternative minimum tax liability from the other state or local jurisdiction in another state which applies to preference items which were also taxed by Iowa.

Lump-sum Distribution

Report on line 1 the amount of distribution subject to special lump-sum tax by the other state. Do not include a distribution taxed by the other state or local jurisdiction in another state as part of gross income. Enter on line 2 the total lump-sum distribution taxed by Iowa. Report on line 4 the Iowa Lump-sum Distribution Tax from line 40, IA 1040. 


Full-Year Iowa Residents Only

  1. Amount of gross income you received that was taxed by Iowa and taxed by the other state, local jurisdiction in another state, or foreign country.
  2. Gross income from line 15, IA 1040.
  3. Divide line 1 by line 2 and enter the percentage rounded to the nearest tenth of a percent. Do NOT exceed 100.0%.
  4. Tax from line 49, IA 1040 less any lump sum tax and alternative minimum tax.
  5. Multiply line 4 by the percentage on line 3.
  6. Enter the tax imposed by the other state, local jurisdiction in another state, or foreign country. “Tax imposed” is the tax calculated from the tax formula or tax tables on the other state, local jurisdiction in another state, or foreign country's tax return, less any nonrefundable credits. Do not reduce this amount by the tax withheld or estimated tax payment made to the other state or foreign country.
  7. Enter the SMALLER of lines 5 or 6. This is your out-of-state tax credit. Enter this amount on line 50, IA 1040.

Example 1: Full-Year Iowa Residents Only

 

Jennifer lived in Iowa all year but worked in both Iowa and Nebraska. She earned $10,000 in Iowa. She also earned $15,000 in Nebraska that was taxed by Nebraska. Jennifer would report $25,000 on line 15 of the IA 1040 as gross income. Line 49 of the IA 1040 would be $1,050. On the Nebraska state return the tax imposed* on her income was $450.

 Column B Spouse
Status 3 Only
Column A You or Joint
1. Amount of gross income you received that was taxed by Iowa and taxed by the other state or foreign country. $15,000
2. Gross taxable income for residents from line 15, IA 1040. 25,000
3. Divide line 1 by line 2 and enter the percentage (not to exceed 100.0%) 60.0%
4. Tax from line 51, IA 1040 (less lump sum tax and minimum tax) 1,050
5. Multiply line 4 by percentage on line 3 630
6. Enter the tax imposed* by the other state or foreign country 450
7. Enter the smaller of line 5 or 6. This is your out-of-state tax credit. Enter this amount on line 57, IA 1040 450

*“Tax imposed” is the tax calculated from the tax formula/tables on the other state, local jurisdiction in another state, or foreign country's tax return, less any nonrefundable credits. Do not reduce this figure by the tax withheld or estimated tax payment made to the other state, local jurisdiction in another state, or foreign country.


Part-Year Iowa Residents Only

  1. Amount of gross income you received that was taxed by Iowa and taxed by the other state, local jurisdiction in another state, or foreign country.
  2. Gross income from line 15, IA 126.
  3. Divide line 1 by line 2 and enter the percentage rounded to the nearest tenth of a percent. Do NOT exceed 100.0%.
  4. Tax from line 49, IA 1040 less any lump sum tax and minimum tax.
  5. Multiply line 4 by the percentage on line 3.
  6. Enter the tax imposed by the other state, local jurisdiction in another state, or foreign country. “Tax imposed” is the tax calculated from the tax formula or tax tables on the other state, local jurisdiction in another state, or foreign country's tax return, less any nonrefundable credits. Do not reduce this amount by the tax withheld or estimated tax payment made to the other state, local jurisdiction in another state, or foreign country.
  7. Part-year residents SKIP LINE 7.
  8. Enter the total amount of gross income taxed by other state, local jurisdiction, or foreign country.
  9. Divide line 1 by line 8 and enter the percentage rounded to the nearest tenth of a percent. Do NOT exceed 100.0%.
  10. Multiply line 6 by the percentage on line 9.
  11. Part-Year Residents enter the smaller of lines 5 or 10 and enter this amount on line 50, IA 1040. This is your Out-of-State Tax Credit.

Example 2: Part-year Iowa Residents Only

Benny lived in Iowa until the end of June. July 1 he moved to Missouri. He worked all year in the state of Missouri. Benny earned a salary of $30,000 for the year, $15,000 while he lived in Iowa and $15,000 while he lived in Missouri. Benny also earned $10,000 farm rental income from farmland located in Iowa. Line 51 of the IA 1040 would be $1,292. On the Missouri state return, the tax imposed* on his income was $1,000.

 Column B Spouse
Status 3 Only
Column A You or Joint
1. Amount of gross income you received that was taxed by Iowa and taxed by the other state or foreign country. $15,000
2. Gross taxable income for part-year residents from line 15, IA 126 25,000
3. Divide line 1 by line 2 and enter the percentage (not to exceed 100.0%) 60.0%

4. Tax from line 51, IA 1040 (less lump sum tax and minimum tax)

 

 1,292
5. Multiply line 4 by percentage on line 3 775
6. Enter the tax imposed* by the other state or foreign country 1,000
7. Enter the total amount of gross income taxed by the other state/foreign country. 30,000
8. Divide line 1 by line 7 and enter the percentage (not to exceed 100.0%) 50.0%
9. Multiply line 6 by the percentage on line 8. 500
10. Enter the smaller of line 5 or 9. This is your out-of-state tax credit. Enter this amount on line 57, IA 1040. 500

*“Tax imposed” is the tax calculated from the tax formula / tables on the other state, local jurisdiction in another state, or foreign country's tax return, less any nonrefundable credits. Do not reduce this figure by the tax withheld or estimated tax payment made to the other state, local jurisdiction in another state, or foreign country.