The Iowa Earned Income Tax Credit is a refundable credit. This credit is available only to taxpayers who qualify for the federal Earned Income Tax Credit (EITC). To calculate the Iowa Earned Income Tax Credit, multiply your federal EITC by 15% (.15).
To find out if you qualify for federal EITC, see the IRS EITC information or call the IRS at 800-829-1040.
If you are filing an Iowa return ONLY to claim EITC
If you qualify for the low income exemption as explained in the instructions for line 26 and are filing an Iowa return only to claim a refund of the Iowa EITC, enter the words “low income exemption” in the area to the left of your net income on line 26. Enter zero on lines 55, 56, and 58. Enter the amount of your Iowa EITC on lines 61, 65, 66, and 67.
Nonresidents and Part-year Residents
The Iowa EITC must be adjusted using the following formula.
|Iowa net income (IA 126, line 26)||___________________________|
All-source net income of you and spouse (IA 1040, line 26)
(The ratio cannot exceed 100%)
|multiplied by the Iowa Earned Income Tax Credit||x __________________________|
|equals credit on line 61||=___________________________|
Married Separate Filers:
The Iowa EITC must be divided between spouses in the ratio of each spouse's earned income to the total earned income of both spouses. Earned income includes wages, salaries, tips, other compensation, and net earnings from self-employment. (Examples of how to prorate)