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Iowa Lump-sum Tax

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Line: 
40
Step: 
Step 9
Step Subject: 
Tax, Credits & Checkoff Contributions
Year: 
2016

A lump-sum distribution occurs when, in one tax year, you receive the total balance from the pension or profit-sharing plan of an employer due to termination of employment, termination of the plan, or death of the employee.

Iowa lump-sum tax applies only if IRS form 4972 was used to compute the federal tax on any portion of the lump-sum distribution. If there is no federal lump-sum tax, then there is no Iowa lump-sum tax.

Iowa Residents:

Enter 25% of the federal tax from IRS form 4972 on line 40 of the IA 1040. Include federal form 4972.

Part-Year Residents:

If a lump-sum distribution reported on federal form 4972 was received while an Iowa resident, 25% of the federal tax from form 4972 must be entered on line 40. Part-year residents who receive a lump-sum distribution while not an Iowa resident are not subject to Iowa lump-sum tax on that distribution. A copy of the federal form 4972 must be included.

Nonresidents:

Nonresidents receiving lump-sum distributions are not subject to Iowa lump-sum tax.

Married Separate Filers (including status 4):

Lump-sum tax is reported by the spouse who received the distribution.

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