Other Refundable Credits

Line
62
Step
10
Step Subject
Credits
Instruction Year
2020

Enter the total of other credits from Part II of the IA 148 Tax Credits Schedule.

Adoption Tax Credit

An Adoption Tax Credit is available for individual income tax equal to the first $5,000 of unreimbursed expenses related to an adoption per each child placed in Iowa. There is no limit on the amount of income earned by an individual to be eligible for the credit. All claims for the adoption of a child cannot exceed the applicable limit based on the year the adoption became final.

The Adoption Tax Credit can only be claimed once the adoption has been finalized. Prior to tax year 2019, only qualified adoption expenses paid or incurred during the tax year are eligible for the credit claimed in that tax year. If qualified adoption expenses were paid or incurred in an earlier year, a timely amended return can be filed for that earlier year claiming the Adoption Tax Credit. Beginning in tax year 2019, all qualifying adoption expenses paid in or before the year the adoption is finalized must be claimed in the tax year the adoption is finalized, up to the credit limit, regardless of the prior year in which the expenses were paid.

EXAMPLE: Y and Z are married. Y and Z adopt a child who is permanently placed in Iowa. The adoption process begins in 2016 and becomes final in 2019. Because the adoption becomes final on or after January 1, 2017, Y and Z qualify for a maximum credit amount of $5,000. Additionally, because the adoption becomes final on or after January 1, 2019, Y and Z may claim an Iowa adoption tax credit for unreimbursed qualified adoption expenses paid or incurred prior to or in the year the adoption becomes final. Y and Z incur and pay unreimbursed qualified adoption expenses of $5,000 in 2016, $10,000 in 2017, $2,000 in 2018, and $2,000 in 2019. Y and Z jointly file their Iowa individual income tax return in 2019. Y and Z may claim an Iowa adoption tax credit of $5,000 on their 2019 Iowa income tax return. Y and Z are not allowed to amend a prior year return in an attempt to claim the credit for unreimbursed qualified adoption expenses paid or incurred prior to the tax year in which the adoption became final.

If additional qualifying expenses are paid after the year the adoption is finalized, and your previous expenses are under the credit limit, those expenses must be claimed in the year they were paid, up to the credit limit.

EXAMPLE: W and X are married. W and X adopt a child who is permanently placed in Iowa. The adoption process begins in 2018 and becomes final in 2019. Because the adoption becomes final on or after January 1, 2017, W and X qualify for a maximum credit amount of $5,000. W and X incur and pay unreimbursed qualified adoption expenses of $1,000 in 2018, and $1,000 in 2019. W and X jointly file their Iowa individual income tax return in 2019. W and X may claim the Iowa adoption tax credit in 2019 in the amount of $2,000. In 2020, W and X incur and pay $5,000 in unreimbursed qualified adoption expenses in connection to the adoption finalized in 2019. W and X may claim the remaining $3,000 credit on their jointly filed Iowa individual income tax return for 2020 for unreimbursed qualified adoption expenses incurred and paid in 2020. W and X shall not amend their 2019 return to reflect the additional unreimbursed qualified adoption expenses from 2020.

A part-year resident of Iowa may claim the credit if he/she was a resident of Iowa at the time the child was permanently placed.

The IA 177 is used to compute the credit and must be included with the Iowa income tax return. The tax credit must also be reported on the IA 148 Tax Credit Schedule using tax credit code 66. If multiple children are adopted in a tax year, complete a separate IA 177 for each Adoption Tax Credit and report each claim on a separate line on the IA 148. Any tax credit in excess of tax liability is refundable.

Any adoption expenses applied to the Adoption Tax Credit are excluded from the calculation of the Iowa itemized deduction for adoption expenses taken on line 20 of the IA 1040 Schedule A. The itemized deduction equals the expenses in excess of three percent of adjusted gross income. For example, if a taxpayer has $100,000 of adjusted gross income and $10,000 of adoption expenses, the taxpayer can claim a $5,000 Adoption Tax Credit and $2,000 of itemized deductions for adoption expenses. See line 37 for an example of the adoption expenses deduction.

The adoption tax credit may only be claimed by a person who adopted the child. When a married couple adopts a child together and the couple files jointly on the same return, the credit may only be claimed once between the couple. When any other two persons adopt a child together, including married persons filing separately on the same or different returns or any unmarried persons filing on separate returns, the credit must be divided between the adoptive parents. Two adoptive parents, other than persons who are married filing jointly, may agree to divide the credit in any way. The total adoption tax credit claimed for all years by both parents combined may not exceed the applicable limit based on the year the adoption became final.

Iowa Code section 422.12A

Biodiesel Blended Fuel Tax Credit

A retail dealer of diesel fuel who sells B5 or higher blends of biodiesel during the tax year at a retail motor fuel site can claim a Biodiesel Blended Fuel Tax Credit. B5 or higher blends are biodiesel blended fuels with a biodiesel content of 5% and higher by volume. Tank wagons are considered retail motor fuel sites.

The tax credit equals 3.5 cents per gallon of biodiesel with a blend between 5% and 10% biodiesel and 5.5 cents per gallon of biodiesel with a blend of 11% or higher. The IA 8864 is used to compute the credit and must be included with the Iowa income tax return.

The Biodiesel Blended Fuel Tax Credit must be reported on the IA 148 Tax Credits Schedule using tax credit code 52. Any tax credit in excess of tax liability is refundable. If the tax credit is earned by a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity. The credit is repealed on January 1, 2025.

Iowa Code section 422.11P

Claim of Right Tax Credit

A Claim of Right Tax Credit may be claimed by a taxpayer who repaid income during the 2020 tax year that was reported and taxed on a prior Iowa income tax return. To calculate the credit, recompute tax liability in the prior tax year excluding the repaid income. The Claim of Right Tax Credit equals the calculated reduction in tax liability in that prior year. However, it may be more advantageous to report the amount of repaid income as an income adjustment on line 24. You may claim either the Claim of Right Tax Credit or take a deduction of the amount repaid on line 24, but not both.

Example of Claim of Right Tax Credit: A taxpayer received a $5,000 bonus in 2018 and reported it on the 2018 Iowa return. In 2020 the taxpayer's employer advised that the bonus was awarded in error and was to be repaid. The bonus was repaid by the end of 2020. After recomputing the 2018 Iowa return, there is a $440 reduction in tax. The taxpayer may claim a credit of $440 on line 62 of the 2020 Iowa return or apply an income deduction of $5,000 on line 24.

The Claim of Right Tax Credit must be reported on the IA 148 Tax Credits Schedule using tax credit code 53. Any tax credit in excess of the tax liability is refundable.


Iowa Code section 422.5(11)

E15 Plus Gasoline Promotion Tax Credit

A retail dealer of gasoline who sells E15 plus gasoline during the tax year at a retail motor fuel site can claim an E15 Plus Gasoline Promotion Tax Credit. E15 plus gasoline is ethanol blended gasoline with an ethanol content between 15% and 69% by volume. Tank wagons are considered retail motor fuel sites.

The tax credit equals three cents per gallon of E15 plus gasoline sold between January 1 and May 31 or September 16 and December 31. The tax rate is ten cents per gallon sold between June 1 and September 15. The IA 138 form is used to compute the credit and must be included with the Iowa income tax return. A taxpayer may claim the E15 Plus Gasoline Promotion Tax Credit even if the taxpayer claims the Ethanol Promotion Tax Credit for the same ethanol gallons.

The E15 Plus Gasoline Promotion Tax Credit must be reported on the IA 148 Tax Credits Schedule using tax credit code 65. Any tax credit in excess of tax liability is refundable. If the tax credit is earned by a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity. The credit is repealed on January 1, 2025.

Iowa Code section 422.11Y

E85 Gasoline Promotion Tax Credit

A retail dealer of gasoline who sells E85 gasoline during the tax year at a retail motor fuel site can claim an E85 Gasoline Promotion Tax Credit. E85 gasoline is ethanol blended gasoline with an ethanol content between 70% and 85% by volume. Tank wagons are considered retail motor fuel sites.

The tax credit equals sixteen cents per gallon of E85 gasoline sold. The IA 135 form is used to compute the credit and must be included with the Iowa income tax return. A taxpayer may claim the E85 Gasoline Promotion Tax Credit even if the taxpayer claims the Ethanol Promotion Tax Credit for the same ethanol gallons.

The E85 Gasoline Promotion Tax Credit must be reported on the IA 148 Tax Credits Schedule using tax credit code 55. Any tax credit in excess of tax liability is refundable. If the tax credit is earned by a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity. The credit is repealed on January 1, 2025.

Iowa Code section 422.11O

Ethanol Promotion Tax Credit

A retail dealer of gasoline who sells ethanol gasoline during the tax year at a retail motor fuel site may be able to claim an Ethanol Promotion Tax Credit. Tank wagons are considered retail motor fuel sites.

Eligibility for the tax credit and the amount of the tax credit depends on whether the retail dealer attains a biofuel threshold percentage, and how many gallons of motor fuel are sold in a year. The biofuel threshold percentages for retail dealers who sell more than 200,000 gallons at all retail locations in a calendar year, and for dealers who sell 200,000 gallons or less at all retail locations in a calendar year, are shown below. The credit is repealed on January 1, 2021.

Biofuel Threshold Percentage

Calendar Year Sales of more than 200,000 gallons Sales of 200,000 gallons or less
2018 23% 19%
2019 25% 21%
2020 25% 25%

Effective for tax year 2011, retailers must declare whether they will calculate the tax credit companywide or separately for each retail motor fuel site. For any year in which the retail dealer has met the threshold, the tax credit is 8 cents for each gallon of pure ethanol sold. If the retail dealer misses the threshold by 2 percentage points or less, the tax credit equals 6 cents for each gallon of pure ethanol sold. If the retail dealer misses the threshold by more than 2 percentage points but not more than 4 percentage points, the tax credit equals 4 cents for each gallon of pure ethanol sold. If the retail dealer misses the threshold by 4 percentage points or more, then no tax credit is allowed.

The retail dealer determines its biofuel distribution percentage by summing the pure ethanol gallons and the pure biodiesel gallons sold during the calendar year, and dividing this sum by the total gasoline gallons sold during the calendar year. While the biodiesel gallons are included in the computation of the biofuel distribution percentage to determine if the retailer met the biofuel threshold percentage, only the pure ethanol gallons sold are used in determining the amount of the Ethanol Promotion Tax Credit.

Example: A retail dealer only operates one retail motor fuel site. The number of gallons of gasoline sold at this site in 2020 equals 112,500 gallons. This consisted of 22,500 gallons of E85, 5,000 gallons of E15, 80,000 gallons of E10, and 5,000 gallons not containing ethanol. The dealer also sold 15,000 gallons of diesel fuel at this site during 2020, of which 5,000 gallons was B11 (11% biodiesel). The pure ethanol gallons is 26,525 (22,500 x 79% = 17,775. 5,000 x 15% = 750. 80,000 x 10% = 8,000. 17,775 + 750 + 8,000 = 26,525). The pure biodiesel gallons sold is 550, or 5,000 x 11%. The total of 26,525 and 550, or 27,075, is divided by the total gasoline gallons sold of 112,500 to arrive at a biofuel percentage of 24%. Since this falls short, but by less than 2%, of the 25% threshold for calendar year 2020, the credit is 6 cents x 26,525, or $1,591.

The IA 137 form is used to compute the credit and must be included with the Iowa income tax return. A retail dealer of gasoline will be able to claim the Ethanol Promotion Tax Credit even if the dealer claims an E85 Gasoline Promotion Tax Credit or the E15 Plus Gasoline Promotion Tax Credit for the same tax year for the same ethanol gallons sold. For retail dealers of gasoline whose tax year is not on a calendar year basis, the retail dealer shall compute the tax credit on the gallons of pure ethanol sold during the year using the applicable credit amounts as shown above. The Ethanol Promotion Tax Credit must be reported on the IA 148 Tax Credits Schedule using tax credit code 64. Any tax credit in excess of tax liability is refundable. If the tax credit is earned by a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.

Iowa Code section 422.11N

Historic Preservation Tax Credit

A Historic Preservation Tax Credit is available for 25% of the qualified rehabilitation expenditures of eligible property in Iowa. This credit is administered by the Iowa Economic Development Authority and the State Historic Preservation Office of the Iowa Department of Cultural Affairs. When the tax credit is awarded, the taxpayer will receive a tax credit certificate number that must be reported on the IA 148 Tax Credits Schedule when the tax credit is claimed using tax credit code 56.

Applications must be filed during a limited registration period and a scoring system is used to select rehabilitation projects eligible for Historic Preservation Tax Credits. However, credits for small projects defined as projects with qualified rehabilitation expenditures up to $750,000 can apply at any time. The project must be completed within 36 months of the date on which the project agreement was signed.

Any tax credit in excess of tax liability is refundable. The Historic Preservation Tax Credit can be transferred to any person or entity. Awardees or transferees can choose to receive the award as a nonrefundable tax credit; in that case the tax credit is claimed on the IA 148 using tax credit code 05. If the tax credit is issued to a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.

Note: For Iowa income tax purposes, the increase in the basis of the rehabilitated property that would otherwise result from the qualified rehabilitation costs will be reduced by the amount of the tax credit received.

Iowa Code sections 404A and 422.11D

Renewable Chemical Production Tax Credit

A Renewable Chemical Production Tax Credit is available to an eligible business producing chemicals from biomass feedstock in the state. The tax credit equals five cents per pound of renewable chemicals produced in a calendar year to the extent such production exceeds the eligible business’s pre-eligibility production threshold. The credit is available for renewable chemicals produced on or after January 1, 2017, and on or before December 31, 2026.

The tax credit is available to businesses that apply to the Iowa Economic Development Authority. The maximum amount of credit that may be issued to an eligible business that has been in operation in the state for five years or less is $1 million. The maximum amount of credit, which may be issued to an eligible business that has been in operation in the state for more than five years is $500,000. An eligible business shall not receive more than five tax credits under the program.

When the tax credit is awarded, the taxpayer will receive a tax credit certificate number that must be reported on the IA 148 Tax Credits Schedule when the tax credit is claimed using tax credit code 69. Any tax credit in excess of tax liability is refundable. If the tax credit is issued to a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.

Iowa Code sections 15.315 - 15.321, 422.10B

Research Activities Tax Credit

An Iowa Research Activities Tax Credit is available for expenditures on research that is technological in nature as specified under the Federal Research Credit of Internal Revenue Code section 41 if the researching entity meets the following two requirements: the business must claim and be allowed a Federal Research Credit for the same taxable year, and the business must be engaged in manufacturing, life sciences, agriscience, software engineering, or aviation and aerospace. In addition, the business cannot be engaged in agricultural production or cannot be an agricultural cooperative, accountant, architect, collection agency, finance or investment company, publishing company, real estate company, retailer, transportation company, or wholesaler. The business also cannot be a contractor, subcontractor, builder, or contractor-retailer engaged in commercial and residential installation / repair including but not limited to HVAC installation / repair, plumbing and pipe fitting, security system installation, or electrical installation / repair. For more information, see Iowa Administrative Rule 701--42.11 and Department guidance on the tax credit changes.

The Iowa credit equals 6.5% of Iowa's apportioned share of qualifying expenditures for increasing research activities when claimed on the IA 128.

The tax credit can alternatively be calculated using the "Alternative Simplified Research Activities Tax Credit" method on form IA 128S with a 4.55% rate on a potentially higher amount of qualifying research expenditures. A taxpayer may choose each year how to compute the Research Activities Tax Credit for Iowa tax purposes.

The Research Activities Tax Credit must be reported on the IA 148 Tax Credits Schedule using tax credit code 58. Any tax credit in excess of tax liability is refundable. If the tax credit is earned by a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.

Iowa Code section 422.10

Supplemental Research Activities Tax Credit

Taxpayers who are approved by the Iowa Economic Development Authority under the High Quality Jobs Program can be awarded a Supplemental Research Activities Tax Credit claimed on either form IA 128 or IA 128S. The amount of the Supplemental Research Activities Tax Credit depends upon the gross receipts of the eligible business. For businesses with average gross revenues of $20 million or less, the supplemental credit cannot exceed 10% of the qualified research expenditures eligible for the Research Activities Tax Credit calculated using the IA 128.

For businesses with gross revenues exceeding $20 million, the supplemental credit cannot exceed 3% of qualified research expenditures. For Research Activities Tax Credits calculated using the IA 128S, see the form instructions for supplemental credit percentages.
When the tax credit is awarded, the taxpayer receives a tax credit certificate number that must be reported on the IA 148 Tax Credits Schedule when the tax credit is claimed using tax credit code 59. Any tax credit in excess of tax liability is refundable. If the tax credit is earned by a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.

Iowa Code sections 15.335 and 422.10

Venture Capital - Qualifying Business Tax Credit

A Venture Capital Tax Credit for Qualifying Business equals 25% of the equity investment made by “angel investors” in a qualifying business approved by the Iowa Economic Development Authority. The credit is refundable when claimed against the individual income tax.

When the tax credit is awarded, the taxpayer receives a tax credit certificate number that must be reported on the IA 148 Tax Credits Schedule when the tax credit is claimed using tax credit code 68.

Iowa Code sections 15E.43 and 422.11F

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