Iowa does not tax Social Security benefits. While Social Security benefits are excluded from income when computing tax, some Social Security benefits are included as income in determining whether a taxpayer has sufficient income to file an Iowa return, and are included as income for purposes of computing the alternate tax on line 39. NOTE: This also affects you if you are single and use the Tax Reduction Worksheet. The reportable Social Security benefit is calculated using the worksheet below and entered on Step 4 of the IA 1040.
SOCIAL SECURITY WORKSHEET
|1. Enter the amount from Box 5 of form(s) SSA-1099. If you filed a joint federal return, enter the totals for both spouses. Do not include Railroad Retirement benefits from form RRB-1099 here.||1.|
|2. Enter one-half of line 1 amount.||2.|
|3. Add amounts from the federal form 1040 on lines 1, 2b, 3b, 4b, and federal form 1040, Schedule 1 lines 10 through 21, plus one-half of any Railroad Retirement Social Security benefits from RRB-1099.* Include any depreciation and section 179 adjustment from line 14 of the Iowa 1040 and all other Iowa nonconformity adjustments to compute correct amount||3.|
|4. Enter the amount from line 2a of your federal 1040.||4.|
|5. Add lines 2, 3, and 4.||5.|
|6. Enter total adjustments from federal form 1040, Schedule 1, lines 23 through 32, plus any write-in adjustments you entered on the dotted line next to line 36.||6.|
|7. Subtract line 6 from line 5.||7.|
8. Enter one of the following amounts based on the federal filing status used on form 1040.
|9. Subtract line 8 from line 7. If zero or less, enter -0-. If line 9 is zero, none of the Social Security benefits are taxable.||9.|
|10. Enter one-half of line 9.||10.|
|11. Iowa Reportable Social Security benefits: Enter the smaller of line 2 or line 10 on Step 4, IA 1040.||11.|
* Line 3 Notes
Bonus Depreciation / Section 179 / and All Other Iowa Net Income Decoupling
Iowa taxpayers who received Social Security benefits in 2018 and claimed depreciation / section 179 on their federal returns or have other Iowa net income nonconformity may have to recompute their reportable benefits on the worksheet. For all other Iowa nonconformity adjustments see IA Schedule A.
Those who need to recompute the reportable Social Security benefits should add the adjustment from line 5 of Schedule IA 4562A and all other Iowa net income nonconformity to the other amounts shown on line 3 of the Social Security Worksheet from the federal return and the RRB 1099. The rest of the form is then completed with the amounts normally used to complete the worksheet from the federal 1040.
Include the following incomes or adjustments to income on line 3 if applicable.
(These were excluded from federal AGI.):
- foreign-earned income
- income excluded by residents of Puerto Rico or American Samoa
- proceeds from Savings Bonds used for higher education and
- employer-provided adoption benefits.
Railroad Retirement Benefits
Although Railroad Retirement benefits are not taxable, one-half of the benefits received must be used to determine the amount of Social Security benefits that are reportable to Iowa.
Interest from Federal Securities
For purposes of determining reportable Social Security benefits, you must also include interest from federal securities.
Married Separate Filers:
a. If both spouses received Social Security benefits, the reportable amount is allocated between the spouses in the ratio of the benefits received by one spouse to the total benefits received. (Examples of how to prorate)
b. If only one spouse received benefits, that spouse will report the calculated portion of the benefits.