Iowa income tax deduction for 65% of the wages paid in the first 12 months of employment
Maximum deduction of $20,000 per employee
In addition to the Targeted Jobs Tax Credit
Ex-offender is Someone Who:
Has been convicted of a felony in Iowa or any other state or the District of Columbia or
Is on parole or
Is on probation for an offense other than a simple misdemeanor or
Is in a work release program or
Is still incarcerated or
Qualifies under the interstate probation and parole compact or
Is certified as an economically disadvantaged ex-offender for the targeted jobs tax credit
Can be any age; no age restrictions
Must be a new hire; a current employee who becomes an ex-offender does not qualify
May hold more than one job; each employer may take the deduction
Can be employed full or part time
Must pass the business’ probationary period, which is six months if an employer does not have a written policy
Cannot be hired to replace another employee who was terminated within the previous 12 months, unless the termination was for misconduct in connection with employment. If the employee left voluntarily, the ex-offender qualifies.
The employer claims the deduction on the Iowa 1040 individual income tax return under "other adjustments" or on the Iowa corporation income tax return under "other reductions."
The employer must submit a separate sheet with the tax return with the following information: the employee’s name, address, Social Security Number, date of hiring, and total wages paid.
Claiming the Maximum Amount
If 65% of the employee’s wages does not meet the $20,000 maximum in a single tax year, the balance may be claimed the following year as long as the employee worked fewer than 12 months the first year.
If a business employed an ex-offender before learning about this benefit, the employer may amend income tax returns to include the deduction. Returns can be amended within three years from the due date of the return.