Complete the IA 1040, showing income from all sources, similar to your federal return.

Show gambling winnings on line 13.

Take eligible gambling losses on IA Schedule A (pdf). Gambling losses are deductible only to the extent of gambling winnings reported on IA 1040, line 13.  The gambling loss amount entered on your IA Schedule A shall only include losses from wagering transactions, and does not extend to business expenses incurred in the trade or business of gambling.

Complete the return through line 47.

Then use the IA 126 (pdf) to determine your credit based upon the percentage of Iowa income to total income.

This credit is taken on line 48.

Include a copy of your federal return.