Federal Income Tax Refund / Overpayment Received in 2021

Step Subject
Federal Tax Addition and Deduction
Instruction Year

If you received a refund of federal income tax during 2021:

You must report the amount on this line. It must be reported even if you used the standard deduction on the prior year's Iowa return. The federal refund must be included on this line because you benefited from being able to deduct federal taxes on the prior year's Iowa return, which reduced your Iowa taxable income for that year. The amount reported on this line should not exceed the total amount of any federal tax deduction taken on the prior year(s) Iowa return.

Note: Economic Impact Payments received separately from your federal income tax refund are not reported as income on the IA 1040 nor do they reduce the amount of your reportable federal refund on line 27 of the IA 1040.

Include the following:

  • The refund you received from your 2020 federal tax return, this includes any additional federal refund received as a result of an adjustment made on your 2020 return to exclude $10,200 of unemployment compensation.
  • To find the amount you received, check your records or call the IRS at 800-829-1040. This information is not available from the Iowa Department of Revenue.
  • Any federal refunds received in 2021 for other years that were amended or filed late
  • Any portion of the federal refund received in 2021 due to excess FICA payments or the Fuel Tax Credit from federal form 4136 if they were claimed as a federal tax payment on line 31 of the 2020 Iowa return or line 33 of Iowa returns prior to 2020.
  • Any portion of the federal refund that represents overpayment of Deemed Repatriation of Deferred Foreign Income.

Federal estimated tax

If you chose to have any part of an overpayment of federal income tax credited to estimated tax payments for 2021, the amount should be claimed as 2021 estimated tax paid on line 31. The total federal overpayment must also be reported on line 27.

Do not include the federal refund in the following situations:

The portion of the federal refund from the following:

  • Recovery Rebate Credit
  • Earned Income Tax Credit
  • Additional Child Tax Credit
  • First-Time Homebuyer Credit
  • Existing Homebuyer Credit
  • Refundable Education Credit
  • Refundable Adoption Tax Credit

You moved to Iowa in 2021:

You are filing an Iowa return for 2021 for the first time because you moved into Iowa during the year. A refund of federal tax received in 2021 is not reported if the tax was not deducted from Iowa income in a prior year.

You were a nonresident:

You were a nonresident for the tax year of the refund and were not required to file an Iowa return for that year.

You did not deduct federal tax in the refund year:

The refund you received was from a year in which you did not take a deduction for the payment of federal tax because your income was less than the minimum amount for paying Iowa tax or your tax for that year was calculated using the alternate tax computation.

Married Separate Filers:

If the refund received in 2021 was from a jointly-filed federal return, it must be divided between spouses in the ratio of the spouses' net incomes in the year for which the refund was issued.

Example: A 2020 federal refund received in 2021 would be prorated using the spouses' net incomes from the 2020 Iowa return.

For purposes of reporting on line 27, the refund must be prorated in this manner even if the refund itself was divided between spouses in some other way, either by mutual agreement or other requirement.

Example of how to prorate:

Your income is $10,500
Spouse's income is $15,500
Total: $26,000
Federal refund: $1,200

Divide your income by total income: $10,500 divided by $26,000 = 40%
The spouse's income is, therefore, 60% of their combined income.

In this example, line 27 is $720 (60%) of the federal refund for the spouse, and $480 (40%) of the federal refund for you.

(Other examples of how to prorate)

Go to Line 26

Go to Line 28

Source URL: https://tax.iowa.gov/expanded-instructions/federal-income-tax-refund-overpayment-received-2021