HOW TO PRORATE
Taxpayers using filing status 3 or 4
may be required to prorate (divide) certain entries on the IA1040, such
as taxable Social Security benefits, Federal income tax refunds, estimated
Federal tax payments, itemized deductions, etc.
Example 1: How a husband and wife
would prorate a Federal refund:
2001 Federal refund received in 2002
from a jointly filed return: $1,000
Husband has net income of $15,000 on the 2001 IA 1040.
Wife has net income of $30,000 on the 2001 IA 1040.
Total net income: $45,000 on the 2001 IA 1040.
Divide wifes net income by total
The result is the percent of total income earned by the wife.
(Wifes net income) $30,000 = 66.7%
(Total of husbands and wifes net income) $45,000
Then take $1,000 X 66.7% = $667. This
is the wifes portion of the refund.
The husbands portion is
$1,000 - $667 = $333, which is entered on line 27 in the other column.
These two amounts are entered on line 27 of the 2002 IA 1040.
Note: Round to the nearest one-tenth
of a percent. For example, 66.74% becomes 66.7% and 66.75% becomes 66.8%
Example 2: How to prorate Social Security
Husband receives Social Security benefits
Wife receives Social Security benefits of $20,000
Total benefits are $50,000
Divide the husbands benefits -
$30,000 - by the total benefits - $50,000.
The result - 60% - is the percent of total benefits earned by the husband.
Complete the Iowa Social Security worksheet
to determine what amount is taxable to Iowa. In this example, the total
taxable Social Security benefits is $8,000. Now prorate the $8,000 between
husband and wife.
Multiply $8,000 by 60%, which equals
$4,800. This is the husbands portion of taxable Social Security
benefits to be entered on line 13.
The wifes portion is $8,000 - $4,800 = $3,200 which is entered on
line 13 in the other column.
Example 3. Federal estimated tax payment
Husband has income of $75,000 that is
not subject to Federal withholding.
Wife has income of $8,000 that is not subject to Federal withholding.
Their total income is $83,000.
The estimated Federal tax payments for this year totaled $18,000.
Divide the husbands income by
the total. The result is the percent of income earned by the husband.
Husband's income not subject to Federal
withholding = $75,000 = 90.36% (90.4%)
[Total of husband and wifes income not subject to Federal
withholding = $83,000]
Multiply $18,000 by 90.4% = $16,272. This
is husbands portion to be entered on line 32.
The wifes portion is $18,000 - $16,272 = $1,728, which is entered on
line 32 in the other column.