Reciprocal Agreement
graphic that says Iowa 2005 expanded 1040 instructions
Questions? E-mail Us!
2005 Expanded Instructions Home
graphic to click to go to the department's web page of e-file choices
graphic to click to go to 2005 expanded instructions topic index
graphic to click to go to 2005 expanded instructions line index


At this time, Iowa's only income tax reciprocal agreement is with Illinois.


IOWA AND ILLINOIS RECIPROCAL AGREEMENT

Any wages or salary made by an Iowa resident working in Illinois is taxable only to Iowa and not to Illinois. Any wages or salary made by an Illinois resident working in Iowa is taxable only to Illinois and not to Iowa.

An Iowa resident working for wages or salary in Illinois should complete and file Illinois form
IL-W-5-NR “Employee’s Statement of Nonresidence in Illinois” with the employer so that the employer will withhold Iowa income tax.

An Illinois resident working for wages or salary in Iowa should complete and file the IA 44-016 “Employee’s Statement of Nonresidence in Iowa” with the employer so that the employer will withhold Illinois income tax.

Iowa will tax any Iowa-source income received by an Illinois resident that is not from wages or salaries. Illinois will tax any Illinois-source income received by an Iowa resident that is not from wages or salaries. Examples of income that are not wages and salaries and, therefore, not covered under the Iowa-Illinois Reciprocal Agreement are Iowa gambling winnings and unemployment compensation for employment in Iowa.

If Illinois income tax has been mistakenly withheld from the wages or salary of an Iowa resident, the Iowa resident must file an Illinois income tax return to get a refund. Any questions on how to complete the Illinois return should be directed to the Illinois Department of Revenue at 1-800-732-8866.

Illinois residents who have had Iowa income tax withheld in error from their wages and have no other Iowa-source income must file an Iowa income tax return requesting a refund. They should complete Steps 1, 2, and 3 of the IA1040, show “0” on line 1 of Step 4 and line 26 of Step 5, write “Illinois resident tax withheld in error” on the face of the return. On the back of the IA1040 on lines 61, 67, 68, 69 and 70, enter the Iowa tax withheld, sign the return and attach copies of W-2s to the front of the return. Copies of Federal and Illinois returns must be enclosed.

Note to electronic filers:
You must complete the entire IA1040 and IA126 in order to receive a refund of Iowa tax withheld in error.