HOW TO PRORATE

Taxpayers using filing status 3 or 4 may be required to prorate (divide) certain entries on the IA 1040, such as taxable Social Security benefits, federal income tax refunds, estimated federal tax payments, itemized deductions, etc.

Example 1: How spouses would prorate a federal refund:

2008 federal refund received in 2009 from a jointly-filed return: $1,000
Spouse A has net income of $15,000 on the 2008 IA 1040.
Spouse B has net income of $30,000 on the 2008 IA 1040.
Total net income: $45,000 on the 2008 IA 1040.

Divide Spouse B's net income by total income.
The result is the percent of total income earned by Spouse B.
(Spouse B’s net income) $30,000 = 66.7%
(Total of both spouse’s net income) $45,000

Then take $1,000 X 66.7% = $667. This is Spouse B’s portion of the refund, reported on line 27 in column B.
Spouse A’s portion is
$1,000 - $667 = $333, which is entered on line 27 in column A.
These two amounts are entered on line 27 of the 2009 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

Spouse A receives Social Security benefits of $30,000
Spouse B receives Social Security benefits of $20,000
Total benefits are $50,000

Divide Spouse A’s benefits - $30,000 - by the total benefits - $50,000.
The result - 60% - is the percent of total benefits earned by Spouse A.

Complete the Iowa Social Security worksheet to determine what amount is taxable to Iowa. In this example, the total taxable Social Security benefits are $8,000. Now prorate the $8,000 between spouses.

Multiply $8,000 by 60%, which equals $4,800. This is Spouse A’s portion of taxable Social Security benefits to be entered on line 13 in column A.
Spouse B’s portion is $8,000 - $4,800 = $3,200 which is entered on line 13 in column B.

Example 3. Federal estimated tax payment proration

Spouse A has income of $75,000 that is not subject to federal withholding.
Spouse B has income of $8,000 that is not subject to federal withholding.
Their total income not subject to federal withholding is $83,000.
The estimated federal tax payments for this year totaled $18,000.

Divide Spouse A’s income by the total. The result is the percent of income earned by Spouse A.

Spouse A's income not subject to federal withholding = $75,000 = 90.36% (90.4%)
[Total of both spouse’s income not subject to federal withholding = $83,000]

Multiply $18,000 by 90.4% = $16,272. This is Spouse A’s portion to be entered on line 32 in column A.
Spouse B’s portion is $18,000 - $16,272 = $1,728, which is entered on line 32 in column B.