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26. NET INCOME. Subtract
line 25 from line 15 and enter the result.
QUALIFICATIONS FOR EXEMPTION FROM TAX
If you qualify for the low income exemption as explained below, enter the words “low income exemption” in the area to the left of your net income figure on line 26. Enter zero on line 58 and complete the remainder of the return.
Even if you owe no tax, you must file an
income tax return to get a refund of any Iowa tax withheld. If you
are exempt from tax, you may want to change your
IA W-4 form with your employer to eliminate state withholding from your
wages.
Iowa Child and Dependent Care Credit
If you qualify for the Iowa Child and Dependent Care Credit, you will need
to file an Iowa return to claim that credit, even if you have no refund due
to you.
The following income must be included when determining if you are eligible for the $9,000 exemption or the $13,500 exemption.
a. The incomes of both husband and wife must be combined to determine if you meet this exemption.
b. The amount of any pension exclusion taken on line 21 of the IA1040.
c. Any amount of lump-sum distribution separately taxed on Federal form 4972.
d. Any net operating loss carryover.
Iowa minimum tax
IMPORTANT: The low income exemption DOES NOT apply to a liability for Iowa
minimum tax. Taxpayers who have a liability for Iowa minimum tax (from form IA
6251) are required to file an Iowa return even if they have no regular
Iowa income tax liability.
FILING STATUS 1, SINGLE:
If you are using filing status 1 (single), you are exempt from Iowa tax if
you meet any of the following three conditions:
a. Your net income from all sources, line 26, is $9,000 or less and you are not claimed as a dependent on another person’s Iowa return.
b. Your net income from all sources, line 26, is less than $5,000 and you are claimed as a dependent on another person’s Iowa return.
c. You were a nonresident or part-year resident and had net income from Iowa sources of less than $1,000. To review instructions for “Iowa-source income,” see the instructions for lines 1-26 of the IA126. If Iowa tax was withheld, you must complete the IA1040 and the IA126 in order to receive a refund of the tax.
ALL OTHER FILING STATUSES:
If you are filing married filing jointly, married filing separately on a combined
return, head of household, or qualifying widow(er), you are exempt from
Iowa tax if you meet either of the following conditions:
a. Your net income from all sources, line 26, is $13,500 or less and you are not claimed as a dependent on another person’s Iowa return.
b. You were a nonresident or part-year resident and had net income from Iowa sources of less than $1,000. To review instructions for “Iowa-source income,” see the instructions for lines 1-26 of the IA126. If Iowa tax was withheld, you must complete the IA1040 and the IA126 in order to receive a refund of the tax.
Married Separate Filers:
Married taxpayers filing married filing separately on a combined return or married filing separate returns must use the combined income of both spouses in determining eligibility for exemption from tax.
If either spouse has a net operating loss that is carried back or forward, then the other spouse cannot use the low income exemption. If the spouse with the net operating loss chooses not to carry the loss back or forward, then the other can claim the low income exemption. A statement must be attached to the return saying that the spouse with the net operating loss will not carry it back or forward.