STEP 6 FEDERAL TAX ADDITION AND DEDUCTION
27. FEDERAL INCOME
TAX REFUND RECEIVED IN 2007.
you received a refund of Federal income tax during 2007, you must report the amount on this line. It must be reported even if you used the standard deduction on the prior years 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.
Include the following:
If you chose to
have any part of an overpayment of Federal income tax credited to
estimated tax payments for 2007, the amount
should be claimed as 2007 estimated
tax paid on line 32. The total Federal
overpayment must also be reported on line 27.
Do NOT include
the Federal refund in the following situations:
- Do not include any part of the refund received from earned income
credit, the additional child tax credit, or the credit for Federal
telephone excise tax paid.
- You are filing an Iowa return for 2007 for the first time because
you moved into Iowa during the year. A refund of Federal tax received
in 2007 is not reported if the tax was not deducted from Iowa income
in a prior 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.
- You were a nonresident for the tax year of the refund and were not required to file an Iowa return for that year.
Married Separate Filers: If the refund
received in 2007 was from a jointly filed Federal return, it
must be divided between the spouses in the ratio of the spouses net
incomes in the year for which the refund was issued. Example:
A 2006 Federal refund received in 2007 would be prorated using
the spouses net incomes from the 2006 Iowa return.
NOTE: 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.
(Examples of how to prorate)
Example of how to prorate:
Wifes income is $10,500
Husbands income is $15,500
Federal refund: $1,200
Divide wifes income by total income: $10,500 divided by $26,000 = 40%
The husbands income is, therefore, 60% of their combined income.
In this example, line 27 is $720 (60%) of the Federal refund for the husband, and $480 (40%) of the Federal refund for the wife.
Go to Line 26
Go to Line 28