A. Enter the amount of additional federal income
tax paid during 2008 for tax year 2007 and any other years before
2007. The amount of additional federal income tax paid is deductible
only if Iowa income tax returns were required to be filed for the
year for which the additional federal income tax was paid. Include
only the actual federal tax payments made in 2008, but DO NOT include
the following:
- penalties
- interest
- excise tax on early withdrawal of qualified plans
REFUNDABLE CREDITS on the federal 1040 may be included on
IA 1040, line 33, to the extent federal income tax was paid by applying the federal refundable credits, such as:
- earned income credit
- additional child tax credit
- others,
including the federal telephone excise tax credit
Any refundable federal credits that reduce federal income tax liability are allowed as a federal tax deduction — up to the amount of the federal tax paid by the refundable credits — on the Iowa return.
In determining the order of applying the refundable federal tax credits, the federal Earned Income Credit (EIC) should be applied first, followed by the additional child tax credit, and then any other refundable federal credits.
EXAMPLE:
The following example illustrates how a refundable
federal Earned Income Credit (EIC) on a timely-filed 2007 federal
1040 may affect line 33 of the 2008 Iowa return.
| FIRST:
FEDERAL TAX LIABILITY FOR TAX YEAR 2007 |
|
| Taxpayer's
Federal Tax Liability for Tax Year 2007: |
$ 2,000 |
| Subtract Taxpayer's Federal Withholding: |
— 500 |
| |
|
| Taxpayer's
Unpaid Federal Tax Liability for Tax Year 2007: |
1,500 |
SECOND: APPLY EIC TO UNPAID FEDERAL INCOME TAX BALANCE |
| Federal EIC
Calculated by Taxpayer for Tax Year 2007: |
$ 2,500 |
| Subtract the
$1,500 Federal in Federal Income Tax the Taxpayer Still Owes
for Tax Year 2007: |
— 1,500 |
| |
|
| Taxpayer Will Receive a Federal Refund of EIC: |
$ 1,000 |
THIRD:
LINE 33 ON IOWA RETURN FOR 2008
|
| 33. Additional
federal tax paid in 2008 for Tax Year 2007 |
$ 1,500 |
The
$1,500 federal tax liability paid by EIC for Tax Year 2007
is deductible on the 2008 Iowa return.
|
B. FICA payments in excess of $6,324 for
Social Security tax for each person and the motor vehicle fuel tax
credit from the 2008 federal return can be deducted as a federal
tax payment on line 33. Any excess FICA tax and federal fuel tax
refunded to you must be added back as a federal tax refund in the
year received. If you are self-employed, any self-employment tax
you pay cannot cause an excess FICA payment.
