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STEP 6 FEDERAL TAX ADDITION AND DEDUCTION.

27. FEDERAL INCOME TAX REFUND/OVERPAYMENT RECEIVED IN 2009.

If you received a refund of federal income tax during 2009, you must report the amount on this line. It must be reported even if you used the standard deduction on the prior year’s 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:

  • The refund you received from your 2008 federal tax return
  • To find the amount you received, check your records or call the IRS at 1-800-829-1040. This information is not available from the Iowa Department of Revenue.

  • Any refunds received in 2009 for other years that were amended or filed late
  • Any portion of the federal refund received due to the Motor Fuel Tax Credit or the Recovery Rebate Credit must be reported on the Iowa return.

If you chose to have any part of an overpayment of federal income tax credited to estimated tax payments for 2009, the amount should be claimed as 2009 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 Tax Credit, Additional Child Tax Credit, or First-time Homebuyer Credit.
  • You are filing an Iowa return for 2009 for the first time because you moved into Iowa during the year. A refund of federal tax received in 2009 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.
  • The $250 federal payment made to Social Security recipients, veterans, and railroad retirees in 2009.

Married Separate Filers: If the refund received in 2009 was from a jointly-filed federal return, it must be divided between spouses in the ratio of the spouses’ net incomes in the year for which the refund was issued.

Example: A 2008 federal refund received in 2009 would be prorated using the spouses’ net incomes from the 2008 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:

Your income is $10,500
Spouse’s income is $15,500
Total: $26,000
Federal refund: $1,200

Divide your income by total income: $10,500 divided by $26,000 = 40%
The spouse’s income is, therefore, 60% of their combined income.

In this example, line 27 is $720 (60%) of the federal refund for the spouse, and $480 (40%) of the federal refund for you.

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