65. IOWA
EARNED INCOME TAX CREDIT.
The Iowa Earned Income Tax Credit is a refundable credit.
This credit is available
only to taxpayers who qualify for the federal Earned Income Tax Credit
(EITC).
To find out if you qualify
for federal EITC, see the IRS
EITC information or call the IRS at 18008291040.
Additional Iowa Eligibility Requirements
In some cases, taxpayers
may be eligible for the federal EITC, but not be eligible for the
Iowa EITC. For example:
 If you have 3 qualifying children, your federal earned income and Adjusted
Gross Income (AGI) must both be less than $40,295 ($43,415 if married filing jointly)
to qualify for an Iowa EITC.
 If you have 2 qualifying children, your federal earned income and AGI must both be less than
$40,295 ($43,415 if married filing jointly) to qualify for an Iowa
EITC.
 If you have 1 qualifying child, your federal earned income and AGI must both be less than
$35,463 ($38,583 if married filing jointly) to qualify for an Iowa
EITC.
 If you have no qualifying children, your federal earned income and AGI must both be less than $13,440 ($16,560 if married filing
jointly) to qualify for an Iowa EITC.
Calculating the Iowa
EITC
If you meet the eligibility requirements above, this is how to calculate the Iowa EITC in various situations:
Situation A
Calculate the Iowa EITC by
multiplying your federal EITC by .07 (7.0%) in these 4 scenarios:
You must recalculate your federal EITC before calculating your Iowa EITC in situations B through
F as follows:
(NOTE: This recalculation does not affect the EITC amount
entered on your federal return. It is required only to determine
the correct Iowa EITC. The amount of income used in making
this recalculation will be the same income used to calculate
the federal EITC. In those cases where the federal EITC is the
same using either earned income or AGI, earned income
should be used in the recalculation.)
Situation B
If you filed any federal status, have 3 qualifying children, and your
income is under $12,570:
Use the federal EITC table and take 7% of the federal EITC for 2 qualifying
children instead of 3 qualifying children using the same income.
Example: A joint return is filed with income of $11,525 and three qualifying
children. The federal EITC is $5,186 for three children, and is $4,610
for two children. The Iowa EITC is 7% of $4,610, or $323.
Situation C
If you filed a joint federal
return, 0
qualifying children
and have income over $5,970
–
 The federal credit is 7.65% of earnings up to $5,970; maximum
credit of $457.
 The maximum credit
is $457 for incomes between $5,970 and $10,590.
 The credit phases out at a rate of 7.65% of earnings above $10,590
 No credit is available once earnings are $16,560.
Worksheet: Joint federal
return; 0 qualifying children, and income over $5,970
1)
Income used to compute federal EITC 


2) Subtract $10,590 
— 
10,590 
3) Subtract line
2 from line 1. If less than zero, enter zero. 


4) Multiply line
3 by 7.65% 


5) Recalculated federal
EITC. Subtract line 4 from $457. 


6)
Iowa EITC. Multiply line 5 by 7%. 


Example: Joint federal
return; 0 qualifying children, and income over $5,970
A
joint federal return is filed for a family with no children. The
income used in the calculation of the federal EITC is $15,000.
1)
Income used to compute federal EITC 

15,000 
2)
Subtract $10,590 
— 
10,590 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 

4,410 
4)
Multiply line 3 by 7.65% 

337 
5)
Recalculated federal EITC. Subtract line 4 from $457. 

120 
6)
Iowa EITC. Multiply line 5 by 7%. 

8 
Situation D
If you filed a joint federal
return, 1
qualifying child and have income over $8,950 –
1)
Income used to compute federal EITC 


2)
Subtract $19,540 
— 
19,540 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 


4)
Multiply line 3 by 15.98% 


5)
Recalculated federal EITC. Subtract line 4 from $3,043. 


6)
Iowa EITC. Multiply line 5 by 7%. 


Example:
Joint federal return; 1 qualifying child, and income over $8,950
A joint
federal return is filed for a family with 1 child. The income
used in the calculation of the federal EITC is $30,000.
1)
Income used to compute federal EITC 

30,000 
2)
Subtract $19,540 
— 
19,540 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 

10,460 
4)
Multiply line 3 by 15.98% 

1,672 
5)
Recalculated federal EITC. Subtract line 4 from $3,043. 

1,371 
6)
Iowa EITC. Multiply line 5 by 7%. 

96 
Situation E
If you filed a joint
federal return, 2 or 3 qualifying children
and have income over $12,570
–
 The federal credit is
40% of earnings up to $12,570; maximum credit of $5,028.
 The maximum credit is
$5,028 for incomes between $12,570 and $19,540.
 The credit phases out at a rate of 21.06% of earnings above $19,540.
 No credit is available once earnings are $43,415.
Worksheet: Joint federal
return; 2 or 3 qualifying children, and income over $12,570
1)
Income used to compute federal EITC 


2)
Subtract $19,540 
— 
19,540 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 


4)
Multiply line 3 by 21.06% 


5)
Recalculated federal EITC. Subtract line 4 from $5,028. 


6)
Iowa EITC. Multiply line 5 by 7%. 


Example:
Joint federal return; 2 or 3 qualifying children, and income over $12,570
A joint
federal return is filed for a family with 2 children. The income
used in the calculation of the federal EITC is $40,000.
1)
Income used to compute federal EITC 

40,000 
2)
Subtract $19,540 
— 
19,540 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 

20,460 
4)
Multiply line 3 by 21.06% 

4,309 
5)
Recalculated federal EITC. Subtract line 4 from $5,028. 

719 
6)
Iowa EITC. Multiply line 5 by 7%. 

50 
Situation F
If you filed other than a joint return and had 3
qualifying children
and have income over $12,570:
 The federal credit
is 40% of earnings up to $12,570; maximum credit of $5,028.
 The maximum credit
is $5,028 for incomes between $12,570 and $16,420.
 The credit phases out at a rate of 21.06% of earnings above
$16,420.
 No credit is available once earnings are $40,295.
Worksheet: Other than
joint federal return, 3 qualifying children, and income over $12,570
1)
Income used to compute federal EITC 


2)
Subtract $16,420 
— 
16,420 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 


4)
Multiply line 3 by 21.06% 


5)
Recalculated federal EITC. Subtract line 4 from $5,028. 


6)
Iowa EITC. Multiply line 5 by 7%. 


Example: Other than joint
federal return, 3 qualifying children, and income over $12,570
A
return is filed using the “head of household” status
for a family with 3 children. The income used in the
calculation of the federal EITC is $35,000.
1)
Income used to compute federal EITC 

35,000 
2)
Subtract $16,420 
— 
16,420 
3)
Subtract line 2 from line 1. If less than zero, enter zero. 

18,580 
4)
Multiply line 3 by 21.06% 

3,913 
5)
Recalculated federal EITC. Subtract line 4 from $5,028. 

1,115 
6)
Iowa EITC. Multiply line 5 by 7%. 

78 
If you are filing an Iowa return only to claim EITC
If you qualify for the low income exemption as explained in the instructions
for line 26 and
are filing an Iowa return only to claim a refund of the Iowa EITC, enter
the words “low income exemption” in the area to the left of your
net income figure on line 26. Enter zero on line 59. Enter the amount of your
Iowa EITC on lines 65, 67, 68, 69, and 70.
NONRESIDENTS AND PARTYEAR RESIDENTS:
The Iowa EITC must be adjusted
using the following formula.
Iowa net income (line 26, IA 126)
divided by
Allsource net income of you and spouse
(line 26, IA 1040) 
X 
Iowa Earned Income
Tax Credit 
= 
credit on line 65 


The ratio
cannot exceed 100%. 



Married Separate
Filers: The
Iowa EITC must be divided between spouses
in the ratio of each spouse’s earned income
to the total earned income of both spouses. Earned income includes
wages, salaries, tips, other compensation, and net earnings
from selfemployment.
(Examples of how to prorate) 
Go to Line 64 Go to Line 66 