Income Tax Benefit for Iowa Employers Who Hire Ex-Offenders

Iowa employers who meet specific criteria are allowed an additional deduction on their Iowa income tax returns for hiring ex-offenders.

See Department Rules and Regulations 40.21.

Benefit for Hiring Ex-offenders

Ex-offender is Someone Who:

Qualifying Ex-offender

Claiming the Deduction

The employer claims the deduction on the Iowa 1040 individual income tax return under "other adjustments" or on the Iowa corporation income tax return under "other reductions."

The employer must submit a separate sheet with the tax return with the following information: the employee’s name, address, Social Security Number, date of hiring, and total wages paid.

Claiming the Maximum Amount

If 65% of the employee’s wages does not meet the $20,000 maximum in a single tax year, the balance may be claimed the following year as long as the employee worked fewer than 12 months the first year.

Amending Returns

If a business employed an ex-offender before learning about this benefit, the employer may amend income tax returns to include the deduction. Returns can be amended within three years from the due date of the return.

10/20/10