Income earned in Iowa by residents and nonresidents is subject to payment of Iowa income tax. Iowa income tax returns must be filed with Iowa.
The only exception to this is wages earned in Iowa by Illinois residents. Because of a reciprocal agreement with Illinois, these wage earners file income tax returns with Illinois. Illinois residents earning wages or salary in Iowa do not pay Iowa income tax, nor are their wages subject to withholding of Iowa income tax.
Residents of all other states are subject to Iowa tax on wages earned in Iowa.
Iowa Residents as Employees
The wages of Iowa residents working in Iowa are subject to Iowa withholding.
A film or television production company that hires Iowa residents as employees working in Iowa must register with the Iowa Department of Revenue as a withholding agent. You may apply online. The application requires the employer’s Federal Identification Number, which should be obtained before filing the state application.
All resident employees should complete the Iowa W-4 (pdf), which is in addition to the federal W-4.
Nonresidents as Employees
The wages earned from film or television production companies by nonresident employees in Iowa are subject to Iowa income tax, but are not subject to Iowa withholding if the employer applies for exemption from withholding.
A film or television production company must submit the following information about nonresident employees in order to receive this exemption:
- the employees’ names
- the employees’ permanent mailing addresses
- the employees’ Social Security Numbers
- the estimated amounts the employees are to be paid
If additional nonresident employees are hired after the initial application for exemption is filed, an amendment listing the additional employees as previously explained must be submitted to the Department.
Please note: Although nonresident employee wages are not subject to Iowa withholding under these circumstances, those wages are still subject to Iowa income tax since the wages were earned in Iowa. Employees will still need to file an Iowa individual income tax return and pay Iowa income tax on the portion of their entire year’s wages earned in Iowa.
As previously explained, Illinois residents working for wages or salary in Iowa do not pay Iowa income tax on that income.