Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 302 - Determination of Net Income › Rule 701-302.21 - Additional Deduction for Wages Paid or Accrued for Work Done in Iowa by Certain Individuals

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 1984, but
				  before January 1, 1989, a taxpayer who operates a business which is considered
				  to be a small business as defined in subrule 40.21(2) is allowed an additional
				  deduction for 50 percent of the first 12 months of wages paid or accrued during
				  the tax years for work done in Iowa by employees first hired on or after
				  January 1, 1984, or after July 1, 1984, where the taxpayer first qualifies as a
				  small business under the expanded definition of a small business effective July
				  1, 1984, and meets one of the following criteria.
A handicapped individual domiciled in this state at the time
				  of hiring.
An individual domiciled in this state at the time of hiring
				  who meets any of the following conditions:
1. Has been convicted of a felony in this or
				any other state or the District of Columbia.
2. Is on parole pursuant to Iowa Code chapter
				906.
3. Is on probation pursuant to
				Iowa Code chapter 907 for an offense other than a simple misdemeanor.
4. Is in a work release program pursuant to
				Iowa Code chapter 247A.
An individual, whether or not domiciled in this state at the
				  time of the hiring, who is on parole or probation and to whom the interstate
				  probation and parole compact under Iowa Code section
				  913.40 applies.
For tax years beginning on or after January 1, 1989, the
				  additional deduction for wages paid or accrued for work done in Iowa by certain
				  individuals is 65 percent of the wages paid for the first 12 months of
				  employment of the individuals, not to exceed $20,000 per individual.
				  Individuals must meet the same criteria to qualify their employers for this
				  deduction for tax years beginning on or after January 1, 1989, as for tax years
				  beginning before January 1, 1989.
For tax years ending after July 1, 1990, a taxpayer who
				  operates a business which does not qualify as a small business specified in
				  subrule 40.21(2) may claim an additional deduction for wages paid or accrued
				  for work done in Iowa by certain convicted felons provided the felons are
				  described in the four numbered paragraphs above and the following unnumbered
				  paragraph and provided the felons are first hired on or after July 1, 1990. The
				  additional deduction is 65 percent not to exceed $20,000 for the first 12
				  months of wages paid for work done in Iowa.
The qualifications mentioned in subrules 40.21(1), 40.21(4),
				  40.21(5) and 40.21(6) and in subrule 40.21(3), paragraphs
"f"
and
"g,"
apply to the additional deduction for work done in
				  Iowa by a convicted felon in situations where the taxpayer is not a small
				  business as well as in situations where the taxpayer is a small
				  business.
The additional deduction applies to any individual hired on
				  or after July 1, 2001, whether or not domiciled in Iowa at the time of hiring,
				  who is on parole or probation and to whom either the interstate probation and
				  parole compact under Iowa Code section
				  907A.1 or the compact for adult
				  offenders under Iowa Code chapter 907B applies. The amount of additional
				  deduction for hiring this individual is equal to 65 percent of the wages paid,
				  but the additional deduction is not to exceed $20,000 for the first 12 months
				  of wages paid for work done in Iowa.
(1) The additional deduction shall not be
				allowed for wages paid to an individual who was hired to replace an individual
				whose employment was terminated within the 12-month period preceding the date
				of first employment. However, if the individual being replaced left employment
				voluntarily without good cause attributable to the employer or if the
				individual was discharged for misconduct in connection with the individual's
				employment as determined by the department of workforce development, the
				additional deduction shall be allowed.
The determination of whether an individual left employment
				  voluntarily without good cause attributable to the employer or if the
				  individual was discharged for misconduct is a factual determination which must
				  be made on a case-by-case basis.
(2) The term "small business" means a
				business entity organized for profit including but not limited to an individual
				proprietorship, partnership, joint venture, association or cooperative. It
				includes the operation of a farm, but not the practice of a profession. The
				following conditions apply to a business entity which is a small business for
				purposes of the additional deduction for wages:
a. The small business shall not have had more
				than 20 full-time equivalent employee positions during each of the 26
				consecutive weeks within the 52-week period immediately preceding the date on
				which an individual for whom an additional deduction for wages is taken was
				hired. Full-time equivalent position means any of the following:
1. An employment position requiring an
				average work week of 40 or more hours;
2. An employment position for which
				compensation is paid on a salaried full-time basis without regard to hours
				worked; or
3. An aggregation of
				any number of part-time positions which equal one full-time position. For
				purposes of this subrule each part-time position shall be categorized with
				regard to the average number of hours worked each week as a one-quarter, half,
				three-quarter, or full-time position, as set forth in the following table:
Average Number of Weekly
							 Hours
Category
More than 0 but less than 15
¼
15 or more but less than 25
½
25 or more but less than 35
¾
35 or more
1 (full-time)