Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 304 - Adjustments to Computed Tax and Tax Credits › Rule 701-304.50 - Taxpayers Trust Fund Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 2013, a
				  taxpayers trust fund tax credit is available for Iowa individual income tax.
				  The credit is available for all individual income tax filers, including
				  residents, nonresidents and part-year residents of Iowa, and individuals who
				  file as part of a composite return as described in rule
				  701-48.1 (422), as long as the
				  Iowa return is filed within the extended due date to file an Iowa return.
				  Therefore, a fiscal-year filer whose tax year does not begin on January 1 is
				  eligible to claim the taxpayers trust fund tax credit as long as the return is
				  filed within the extended due date of the Iowa return.
(1)
Calculation of the amount of tax
				credit.
The credit is calculated by taking the amount in the Iowa
				taxpayers trust fund and dividing it by the number of individual income
				taxpayers who filed Iowa returns by October 31 of the year preceding the year
				in which the credit is allowed.
EXAMPLE: There is $120 million in the Iowa taxpayers trust
				  fund at the end of the fiscal year ending June 30, 2013. There were 2,200,000
				  individuals who filed Iowa income tax returns by October 31, 2013, for tax
				  years beginning on or after January 1, 2012, but beginning before January 1,
				  2013. This results in an Iowa taxpayers trust fund tax credit of $54 for the
				  tax year beginning on or after January 1, 2013, but beginning before January 1,
				  2014 ($120,000,000 divided by 2,200,000 equals $54.55, which is rounded down to
				  the nearest whole dollar). All taxpayers who file their Iowa individual income
				  tax return by October 31, 2014, for the tax period beginning on or after
				  January 1, 2013, but beginning before January 1, 2014, will be entitled to
				  claim a $54 Iowa taxpayers trust fund tax credit.
If the amount of Iowa taxpayers trust fund tax credits
				  claimed on tax returns for a particular year is less than the amount
				  authorized, the difference will be transferred to the Iowa taxpayers trust fund
				  for the next year and will be available as an Iowa taxpayers trust fund tax
				  credit for the next year. There must be a balance in the Iowa taxpayers trust
				  fund of at least $30 million in order for the Iowa taxpayers trust fund tax
				  credit to be available.
EXAMPLE: There is $120 million in the Iowa taxpayers trust
				  fund at the end of the fiscal year ending June 30, 2013. The total amount of
				  Iowa taxpayers trust fund tax credit claimed on Iowa tax returns for tax years
				  beginning on or after January 1, 2013, but beginning before January 1, 2014,
				  which were filed on or before October 31, 2014, is $90 million. The difference
				  of $30 million will be transferred to the Iowa taxpayers trust fund for the
				  fiscal year ending June 30, 2014. The legislature approves an additional $60
				  million to be deposited in the Iowa taxpayers trust fund for the fiscal year
				  ending June 30, 2014. This will result in $90 million in the Iowa taxpayers
				  trust fund for the fiscal year ending June 30, 2014. If 2,200,000 individuals
				  file Iowa individual income tax returns for tax years beginning on or after
				  January 1, 2013, but beginning before January 1, 2014, by October 31, 2014,
				  this will result in a $40 Iowa taxpayers trust fund tax credit for the tax year
				  beginning on or after January 1, 2014, but beginning before January 1, 2015
				  ($90,000,000 divided by 2,200,000 equals $40.90, which is rounded down to the
				  nearest whole dollar).
(2)
Claiming the credit on the tax return.
The Iowa taxpayers
				trust fund is claimed on the amount of Iowa tax computed after all other
				nonrefundable credits allowed in division II of Iowa Code chapter 422
				(excluding the Iowa taxpayers trust fund tax credit) are deducted, after the
				amount of school district surtax described in rule
				701-42.1 (257,422) and emergency
				medical services income surtax described in rule
				701-42.2 (422D) is added, and
				after all refundable credits (excluding estimated payments and tax withheld)
				allowed in division II of Iowa Code chapter 422 are deducted. Any Iowa
				taxpayers trust fund tax credit in excess of the tax liability is not
				refundable and shall not be carried back to the tax year prior to the tax year
				in which the credit is claimed and cannot be carried forward to a tax year for
				any following year.
EXAMPLE: A taxpayer reported a tax liability of $100 on the
				  taxpayer's 2013 Iowa income tax return. The taxpayer claimed a $40 personal
				  exemption credit and a $25 franchise tax credit. This resulted in tax due of
				  $35 before applying the school district surtax. Taxpayer was subject to a $2
				  school district surtax which resulted in total tax due of $37. Taxpayer was
				  entitled to claim a $54 Iowa taxpayers trust fund tax credit, but only $37 of
				  credit could be applied on the 2013 Iowa return. The remaining $17 of credit
				  cannot be refunded, cannot be applied to a prior year tax liability, and cannot
				  be carried forward to be applied to a subsequent year tax liability.
This rule is intended to implement Iowa Code section
				  422.11E.