reglab/statecodes huggingface dataset:
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.4 - Withholding on Nonresidents

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
General
				rules.
Payers of Iowa income to nonresidents are required to withhold
				Iowa income tax and to remit the tax to the department on all payments of Iowa
				income to nonresidents except as otherwise described in this rule. Withholding
				agents should use the following methods and rates in withholding for
				nonresidents:
a.
Wages or
				salaries.
Use the same withholding procedures, tables, formulas, and
				rates as are used for residents. See rule
				701-307.2 (422). Subrule
				307.4(5) is an exception to the general rule. In addition, in accordance with
				the reciprocal tax agreement between Iowa and Illinois described in 701-subrule
				300.13(1), Iowa withholding tax is not withheld on wages of Illinois residents
				who perform personal services in Iowa.
b.
Payments other than wages,
				salaries, and other compensation for personal services.
In lieu of
				using withholding tables or computer formulas to determine the amount of Iowa
				income tax to be withheld from payments made to nonresidents other than for
				salaries, wages, or other compensation for personal services, or income
				payments to nonresidents for agricultural commodities or products, Iowa income
				tax should be withheld at a rate of 5 percent of the amount of the payment.
				Subrule 307.4(6) describes the optional exemption from withholding of income
				payments made to nonresidents for the sale of agricultural commodities or
				products.
Nonresidents who prefer to make Iowa estimate payments
				  instead of having Iowa income tax withheld from income payments from Iowa
				  sources should refer to subrule 307.4(3) and rule
				  701-308.3 (422).
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.5 - Penalty and Interest

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Definitions.
For the purposes of this rule, the following
				definitions apply:
"Income statement"
means a statement that
				  conforms to the requirements of Iowa Code section
				  422.16(7)
"a."
An income statement includes, but is not limited to,
				  Internal Revenue Service (IRS) Form W-2, IRS Form 1099, and IRS Form
				  W-2G.
"Payee"
means an employee or other person
				  who had Iowa income tax withheld pursuant to Iowa Code section
				  422.16.
"Payer"
means an employer or other person
				  required to withhold and remit Iowa income tax pursuant to Iowa Code section
				  422.16.
(2)
Penalties for willful failure to
				file or furnish an income statement or for willfully filing or furnishing a
				false or fraudulent income statement.
a. Payers responsible for furnishing an
				income statement to a payee as described in paragraph
				307.3(4)
"d"
and for filing an income statement with the
				department as described in paragraph 307.3(4)
"e"
shall be
				subject to a $500 penalty for each instance of any of the following:
(1) Willful failure to furnish an income
				statement to a payee by January 31 of the year following the year in which
				income tax is withheld.
(2) Willful
				failure to file an income statement with the department by February 15 of the
				year following the year in which income tax is withheld.
(3) Willfully furnishing a false or
				fraudulent income statement to a payee.
(4) Willfully filing a false or fraudulent
				income statement with the department.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.6 - Withholding Tax Credit to Workforce Development Fund

Current through Register Vol. 47, No. 3, July 24, 2024
Upon payment in full of a certificate of participation or
				  other obligation issued to fund a job training program under Iowa Code chapter
				  260E, the community college which provided the training is to notify the
				  economic development authority of the amount paid by the employer or business
				  to the community college during the previous 12 months. The economic
				  development authority is to notify the department of revenue of this amount.
				  The department is to credit 25 percent of this amount to the workforce
				  development fund in each quarter for the next ten years from the withholding
				  tax paid by the employer or business. If the withholding tax paid by the
				  employer or business for a quarter is not sufficient to cover the sum to be
				  credited to the workforce development fund, the sum to be credited is to be
				  reduced accordingly. The aggregate amount from all employers to be transferred
				  to the workforce development fund in a year is not to exceed $4 million for
				  fiscal years beginning on or after July 1, 2001, but before July 1, 2014. The
				  aggregate amount is not to exceed $5,750,000 for the fiscal year beginning July
				  1, 2014, and the aggregate amount is not to exceed $6,000,000 for fiscal years
				  beginning on or after July 1, 2015.
This rule is intended to implement Iowa Code section
				  422.16A as amended by 2014 Iowa
				  Acts, House File 2460.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.7 - Ace Training Program Credits From Withholding

Current through Register Vol. 47, No. 3, July 24, 2024
The accelerated career education (ACE) program is a training
				  program administered by the Iowa department of economic development to provide
				  technical training in state community colleges for employees in highly skilled
				  jobs in the state to the extent that the training is authorized in an agreement
				  between an employer or group of employers and a community college for the
				  training of certain employees of the employer or group of employers. If a
				  community college and an employer or group of employers enter into a program
				  agreement for ACE training, a copy of the agreement is to be sent to the
				  department of revenue. No costs incurred prior to the date of the signing
				  between a community college and an employer or group of employers may be
				  reimbursed or are eligible for program job credits, including job credits from
				  withholding unless the costs are incurred on or after July 1, 2000.
(1) The costs of the ACE training program may
				be paid from the following sources:
a. Program
				job credits which the employer receives on the basis of the number of program
				job positions agreed to by the employer for the training program;
b. Cash or in-kind contributions by the
				employer toward the costs of the program which must be at least 20 percent of
				the total cost of the program;
c.
				Tuition, student fees, or special charges fixed by the board of directors of
				the community college to defray costs of the program;
d. Guarantee by the employer of payments to
				be received under paragraphs
"a"
and
"b"
of
				this subrule.
This rule pertains only to the program job credits from
				  withholding described in paragraph
"a."
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.8 - New Job Tax Credit From Withholding

Current through Register Vol. 47, No. 3, July 24, 2024
The Iowa industrial new jobs training program is a program
				  administered by the economic development authority for projects established by
				  a community college for the creation of jobs by providing education and
				  training of workers for new jobs for new or expanding industries. For employers
				  that have entered into an agreement with a community college under Iowa Code
				  chapter 260E, a credit equal to 1.5 percent of the wages paid by the employer
				  to each employee covered by the agreement can be taken on the Iowa withholding
				  tax return. If the amount of withholding by the employer is less than 1.5
				  percent of the wages paid to the employees covered by the agreement, the
				  employer can take the remaining credit against Iowa tax withheld for other
				  employees. An employee does not include a resident of Illinois who earns wages
				  in Iowa since these employees are not subject to Iowa withholding tax in
				  accordance with the Iowa-Illinois reciprocal tax agreement discussed in
				  701-subrule 300.13(1). The administrative rules for the Iowa industrial new
				  jobs training program administered by the economic development authority may be
				  found in 261-Chapter 5.
This rule is intended to implement Iowa Code section
				  260E.2 as amended by 2012 Iowa
				  Acts, Senate File 2212, and section
				  260E.5.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 307 - Withholding › Rule 701-307.9 - Supplemental New Jobs Credit From Withholding and Alternative Credit for Housing Assistance Programs

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Supplemental new jobs credit from withholding.
For eligible
				businesses approved by the economic development authority under Iowa Code
				section 15A.7, a credit equal to an
				additional 1.5 percent of the wages paid to employees in new jobs for these
				eligible businesses can be taken on the Iowa withholding tax return. This
				supplemental new jobs credit is in addition to the credit described in rule
				701-307.8 (260E). The
				administrative rules for the supplemental new jobs credit from withholding may
				be found in 261-paragraph 59.6(3)
"a."
(2)
Alternative credit for housing
				assistance programs.
As an alternative to the credit described in
				subrule 307.9(1) for eligible businesses in an enterprise zone, a business may
				provide a housing assistance program in the form of down payment assistance or
				rental assistance for employees in new jobs. A credit equal to 1.5 percent of
				the wages paid to employees participating in a housing assistance program may
				be claimed on the Iowa withholding tax return for wages paid prior to July 1,
				2009. Effective July 1, 2009, the alternative credit for housing assistance
				programs was repealed. The administrative rules for the enterprise zone program
				administered by the Iowa department of economic development may be found in
				261-Chapter 59.
This rule is intended to implement Iowa Code section
				  15A.7 and 2014 Iowa Code
				  sections 15E.196 and
				  15E.197.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 308 - Estimated Income Tax for Individuals › Rule 701-308.1 - Who Must Pay Estimated Income Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
General rule.
For tax years beginning on or after January 1,
				1990, estimated payments are required if the taxpayer's income tax liability
				attributable to incomes not subject to withholding is expected to be $200 or
				more. The amount of estimated tax paid must be used as a credit on the
				taxpayer's individual income tax return.
(2)
Joint estimate payments by
				married taxpayers.
A husband and wife may make a joint estimate tax
				payment on one form as if they were one taxpayer. If a joint estimate payment
				is made, but the husband and wife elect to file separate returns or separately
				on the combined return form, the estimate tax paid for the tax year by the
				husband and wife shall be allocated between the spouses on their returns in the
				proportion that each spouse's net income not subject to withholding tax relates
				to the combined net income of both spouses not subject to withholding
				tax.
(3)
Separate estimate
				tax payments by married taxpayers.
A husband and wife may each make
				separate estimate payments. If separate estimate payments are made by married
				taxpayers, each spouse is to claim only the estimate payments made by that
				spouse.
(4)
Examples of
				types of taxpayers who may be required to make estimate payments.
Listed below are examples of various types of taxpayers who may be required to
				make estimated tax payments. The list is for illustrative purposes and is not
				deemed to be all-inclusive.
1.
Self-employed.
An individual having taxable income from a
				trade or business where the individual has control of the work, the services
				rendered, and the fees and charges for services rendered or merchandise
				sold.
2.
Retiree.
An individual receiving pensions, annuities, and social security benefits or
				other incomes not subject to withholding after the taxpayer has withdrawn from
				active employment.
3.
Farmers and fishers.
Individuals deriving at least two-thirds
				of yearly income from farming or fishing activities.
4.
Nonresident.
Any
				individual who resides out of state and receives taxable income from an Iowa
				source which is not subject to withholding.
5.
Beneficiaries of estates and
				trusts.
Any resident or nonresident individual who is the recipient of
				income from an estate or trust from an Iowa source.
6.
Taxpayers with income in addition
				to wages.
An individual drawing salary or wages subject to withholding
				tax, having additional taxable income from an Iowa source which is not subject
				to withholding, such as interest, dividends, capital gains, rents, royalties,
				business income, or farm income.
7.
Agricultural worker.
Any worker receiving a wage or salary for
				agricultural labor which is excluded by law for withholding tax purposes.
This rule is intended to implement Iowa Code section
				  422.16.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 308 - Estimated Income Tax for Individuals › Rule 701-308.2 - Time for Filing and Payment of Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Time for filing.
a.
General rule.
The date for filing the first estimate tax
				payment is on or before the last day of the fourth month of the tax year. The
				estimate tax form is to be sent to: Estimate Processing, Iowa Department of
				Revenue, P.O. Box 10466, Des Moines, Iowa 50306.
b.
Special rule for farmers and
				fishers.
If the estimated gross income of a taxpayer from farming or
				fishing is at least two-thirds of the estimated gross income from all sources
				for the taxable year, one of the following three methods is available to the
				taxpayer for satisfying the requirement to make estimate tax payments.
(1) Make the first estimate payment on April
				30 and make the other three payments by the dates specified under subrule
				49.2(2).
(2) Make the entire
				estimate payment for the tax year by January 15 of the subsequent tax year and
				file the individual income tax return by April 30 of the subsequent tax
				year.
(3) File the individual
				income tax return and pay the tax in full on or before March 1 of the
				subsequent tax year.
c.
Amended estimate payments.
(1)
General rule.
Whenever a
				taxpayer who is required to make estimate payments has reason to believe that
				the anticipated income tax liability on which the estimate payments are based
				has increased or decreased, any subsequent estimate payments should be amended
				or adjusted accordingly.
(2)
Example.
A married couple is making joint estimate tax
				payments on a calendar year basis, anticipating taxable income of $8,500, with
				an estimated tax liability of $300. The taxpayers paid the first quarter
				installment of $75 by the due date of April 30 of the current year and the
				second installment of $75 on June 30. On July 15, real estate owned jointly by
				the taxpayers is sold, creating additional taxable income for the year of
				$7,500. The new tax liability for the tax year is $900 less the estimate
				payments of $150 already paid for the first and second quarters. There is a
				balance of $750 to be paid in two equal installments of $375 each by September
				30 of the current year and by January 31 of the succeeding year.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 308 - Estimated Income Tax for Individuals › Rule 701-308.4 - Special Estimated Tax Periods

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Short taxable year.
A
				taxpayer having a taxable year of less than 12 months must make estimated tax
				payments if anticipating an Iowa tax liability of $50 or more for that short
				tax year if that tax year began prior to January 1, 1990. In the case of short
				tax years beginning on or after January 1, 1990, taxpayers would be required to
				make estimated payments if their anticipated Iowa tax liabilities were $200 or
				more from incomes not subject to withholding.
(2)
Part-year resident.
a.
General rule.
Part-year
				residents moving into or out of the state must determine their Iowa estimated
				tax on the ratio of income from Iowa sources not subject to withholding tax to
				incomes from all sources.
b.
Example.
An individual moving into the state on April 15,
				having taxable income from an Iowa source which is not subject to withholding
				and an expected tax liability of $150, must make the first estimate payment of
				$50 by June 30 and pay the remaining balance of $100 in two equal installments
				of $50 each by September 30 and by January 31 of the succeeding year if the tax
				year for which the estimate payments were made began prior to January 1, 1990.
				A similar procedure for making estimate payments would be followed for tax
				years beginning on or after January 1, 1990, when no estimate payments would be
				required unless the anticipated state income tax liability for the balance of
				the tax year would be $200 or more.
This rule is intended to implement Iowa Code section
				  422.16.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 308 - Estimated Income Tax for Individuals › Rule 701-308.5 - Reporting Forms

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Resident forms.
Blank estimate tax forms are available from
				the department for resident taxpayers making state estimate payments.
(2)
Nonresident forms.
A
				special nonresident estimate tax form with instructions is available from the
				department for any nonresident wishing to make estimate tax payments in lieu of
				having Iowa income tax withheld by an Iowa withholding agent. The estimated
				payment should be submitted with the certificate or the release from
				withholding described in subrule 49.3(2).
This rule is intended to implement Iowa Code section
				  422.16.
Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 308 - Estimated Income Tax for Individuals › Rule 701-308.6 - Penalty-underpayment of Estimated Tax

Current through Register Vol. 47, No. 3, July 24, 2024
The civil penalty provided by the Internal Revenue Code for
				  underpayment of federal estimated tax also applies to persons required to make
				  payments of estimated tax under provisions of the Iowa Code. The Iowa penalty
				  for underpayment of estimated tax is computed on Form IA 2210 for individual
				  taxpayers other than farmers and fishers and Form IA 2210F for individuals who
				  have two-thirds of their gross annual incomes from farming or fishing
				  activities.
(1)
Exceptions
				which may avoid the underpayment penalty.
The following are the two
				exceptions under which taxpayers may avoid the penalty for underpayment of
				estimated tax:
a. Current year payments equal
				or exceed prior year's liability. Taxpayers may avoid the penalty for
				underpayment of estimated tax if the estimated tax payments and other tax
				payments for the current tax year, such as withholding tax, are equal to or
				exceed the tax liability for the prior tax year. The prior tax year must cover
				a 12-month period and there must have been a tax liability on the return for
				the prior year. For tax years beginning on or after January 1, 1987, the
				requirement that the return for the prior tax year must have had a tax
				liability is eliminated although the return must have covered a 12-month
				period.
b. Current year payments
				equal or exceed 80 percent, or 90 percent for tax years beginning on or after
				January 1, 1987, of the tax on the taxpayer's annualized income. Taxpayers may
				also avoid the penalty for underpayment of estimated tax, if their tax payments
				for the tax year are equal to or exceed 80 percent of the tax on the taxpayer's
				annualized income for periods from the first of the tax year to the end of the
				month preceding the month in which an installment of estimated tax is due. For
				tax years beginning on or after January 1, 1987, taxpayers may avoid the
				penalty for underpayment of estimated tax if their tax payments for the tax
				year are equal to or exceed 90 percent of the tax on the taxpayer's annualized
				income.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 401 - Partnerships › Rule 701-401.1 - General Rule

Current through Register Vol. 47, No. 3, July 24, 2024
An Iowa partnership, limited partnership, or limited
				  liability company required to file a return under the provisions of Iowa Code
				  subsection 422.15(2) 
				  shall be a partnership, limited partnership, or limited liability company
				  required to file a partnership return for purposes of federal income tax. A
				  partnership or limited liability company engaged in carrying on business in
				  this state is an Iowa partnership or an Iowa limited liability company. For tax
				  years beginning on or after January 1, 2013, a partnership, limited partnership
				  or limited liability company doing business in Iowa or deriving income from
				  real, tangible or intangible property located or having a situs in Iowa must
				  file an Iowa partnership return. For specific criteria related to doing
				  business in Iowa or deriving income from real, tangible or intangible property
				  located or having a situs in Iowa, see rule
				  701-52.1 (422). Iowa follows the
				  Treasury check-the-box regulation, 301.7701-3, for determination of the tax
				  status of partnerships or limited liability companies including single-member
				  limited liability companies.
This rule is intended to implement Iowa Code section
				  422.15 as amended by 2013 Iowa
				  Acts, Senate File 452.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 401 - Partnerships › Rule 701-401.2 - Partnership Returns

Current through Register Vol. 47, No. 3, July 24, 2024
Every partnership deriving income (1) from property owned
				  within this state or (2) from a business, trade, profession or occupation
				  carried on within the state must make a return of income regardless of the
				  amount of income or loss and regardless of the residence of the partners. For
				  tax years beginning on or after January 1, 2013, every partnership doing
				  business in Iowa or deriving income from real, tangible or intangible property
				  located or having a situs in Iowa must make a return of income regardless of
				  the amount of income or loss and regardless of the residence of the partners.
				  The return shall be made on the proper form and signed by one of the partners.
				  The return shall be made on the same period basis, calendar or fiscal, as the
				  partnership accounts are kept, irrespective of the fact the partners are
				  reporting their incomes on a different period basis. The return shall be filed
				  with the department on or before the last day of the fourth month after the
				  expiration of the tax year.
This rule is intended to implement Iowa Code section
				  422.15 as amended by 2013 Iowa
				  Acts, Senate File 452, and section
				  422.21.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 401 - Partnerships › Rule 701-401.3 - Contents of Partnership Return

Current through Register Vol. 47, No. 3, July 24, 2024
The return of a resident partnership or of a partnership with
				  one or more nonresident members, but whose income is derived entirely or
				  partially from sources within this state, shall state specifically (1) the net
				  income, and the capital gains or losses reported on the federal partnership
				  return, (2) the names and addresses of the partners, and (3) their respective
				  shares in said amounts.
This rule is intended to implement Iowa Code section
				  422.15.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 401 - Partnerships › Rule 701-401.4 - Distribution and Taxation of Partnership Income

Current through Register Vol. 47, No. 3, July 24, 2024
A partnership as such is not taxable but the members of a
				  partnership (including limited partnerships organized under Iowa Code chapter
				  488) are taxable (except as otherwise provided in 701-subrule 40.16(5)
				  respecting nonresident members) upon their distributable shares of the net
				  income of the partnership whether distributed to the partners or not. If the
				  result of the partnership operation is a net loss (i.e., excess of allowable
				  deductions from gross income) the loss may be deducted by the partners (except
				  as otherwise provided respecting nonresident members) in the same proportion
				  that net income would have been taxable to the partners. If the partner reports
				  income on the same taxable year basis as that of the partnership, the
				  distributable share of the net income (or loss) of the partnership for the
				  taxable year must be included in or deducted from gross income on the
				  individual return for that year. If, however, the taxable year of the partner
				  is different from that of the partnership, distributable shares must be
				  included in or the proportion of the loss deducted from gross income for the
				  year in which the taxable year of the partnership ends.
Residents of Iowa must report in total their distributable
				  share of partnership income or loss on their Iowa income tax return.
				  Nonresidents must report, for income tax purposes, their share of distributable
				  partnership income or loss as determined under 701-subrule 40.16(6).
This rule is intended to implement Iowa Code sections
				  422.7 and
				  422.15.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 403 - Apportionment of Income for Resident Shareholders of S Corporations › Rule 701-403.1 - Apportionment of Income for Resident Shareholders of S Corporations

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 1998, resident
				  shareholders of all S corporations which carry on business within and without
				  Iowa may, at their election, determine the S corporation income allocable to
				  sources within Iowa by allocation and apportionment of the S corporation
				  income. For tax years beginning on or after January 1, 2013, estates and trusts
				  with a situs in Iowa which are shareholders in S corporations which carry on
				  business within and without Iowa can take advantage of these apportionment
				  provisions. The criteria to determine whether the S corporation is carrying on
				  business within and without Iowa is set forth in 701-subrule 54.1(4).
For tax years beginning on or after January 1, 1997, a
				  shareholder in an S corporation which carries on business within and without
				  Iowa which has elected to apportion income and then elects not to apportion
				  income shall not reelect to apportion income for three tax years immediately
				  following the first tax year in which the shareholder elected not to apportion
				  income, unless the director of revenue consents to the election.
This rule is intended to implement Iowa Code section
				  422.5, subsection 1, paragraph
"j,"
as amended by 2013 Iowa Acts, Senate File
				  452.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 403 - Apportionment of Income for Resident Shareholders of S Corporations › Rule 701-403.4 - Computation of Net S Corporation Income

Current through Register Vol. 47, No. 3, July 24, 2024
After making the adjustments in Iowa Code section
				  422.35, net S corporation income
				  is computed by adding to or subtracting from the S corporation's ordinary
				  income (loss) from a trade or business those items of income, losses, and
				  expenses that flow directly to the shareholder whose separate treatment could
				  affect the tax liability of the shareholder. In computing the amounts of
				  income, losses, and expenses that flow directly to the shareholder, these items
				  of income, losses, and expenses, except for interest exempt from federal income
				  tax and itemized deductions for high-income individuals, must be reduced
				  proportionately to the amount that the sum of all like amounts of income,
				  losses, and expenses are reduced for federal income tax computations.
This rule is intended to implement Iowa Code section
				  422.8, subsection 2, as amended
				  by 1996 Iowa Acts, chapter 1197.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 403 - Apportionment of Income for Resident Shareholders of S Corporations › Rule 701-403.5 - Computation of Federal Tax on S Corporation Income

Current through Register Vol. 47, No. 3, July 24, 2024
The amount of federal income tax related to the items of
				  income, losses, and expenses from an S corporation is to be computed by
				  dividing the sum of the items of income, losses, and expenses by federal
				  adjusted gross income, and the result multiplied by the sum of the federal
				  income tax and the federal alternative minimum tax. This resulting tax figure
				  is to be reduced by the nonrefundable federal tax credits relating to the S
				  corporation income which are a reduction in tax rather than a payment of tax.
				  Credits that are deemed to be a payment of tax include, but are not limited to,
				  backup withholding on interest, dividends and other types of income, and credit
				  for motor vehicle fuel taxes.
For tax periods beginning prior to January 1, 2002, the
				  distribution received from the S corporation is reduced by 50 percent of the
				  federal tax paid by the shareholder on the S corporation income. For tax
				  periods beginning on or after January 1, 2002, the distribution received from
				  the S corporation is reduced by 100 percent of the federal tax paid by the
				  shareholder on the S corporation income.
This rule is intended to implement Iowa Code section
				  422.8, subsection 2, as amended
				  by 2002 Iowa Acts, House File 2078.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 403 - Apportionment of Income for Resident Shareholders of S Corporations › Rule 701-403.6 - Income Allocable to Iowa

Current through Register Vol. 47, No. 3, July 24, 2024
In order to determine the amount of income allocable to Iowa
				  from an electing S corporation, apply the allocation and apportionment rules in
				  701-Chapter 54.
This rule is intended to implement Iowa Code section
				  422.8, subsection 2, as amended
				  by 1996 Iowa
Acts, chapter 1197.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 403 - Apportionment of Income for Resident Shareholders of S Corporations › Rule 701-403.7 - Credit for Taxes Paid to Another State

Current through Register Vol. 47, No. 3, July 24, 2024
If a taxpayer elects to take advantage of the apportionment
				  provisions for a resident shareholder of an S corporation, then the taxpayer
				  may not take a credit against Iowa income tax for income taxes or taxes
				  measured by income paid to another state or foreign country on the S
				  corporation income. A taxpayer may claim a credit against Iowa income tax for
				  income taxes or taxes measured by income paid to another state or foreign
				  country on income other than S corporation income that may be earned in the tax
				  year.
This rule is intended to implement Iowa Code section
				  422.8.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.1 - Composite Returns

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years of nonresident partners, members, shareholders,
				  or beneficiaries which begin on or after January 1, 1987, a partnership,
				  limited liability company, S corporation, or trust may be allowed or be
				  required to file a composite return and pay the tax due on behalf of the
				  nonresident partners, members, shareholders, or beneficiaries. For tax years of
				  nonresident partners, members, shareholders, or beneficiaries which begin on or
				  after January 1, 1999, a partnership, limited liability company, S corporation,
				  or trust may elect or may be required to file a composite return and pay the
				  tax due on behalf of the nonresident partners, members, shareholders, or
				  beneficiaries. For tax years beginning on or after January 1, 1995,
				  professional athletic teams may be allowed or be required to file a composite
				  return and pay the tax due on behalf of nonresident team members. For tax years
				  beginning on or after January 1, 2008, nonresident trusts or estates which are
				  partners, members, shareholders or beneficiaries in partnerships, limited
				  liability companies, S corporations or estates or trusts may elect or may be
				  required to file a composite return and pay the tax due on behalf of the
				  nonresident trusts or estates.
This rule is intended to implement Iowa Code section
				  422.13 as amended by 2007 Iowa
				  Acts, House File 923, section 15.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.2 - Definitions

Current through Register Vol. 47, No. 3, July 24, 2024
For the purposes of this chapter:
"Employee"
means a nonresident member of a
				  professional athletic team as defined in subrule
				  701-40.46 (1).
"Partner"
includes a member of a limited
				  liability company which is treated as a partnership for tax purposes.
"Taxpayer"
means a partnership, limited
				  liability company, S corporation, professional athletic team, or trust which
				  files a return and pays the tax on behalf of the nonresident partners, members,
				  shareholders, employees, beneficiaries, estates or trusts.
"Tax year"
means the tax year of the
				  partners, shareholders, employees, beneficiaries, estates or trusts included in
				  the composite return.
This rule is intended to implement Iowa Code section
				  422.13.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.5 - Composite Return Required by Director

Current through Register Vol. 47, No. 3, July 24, 2024
The director may in accordance with rule
				  701-48.3 (422) require the
				  filing of a composite return under the following conditions.
(1) The director may require the filing of a
				composite return if the nonresident partners, shareholders, or beneficiaries do
				not file individual income tax returns and pay the tax due.
(2) Where some of the nonresident partners,
				shareholders, or beneficiaries file individual income tax returns and pay the
				tax due, but other nonresident partners, shareholders, or beneficiaries do not
				file individual returns, the director may require a composite return which
				includes the Iowa taxable income of those nonresident partners, shareholders,
				or beneficiaries who did not file individual returns.
(3) For tax years beginning on or after
				January 1, 2010, if it is determined that it is necessary for the efficient
				administration of Iowa individual income tax, the director may require the
				filing of a composite return for nonresidents other than nonresident partners,
				members, beneficiaries or shareholders in partnerships, limited liability
				companies, trusts or S corporations.
For example, the director may require a composite return in
				  situations where nonresident real estate brokers or nonresident insurance
				  agents who are independent contractors earn commission income from the sale of
				  real estate in Iowa or from insurance policies sold to Iowa residents.
This rule is intended to implement Iowa Code section
				  422.13 as amended by 2009 Iowa
				  Acts, Senate File 478, section 132.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.6 - Determination of Composite Iowa Income

Current through Register Vol. 47, No. 3, July 24, 2024
Because a composite return is filed on behalf of the
				  nonresident partners, shareholders, employees, or beneficiaries, it must be
				  based upon the tax year of the majority of its partners, shareholders,
				  employees, or beneficiaries. The composite return must be filed on Form IA
				  1040C, "Composite Iowa Individual Income Tax Return." Attach schedules as
				  necessary to explain the return. For the purposes of this rule, federal income
				  means federal ordinary income (loss) from trade or business activities plus
				  those items of income which flow through separately less expense items which
				  flow through separately to the partners, shareholders, or beneficiaries joining
				  in the filing of a composite return.
1. Adjustments to federal income. For
				partnerships and trusts, make those adjustments to federal income set forth in
				Iowa Code section 422.7. For S corporations, make
				those adjustments to federal income set forth in Iowa Code section
				422.35.
2. Apply the allocation and apportionment
				provisions of 701-Chapter 54 or rule
				701-40.46 (422) for allocation
				of compensation paid to nonresident employees of professional athletic
				teams.
3. Deduct one standard
				deduction equal to the amount allowed a single taxpayer, not to exceed the
				amount of income attributable to Iowa, for each nonresident partner,
				shareholder, employee, or beneficiary included in the composite
				return.
4. For tax years beginning
				on or after January 1, 1989, deduct an amount in lieu of a federal tax
				deduction based upon the following schedule.
0 - $ 49,999
No deduction
$ 50,000-$ 99,999
5% of net income attributable to Iowa
$100,000-$199,999
10% of net income attributable to Iowa
$200,000 and over
15% of net income attributable to Iowa
5. A
				net operating loss carryback or carryforward is allowed. See 701-subrule
				40.18(3). In lieu of a net operating loss carryback, the taxpayer may elect to
				carry the loss forward.
This rule is intended to implement Iowa Code section
				  422.13.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.7 - Determination of Composite Iowa Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1) The tax will be computed in accordance
				with Iowa Code section
				422.5, including the alternative
				minimum tax as though a resident.
(2) Deduct from the computed tax one personal
				exemption credit of $20 ($40 for tax years beginning on or after January 1,
				1998) for each nonresident partner, shareholder, employee, or beneficiary
				included in the composite return.
EXAMPLE: For tax year 1991, X corporation is an S
				  corporation, all of whose shareholders but one are nonresidents who have
				  elected to join in the filing of a composite return. The three electing
				  shareholders' share of income or loss is 87 percent of the corporation's total
				  income. The S corporation's net income is $800,000, and income items totaling
				  $6,000 and expenses of $500,000 flow directly to the shareholders. The
				  corporation has 25 percent of its sales with an Iowa destination. The
				  corporation has tax preferences and adjustments of $475,000. The composite tax
				  liability would be computed as follows:
Net income attributable to electing shareholders
							 $800,000 Ã— 87%
$696,000
Add: electing shareholders' share of income items
							 which flow separately to shareholders $6,000 Ã— 87%
5,220
Less: electing shareholders' share of expenses which
							 flow separately to shareholders $500,000 Ã— 87%
<435,000>
Income attributable to electing shareholders
$266,220
Times the Iowa business activity ratio
25%
Net income attributable to Iowa
$ 66,555
Less: one standard deduction per shareholder 3
							 Ã— $1,280
<3,840>
Federal tax deduction $66,555 Ã— 5%
<3,328>
Iowa taxable income
$ 59,387
Computed tax
$ 4,515
Less: one personal exemption credit per shareholder 3
							 Ã— $20
<60>
Iowa tax
$ 4,455
The alternative minimum tax would be computed as
				  follows:
Iowa taxable income
$ 59,387
Add: tax preferences and adjustments attributable to
							 electing shareholders times Iowa activity ratio $475,000 Ã— 87% Ã—
							 25%
103,313
$162,700
Less: exemption
35,000
Minimum taxable income
$127,700
times minimum tax rate 7.5%
Ã— .075
Computed minimum tax
$ 9,578
Less regular tax
<4,455>
Minimum tax liability
$ 5,123
This rule is intended to implement Iowa Code section
				  422.13.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.8 - Estimated Tax

Current through Register Vol. 47, No. 3, July 24, 2024
Taxpayers filing composite returns are not required to make
				  payments of estimated tax. However, if taxpayers desire to make estimated
				  payments, the estimated payments should be made on Form IA 1040ES using the
				  partnership's, S corporation's, or trust's identification number assigned by
				  the department in lieu of the social security number.
This rule is intended to implement Iowa Code section
				  422.13.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 404 - Composite Returns for Tax Years Beginning Prior to January 1, 2022 › Rule 701-404.10 - Repeal-transition Rule

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
In
				general.
Except as otherwise provided in subrule 404.10(2), this
				chapter has no application to any tax year of partners, members, shareholders,
				beneficiaries, or employees that begins on or after January 1, 2022. The
				department's administrative rules on composite returns for any tax year of a
				partnership, limited liability company, S corporation, estate, or trust that
				begins on or after January 1, 2022, are located in 701-Chapter 405.
(2)
Special rule for fiscal year
				filers in tax year 2021.
For the tax year of a partnership, limited
				liability company, S corporation, estate, or trust that begins in calendar year
				2021 and ends in calendar year 2022, the entity may elect or be required to
				file a Form IA 1040C and pay tax under this chapter for income from that tax
				year that is reportable by nonresident partners, members, shareholders, or
				beneficiaries for their tax year beginning during calendar year 2022.
EXAMPLE: Partnership P is a fiscal year filer with a tax year
				  that runs from July 1 to June 30. The majority of Partnership P's partners are
				  individuals who file on a calendar-year basis, thus P is required to file the
				  Form IA 1040C on a calendar-year basis. Partnership P may elect orbe required
				  to file a Form IA 1040C to report the Iowa-source income earned by the eligible
				  nonresident partners during Partnership P's 2021 tax year that began on July 1,
				  2021, and ended on June 30, 2022.
This rule is intended to implement 2021 Iowa Acts, Senate
				  File 608, division II.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 405 - Composite Returns for Tax Years Beginning on or After January 1, 2022 › Rule 701-405.1 - Composite Returns

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 2022, a
				  pass-through entity with one or more nonresident members for any period of time
				  during the tax year shall file a composite return using the Iowa composite
				  return (IA PTE-C) and pay Iowa income or franchise tax on behalf of all of its
				  nonresident members, unless an exception in rule
				  701-405.5 (422) applies. The IA
				  1040C, used to file composite returns under the former composite return law in
				  tax years beginning before January 1, 2022, has been discontinued for tax years
				  beginning on or after that date, except as provided in 701-subrule 404.10(2).
				  Rules related to the former composite return law are located in 701-Chapter
				  404.
This rule is intended to implement Iowa Code section
				  422.16B.
Iowa Administrative Code › Agency 701 - Revenue Department › Title V - Pass-through Entity Income Tax › Chapter 405 - Composite Returns for Tax Years Beginning on or After January 1, 2022 › Rule 701-405.2 - Definitions

Current through Register Vol. 47, No. 3, July 24, 2024
Unless otherwise indicated in this rule or required by the
				  context, all words and phrases used in this chapter that are defined under Iowa
				  Code section 422.16B shall have the same
				  meaning as provided to them under that Iowa Code section. For the purposes of
				  this chapter:
"Composite return"
means the IA PTE-C Iowa
				  composite return, which reports information about the Iowa-source income or
				  other amounts credited or paid to each nonresident member of the pass-through
				  entity, the amount of composite return tax due on behalf of each nonresident
				  member of the pass-through entity, and such other information as the department
				  may require.
"Composite return tax"
means the Iowa
				  income tax or franchise tax due by a pass-through entity on behalf of the
				  pass-through entity's nonresident members.
"Department"
means the department of
				  revenue.
"GovConnectIowa"
means the e-services
				  portal of the department.
"Tax year"
means the tax year of the
				  pass-through entity filing the composite return.
This rule is intended to implement Iowa Code section
				  422.16B.