Iowa Residents are required to pay income tax on all of their income regardless of where it was earned. If another state also taxes the income, you may be able to claim a credit for taxes paid to the other state on your return.
When a resident Iowa return and a nonresident return for the other state is entered into the program, the program will automatically calculate the credit based on the income and taxes paid allocated to the other state.
Taxpayers that earned income in Illinois, please refer to the Iowa Reciprocal Agreement article for instructions on correctly reporting taxes paid to another state.
If a part-year return is entered, you will need to manually enter the credit for taxes paid into the program. You can go to:
- State Section
- Credit for Taxes Paid to Another State
- Add Other State Credit
- Choose state from the drop-down menu
You will need to refer to the other state's PDF to determine the Adjusted Gross Income for the other state and the tax paid.
For more information, see Iowa Reciprocal Agreement or the Out-of State Tax Credit