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According to IAC 701 41.3 (422)(4)(b), “For tax years beginning on or after January 1, 1982, the federal income tax deduction attributable to Iowa by nonresidents of Iowa shall be the same deduction as is available for resident taxpayers.”

Because both resident and nonresident taxpayers are allowed the full federal amount of taxes paid as a deduction (i.e. nonresidents do not have to pro-rate it to the ratio of source income to total income), Onvio Tax adds back the prior year federal tax refunds to both total and source other income.

For proforma’d clients, Onvio Tax automatically calculates the deduction. For new clients, you can use the force fields in the Federal Tax Adjustment section at the bottom of  the IA Income screen.

Iowa Overview (1041)