HOW TO PRORATE
Taxpayers using filing
status 3 or 4 may be required to prorate (divide) certain entries on the IA1040, such as taxable
Social Security benefits, Federal income tax refunds, estimated Federal tax
payments, itemized deductions, etc.
Example 1: How a husband and wife would
prorate a Federal refund:
2003 Federal refund received in 2004 from
a jointly-filed return: $1,000
Husband has net income of $15,000 on the 2003 IA 1040.
Wife has net income of $30,000 on the 2003 IA 1040.
Total net income: $45,000 on the 2003 IA 1040.
Divide wifes net income by total income.
The result is the percent of total income earned by the wife.
(Wifes net income) $30,000 = 66.7%
(Total of husbands and wifes net income) $45,000
Then take $1,000 X 66.7% = $667. This is
the wifes portion of the refund, reported on line 27 in her column.
The husbands portion is
$1,000 - $667 = $333, which is entered on line 27 in the other column.
These two amounts are entered on line 27 of the 2004 IA 1040.
Note: Round to the nearest one-tenth of
a percent. For example, 66.74% becomes 66.7% and 66.75% becomes 66.8%
Example 2: How to prorate Social Security
Husband receives Social Security benefits
Wife receives Social Security benefits of $20,000
Total benefits are $50,000
Divide the husbands benefits - $30,000
- by the total benefits - $50,000.
The result - 60% - is the percent of total benefits earned by the husband.
Complete the Iowa Social Security worksheet
to determine what amount is taxable to Iowa. In this example, the total
taxable Social Security benefits is $8,000. Now prorate the $8,000 between
husband and wife.
Multiply $8,000 by 60%, which equals $4,800.
This is the husbands portion of taxable Social Security benefits
to be entered on line 13.
The wifes portion is $8,000 - $4,800 = $3,200 which is entered on
line 13 in the other column.
Example 3. Federal estimated tax payment
Husband has income of $75,000 that is not
subject to Federal withholding.
Wife has income of $8,000 that is not subject to Federal withholding.
Their total income not subject to Federal withholding is $83,000.
The estimated Federal tax payments for this year totaled $18,000.
Divide the husbands income by the
total. The result is the percent of income earned by the husband.
Husband's income not subject to Federal
withholding = $75,000 = 90.36% (90.4%)
[Total of husband and wifes income not subject to Federal withholding
Multiply $18,000 by 90.4% = $16,272. This
is husbands portion to be entered on line 32.
The wifes portion is $18,000 - $16,272 = $1,728, which is entered
on line 32 in the other column.