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All income an Iowa resident earns is taxable to Iowa to the same extent that it is taxable on the Federal return even if the income was earned in another state or foreign country. If another state or foreign country taxes that same income, then the Iowa resident may be able to claim a credit on this line. Use form IA 130 to compute the Out-of-State Tax Credit.

a. Nonresidents of Iowa cannot claim this credit.

b. Part-year residents of Iowa may claim this credit only if the income they earned during that part of the year that they were Iowa residents was also taxed by another state or country.

c. The state or foreign income tax imposed on your income is the tax shown on the income tax return you filed with that state or country. It is not the amount that was withheld from your wages.

d. An IA 130 form must be figured separately for each state or foreign country. The combined total of all credits cannot exceed the Iowa tax liability.

In order to receive the credit, a complete copy of your income tax return(s) filed with the other state(s) must be submitted with your Iowa return, along with a copy of the IA 130. If you are claiming the credit paid to a foreign country, attach a copy of Federal form 1116.

Instructions and Examples for using the IA 130.

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