The Iowa Department of Revenue reminds Iowans who work out-of-state that they still have to file an Iowa income tax return along with the return from the other state. Department spokesman, Jim McNulty, says there’s just one exception to the rule. McNulty says taxpayers that live in Iowa and work in Illinois don’t have to file an Illinois tax return because Illinois automatically witholds taxes for Iowa.
But, he says if you lived in Council Bluffs and worked in Omaha, you would have to file returns for both Iowa and Nebraska. McNulty says the location of the business that pays your salary determines the state credited with your pay. McNulty says your wage income is where you perform your job, and if that is outside of Iowa, your wages will be considered earned in that state. Other income, such as bank interest, is considered earned in your state of residency.
McNulty says you will file an Iowa return, and then get a credit for taxes paid in another state. McNulty says you figure your wages on your Iowa return, and get a credit for the taxes you paid to the other state. McNulty says people who live out of Iowa, but still earn money here, may have to file an Iowa tax return too. McNulty says you have to file a tax return if your Iowa income is one-thousand dollars or more. For example, McNulty says if you earn rental income of one-thousand dollars or more on Iowa property, you would have to file an Iowa tax return.
McNulty says they have some simple measures to determine your "state of residence." McNulty says they determine where you spend at least 180 days of the year. So if you spend four months in Iowa and go south for the rest of the year, you’re considered an Iowa resident. He says they also look at things like where you get your drivers’ license. McNulty says you can get more information on tax filing requirements by calling:800-367-3388, or you can surf to the Department of Revenue’s website.