HOW TO PRORATE
Taxpayers using filing status 3 or 4 may be required
to prorate (divide) certain entries on the IA 1040, such as taxable
Social Security benefits, federal income tax refunds, estimated federal
tax payments, itemized deductions, etc.
Example 1: How
spouses would prorate a federal refund:
2008 federal refund received in 2009 from a jointly-filed
Spouse A has net income of $15,000 on the 2008 IA 1040.
Spouse B has net income of $30,000 on the 2008 IA 1040.
Total net income: $45,000 on the 2008 IA 1040.
Divide Spouse B's
net income by total income.
The result is the percent of total income earned by Spouse B.
(Spouse Bs net income) $30,000 = 66.7%
(Total of both spouses net income) $45,000
Then take $1,000
X 66.7% = $667. This is Spouse Bs portion of the refund, reported
on line 27 in column B.
Spouse As portion is
$1,000 - $667 = $333, which is entered on line 27 in column A.
These two amounts are entered on line 27 of the 2009 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
Spouse A receives Social Security benefits of $30,000
Spouse B receives Social Security benefits of $20,000
Total benefits are $50,000
Divide Spouse As
benefits - $30,000 - by the total benefits - $50,000.
The result - 60% - is the percent of total benefits earned by Spouse A.
Complete the Iowa Social Security worksheet to determine what amount is taxable to Iowa. In this example, the total taxable Social Security benefits are $8,000. Now prorate the $8,000 between spouses.
by 60%, which equals $4,800. This is Spouse As portion of
taxable Social Security benefits to be entered on line 13 in column A.
Spouse Bs portion is $8,000 - $4,800 = $3,200 which is entered
on line 13 in column B.
Example 3. Federal estimated tax payment proration
Spouse A has income of $75,000 that is not subject to
Spouse B 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 Spouse As
income by the total. The result is the percent of income earned by
Spouse A's income not subject to federal withholding
= $75,000 = 90.36% (90.4%)
[Total of both spouses income not subject to federal withholding
by 90.4% = $16,272. This is Spouse As portion to be entered
on line 32 in column A.
Spouse Bs portion is $18,000 - $16,272 = $1,728, which is entered
on line 32 in column B.