*IA 1040 Schedule 1

Topics:

Schedule 1
  • Step Subject: Schedule 1
  • Instruction Year: 2023

Schedule 1 (located on page 4 of the IA 1040) is used to report Iowa adjustments to federal taxable income. Amounts should only be reported if there is a difference between the federal and Iowa reportable amounts. Column A should be used to report additions to federal taxable income and Column B should be used to report subtractions from federal taxable income. Report all amounts as a positive number.

Line 1: Interest

Column A

Enter interest from state and municipal securities, to the extent not already included in federal taxable interest on the IA 1040, line 2, unless specifically exempt from Iowa tax.

However, interest from certain Iowa state and municipal securities is exempt from Iowa tax and should not be included on this line. For more information, see Iowa Administrative Code rules 701—302.2 and 701—302.3.

The following securities are exempt:

  • Aviation Authority Bonds, Iowa Code section 330A.16
  • Beginning Farmer Loan Program Bonds, Iowa Code section 175.17(10)
  • Community College Bond Program Bonds, Iowa Code section 260C.71(6)
  • Community College Residence Halls and Dormitories Bonds, Iowa Code section 260C.61
  • County Health Center Bonds, Iowa Code section 331.441(2)"C"(7)
  • E911 Emergency Telephone Service Program Bonds, Iowa Code section 34A.20(6)
  • Interstate Bridges Bonds, Iowa Code section 313A.36
  • Iowa Board of Regents Bonds for buildings and facilities, Iowa Code sections 262.41, 262.51, 262.60, and 262A.8
  • Iowa Higher Education Loan Authority, Iowa Code section 261A.27
  • Iowa Municipality Urban Renewal Bonds, Iowa Code section 403.9(2)
  • Iowa Rural Water District Revenue Bonds and notes, Iowa Code section 357A.15
  • Low Income Housing Bonds, Iowa Code section 403A.12
  • Prison Infrastructure Revenue Bonds, Iowa Code section 16.177(8)
  • Regents Institutions Medical and Hospital Buildings at University of Iowa Bonds, Iowa Code section 263A.6
  • Soil Conservation Districts Revenue Bonds, Iowa Code section 161A.22
  • Quad Cities Interstate Metropolitan Authority Bonds, Iowa Code section 28A.24
  • Sewage Treatment Works Revenue Bonds, Iowa Code section 16.131(6)
  • Underground Storage Tank Fund Revenue Bonds, Iowa Code section 455G.6(14)
  • Vision Iowa Program, Iowa Code section 12.71
  • Iowa Utilities Board and Consumer Advocate Building Bonds, Iowa Code section 12.91(9)
  • School Infrastructure Program Bonds, Iowa Code section 12.81(8)
  • Appropriation Bonds, Iowa Code section 12.87(8)

Column B

Enter interest received from federal securities (for example, U.S. Savings Bonds, U.S. Treasury Notes), to the extent included on the IA 1040, line 2. Do not include interest from repurchase agreements of U.S. Government securities.

The following list contains widely held United States Government obligations, but is not intended to be all-inclusive.

The following are exempt and should be included in Column B to the extent they are included in federal taxable income:

  1. a. United States Government obligations: United States Treasury - Principal and interest from bills, bonds, and notes issued by the United States Treasury exempt under 31 USC section 3124(a).
    • Series E, EE, F, G, H and I bonds
    • United States Treasury bills
    • U.S. Government certificates
    • U.S. Government bonds
  2. U.S. Government notes
  3. b. Territorial obligations:
    • Guam - Principal and interest from bonds issued by the Government of Guam (48 USCS section 1423[a]).
    • Puerto Rico - Principal and interest from bonds issued by the Government of Puerto Rico (48 USCS section 745).
    • Virgin Islands - Principal and interest from bonds issued by the Government of the Virgin Islands (48 USCS section 1403).
    • Northern Mariana Islands - Principal and interest from bonds issued by the Government of the Northern Mariana Islands (48 USCS section 1681(c)).
  4. c. Federal agency obligations:
    • Commodity Credit Corporation - Principal and interest from bonds, notes, debentures, and other similar obligations issued by the Commodity Credit Corporation (15 USCS section 713a–5).
    • Banks for Cooperatives - Principal and interest from notes, debentures, and other obligations issued by Banks for Cooperatives (12 USCS section 2134).
    • Farm Credit Banks - Principal and interest from systemwide bonds, notes, debentures, and other obligations issued jointly and severally by Banks of the Federal Farm Credit System (12 USCS section 2023).
    • Federal Land Bank Association - Principal and interest from bonds, notes, debentures, and other obligations issued by the Federal Land Bank Association (12 USCS section 2098).
    • Financial Assistance Corporation - Principal and interest from notes, bonds, debentures, and other obligations issued by the Financial Assistance Corporation (12 USCS section 2278b–10[b]).
    • Production Credit Association - Principal and interest from notes, debentures, and other obligations issued by the Production Credit Association (12 USCS section 2077).
    • Federal Deposit Insurance Corporation (FDIC) Principal and interest from notes, bonds, debentures, and other such obligations issued by the Federal Deposit Insurance Corporation (12 USCS section 1825).
    • Federal Financing Bank - Interest from obligations issued by the Federal Financing Bank. Considered to be United States Government obligations (12 USCS section 2288, 31 USCS section 3124[a]).
    • Federal Home Loan Bank - Principal and interest from notes, bonds, debentures, and other such obligations issued by any Federal Home Loan Bank and consolidated Federal Home Loan Bank bonds and debentures (12 USCS section 1433).
    • Federal Financing Corporation - Principal and interest from notes, bonds, debentures, and other such obligations issued by the Federal Financing Corporation (12 USCS section 2288(b)).
      Financing Corporation (FICO) - Principal and interest from any obligation of the Financing Corporation (12 USCS Sections 1441[e][7] and 1433).
    • General Services Administration (GSA) - Principal and interest from General Services Administration participation certificates. Considered to be United States Government obligations (31 USCS section 3124[a]).
    • Housing and Urban Development (HUD). Principal and interest from War Housing Insurance debentures (12 USCS section 1739[d]).
      *  Principal and interest from Rental Housing Insurance debentures (12 USCS section 1747g[g]).
      *  Principal and interest from Armed Services Mortgage Insurance debentures (12 USCS section 1748b[f])
      *  Principal and interest from National Defense Housing Insurance debentures (12 USCS section 1750c[d]).
      *  Principal and interest from Mutual Mortgage Insurance Fund debentures (12 USCS section 1710[d]).
    • National Credit Union Administration Central Liquidity Facility - Income from notes, bonds, debentures, and other obligations issued on behalf of the National Credit Union Administration Central Liquidity Facility (12 USCS section 1795k[b]).
    • Resolution Funding Corporation - Principal and interest from obligations issued by the Resolution Funding Corporation (12 USCS Sections 1441[f][7] and 1433).
    • Student Loan Marketing Association (Sallie Mae) - Principal and interest from obligations issued by the Student Loan Marketing Association. Considered to be United States Government obligations (20 USCS section 1087–2[1], 31 USCS section 3124[a]).
    • Tennessee Valley Authority - Principal and interest from bonds issued by the Tennessee Valley Authority (16 USCS section 831n–4[d]).
    • United States Postal Service - Principal and interest from obligations issued by the United States Postal Service (39 USCS section 2005[d][4]).
    • Certificates on Government Receipts.

The following are not considered federal securities and are taxable and should not be included in Column B:

Federal Agency Obligations:

  • Building and Loan Associations
  • Credit Unions, federal or state
  • Export-Import Bank of the United States
  • Federal Agricultural Mortgage Corporation (Farmer Mac)
  • Federal Home Loan Mortgage Corporation (Freddie Mac) Securities
  • Federal Housing Administration
  • Federal income tax refunds, interest
  • Federal National Mortgage Association
  • Federal National Mortgage Association (Fannie Mae) Securities
  • Government National Mortgage Association (Ginnie Mae) Securities
  • Merchant Marine (Maritime Administration)
  • Money Market Certificates
  • Mortgage Participation Certificates
  • Savings and Loan Associations, federal or state
  • Small Business Administration

Obligations of International Institutions:

  • Asian Development Bank
  • Inter-American Development Bank
  • International Bank for Reconstruction and Development (World Bank)

Other Obligations:

  • Washington D.C. Metro Area Transit Authority

Married Separate Filers:

Divide interest income based on ownership of the account or certificate.

  • Jointly held: Divide equally between spouses.
  • Held in the name of only one spouse: Allocate interest wholly to that spouse.

Line 2: Dividends

Column A: Include all dividends from mutual funds, investment trusts, or regulated investment companies investing in state and municipal bonds.

Etc...