1. Registration: How do I register as an Iowa withholding agent?
2. Withholding Requirements: What income is subject to Iowa withholding?
3. Withholding Tables: How can I get the current withholding guide?
4. Late Filing: Will I be charged penalty and interest if I don't file on time?
5. W-4s: What should income recipients complete?
6. Allowances: Why do more allowances result in more Iowa withholding?
7. Filing Returns: How do I file returns?
8. Payment Vouchers: What should I do if I don't receive my withholding payment vouchers?
9. Confidentiality: Are Department employees required to abide by any confidentiality laws?
1. How do I register as an Iowa withholding agent?
Every employer or other person who is required to withhold Iowa income tax must register as a withholding agent. There is no fee for registering. You can apply for your Iowa permit online.
Iowa will use the Federal Employer Identification Number (FEIN) and add a suffix to register an employer for Iowa withholding.
You can apply online to receive a Federal EIN.
2. What income is subject to Iowa withholding?
Iowa income tax withholding is applied to the same wages and compensation to which federal income tax withholding applies.
Agricultural Wages
Wages paid to agricultural labor are subject to withholding for state income tax purposes to the same extent that the wages are subject to withholding for federal income tax purposes.
Iowa and Illinois
Iowa and Illinois have a reciprocal agreement for individual income tax purposes. At this time, Iowa 's only income tax reciprocal agreement is with Illinois .
Any wages or salary made by an Iowa resident working in Illinois is taxable only to Iowa and not to Illinois . Any wages or salary made by an Illinois resident working in Iowa is taxable only to Illinois and not to Iowa .
An Iowa resident working for wages or salary in Illinois should complete and file Illinois form IL-W-5-NR “Employee's Statement of Nonresidence in Illinois ” with the employer so that the employer will be aware it is appropriate to withhold Iowa income tax. The Iowa resident should also complete an Iowa W-4.
An Illinois resident working for wages or salary in Iowa should complete and file the IA 44-016 “Employee's Statement of Nonresidence in Iowa ” with the employer so that the employer will be aware it is appropriate to withhold Illinois income tax.
Iowa will tax any Iowa-source income received by an Illinois resident that is not from wages or salaries. Illinois will tax any Illinois-source income received by an Iowa resident that is not from wages or salaries. Examples of income that are not wages and salaries and, therefore, not covered under the Iowa-Illinois Reciprocal Agreement are Iowa gambling winnings and unemployment compensation for employment in Iowa.
3. How can I get the current withholding guide?
Go to our withholding forms page.
4. Will I be charged penalty and interest if I don't file on time?
A penalty of 10 percent will be added to the tax due if the return is not filed by the due date and at least 90 percent of the correct tax is not paid by the due date.
If the return is filed timely and the tax is not remitted, a penalty of 5 percent will be added to the tax due if at least 90 percent of the correct tax is not paid by the due date.
If both penalties apply, only the failure to file penalty of 10 percent is imposed .
The interest rate may change yearly. Interest must be added to delinquent tax at a per month rate, beginning on the due date of the return and accruing each month until you make full payment of any or all tax, penalty and interest due.
5. What should income recipients complete?
Employees must complete the federal W-4 and the Iowa W-4 (pdf).
The upper portion of the Iowa W-4 is the Centralized Employee Registry (CER) administered by the Iowa Department of Human Services. It was created to assist with the collection of delinquent child support payments and will also help detect unemployment benefits fraud.
Instead of using the top portion of the IA W-4, you may complete it online at the Department of Human Services Web site.
If you have questions, contact the CER hotline at 1-877-274-2580.
Employers are required to submit information on any new hire or re-hire to the CER within 15 days of hire.
Pension income
A W-4P (pdf) is available for use by those receiving pensions. Because of the pension exclusion on the Iowa return, many taxpayers may want to use the W-4P to reduce the amount of withholding taken from pension checks.
6. Why do more allowances result in more Iowa withholding?
In some cases, withholding amounts on the withholding tax table for a given income will actually rise as the number of allowances increases. This is because federal tax is deductible when calculating state tax. Federal tax will decline as the number of allowances increases, resulting in a smaller deduction when calculating Iowa tax. Because of this, state withholding amounts may increase even though the number of allowances claimed increased.
7. How do I file returns?
Withholding is filed electronically through the Internet or by touch-tone telephone through the Department's eFile & Pay (eFP) system. We do not mail paper returns.
Registered Iowa withholding agents receive a letter from the Department with an access code to eFP called the Business eFile Number.
The Department determines how often withholding tax is filed based on the estimated amount of withholding tax that the employer entered on the application. These filing statuses are as follows:
- QUARTERLY if you remit less than $6,000 tax per year (less than $1,500 per quarter)
You will eFile a quarterly return at the end of each calendar quarter, and an annual VSP reconciliation form through eFP. - MONTHLY if you remit $6,000 - $120,000 tax per year ($500 - $10,000 per month)
You will eFile tax deposits for the first two months of quarter through eFP; there is no monthly deposit for the third month of the quarter. For the third month, you will eFile the quarterly return with the payment for the balance of tax due for that quarter. At the end of each year you will also eFile an annual VSP reconciliation form. - SEMI-MONTHLY if you remit more than $120,000 tax per year (more than $10,000 per month; more than $5,000 semi-monthly)
You are required to eFile deposits twice each month, quarterly returns, and the annual VSP reconciliation form through eFP.
End-of-the-year reporting
This is now an electronic process through eFile & Pay.
The VSP (Verified Summary of Payments Report) for the calendar year is due by the end of February of the following year.
Do not send copies of W-2s, W-2c's or 1099s to the Department. That information is available to the Department from the Internal Revenue Service. Employers are required to keep copies of the W-2s, W-2c's and 1099s for four years from the end of the year for which the forms apply.
8. What should I do if I don't receive my withholding payment vouchers?
If you are a semi-monthly filer, you are required to pay electronically.
However, many Iowa withholding agents will receive paper payment vouchers that are preprinted with your business information. These must be used if paying with check or money order. The payment voucher packet contains all the tax periods needed for the year. If you do not receive your preprinted vouchers, contact our eFile Unit.
You may also print your payment voucher from the eFile & Pay system. Your computer must have Internet Explorer version 5.5 or newer and Acrobat Reader version 6.0.1 or newer.
Payment vouchers are not available on the Tax Fax system or on the Web site.
Please note that these vouchers are not returns. Returns must be filed through eFile & Pay.
9. Are Department employees required to abide by any confidentiality laws?
Yes. Please refer to this confidentiality statement for more details.