2019 IA 126 Instructions, page 1
Who must file?
Complete this form if you or your spouse are a
nonresident of Iowa with income from Iowa
sources, or a part-year Iowa resident.
Iowa and Illinois reciprocal agreement
Any wages or salaries earned by an Iowa resident
working in Illinois are taxable only to Iowa and not
to Illinois. Any wages or salaries earned by an
Illinois resident working in Iowa are taxable only
to Illinois and not to Iowa. Iowa will tax any Iowa-
source income received by an Illinois resident that
is not from wages or salaries. Illinois may tax any
Illinois-source income received by an Iowa
resident that is not from wages or salaries.
Examples: self-employment/business income,
gambling winnings and unemployment
compensation from Iowa sources.
Include this form and a copy of your federal return
with your IA 1040. Report only Iowa-source
income on the IA 126.
When using filing status 3 (married filing
separately on the combined return) on your IA
1040, use both columns A and B of IA 126 and
divide your Iowa income between spouses using
the instructions given for the corresponding line
on the IA 1040 for married separate filers. All
other filing statuses use column A only.
Complete the IA 1040, lines 1-47 before
completing the IA 126. The IA 1040 must be
completed using income from all sources.
Nonresidents and part-year residents of Iowa will
use the IA 126 to report their Iowa-source
income. The credit from this form is used to
reduce total tax on the IA 1040.
For part-year Iowa residents, Iowa net income
includes all income received while living in Iowa
plus any Iowa-source income received while a
For nonresidents, Iowa net income will include
all income from Iowa sources. Complete the IA
126, lines 1-26, using only income from Iowa
For married taxpayers, if one spouse is a full
year Iowa resident, the full year Iowa resident
must include all of that spouse’s income from the
IA 1040, lines 1-26.
Line 1: Wages, salaries, tips, etc
Part-year residents: Include all W-2 income
earned or received while an Iowa resident, even if
it was earned in another state, and any income for
services performed in Iowa while a nonresident of
the state. If it was earned in another state, you
may also need to fill out the IA 130 if you pay tax
to the other state. You will need to check with that
state for their filing requirements.
Nonresidents: Report only Iowa-source income.
If the portion of employee compensation earned
in Iowa by a nonresident is not reported
separately, allocate the compensation based
upon the number of days worked in Iowa to total
Line 2: Taxable interest income
Part-year residents: Report all interest shown on
the IA 1040 which accrued while an Iowa resident
and any interest received while a nonresident
which was derived from a trade, business, or
profession carried on within Iowa.
Nonresidents: Report only the interest derived
from a trade, business, or profession carried on
Line 3: Ordinary dividend income
Part-year residents: Report all dividends
received while an Iowa resident and any
dividends received while a nonresident which
were derived from a trade, business, or
profession carried on within Iowa.
Nonresidents: Report the dividends derived from
a trade, business, or profession carried on within
Line 4: Alimony received
Part-year residents: Report all alimony or
separate maintenance payments received while
an Iowa resident.
Nonresidents: Do not enter anything on this line.
Line 5: Business income or (loss)
Part-year residents: From the total business
income or loss shown on the IA 1040, line 5,
report the amount earned while an Iowa resident,
and report any portion of the total business
income or loss earned while a nonresident using
the instructions for nonresidents given below.
Nonresidents: Report the portion of business
income or loss attributable to a trade, business, or
profession carried on within Iowa. Include a
supporting schedule showing Iowa gross receipts
divided by total gross receipts for each business;
multiply this ratio times the total net income from
the corresponding business. A sale of goods is
considered an Iowa sale if goods are delivered or
shipped to a point within the state regardless of