Iowa State Tax Routine (IATX)

The Iowa State Tax Special Routine Processing utilizes the following steps:

Line 1	Multiply the employee’s gross wages for the current payroll period by the number of payroll periods in a year to obtain their Annualized Gross Income (GI).
Line 2	*Determine the Withholding Allowance Amount for the employee.
Line 3	Determine the Taxable Amount by subtracting Line 2 from Line 1.
Line 4	Using the Marginal Tax Rates (DEDX) entries for the Iowa State Tax deduction, compute tax on the Taxable Amount (Line 3).
Line 5	*Determine Deduction Amount per Allowance.
Line 6	Arrive at the Iowa tax by subtracting Line 4 - Line 5.
Line 7	Divide the amount on Line 6 by the number of payroll periods in a year to determine the employee’s Iowa Withholding Tax for the pay period.

*Determine the Withholding Allowance Amount (Line 2)

Take the Annual Exemption Amount field in the Tax Parameter (TAXP) screen is mapped with the value of $13,850 and if the number of allowances claimed by the employee is 0 or 1 then this value can be used as it is. If the number of allowances are more than 2 or more then the following value should be used 13,850 x2 = 27,700.

Determine Deduction per Allowance (Line 5)

The state of Iowa has fixed the price per allowance as $40 and based on the number of allowances claimed by the employee as per the State Tax Allowance field in the Employee Tax Parameters (TAX) or State Tax Enrollment (TAXS)page. For example, if the employee has claimed 3 allowances then the value for the deduction allowance should be as 40 x 3= 120.

Note: The Iowa State Tax Routine is only available for sites that utilize the Next Generation Payroll service.

Data Setup Considerations

Sites need to ensure that they have implemented the following Business Process/Data Setup changes at their site prior to using the Iowa State Tax Routine.

Tax Parameters (TAXP) setup for Iowa State Tax Deductions
The Annual Exemption Amount field is mapped with the Withholding allowance Amount ($13,850).
The Minimum Standard Deduction field of the TAXP page is mapped with $40, indicating the per deduction rate for the employee.
Employee Tax Parameter (TAX) enrollment (Note: this only applies to employees enrolled in a Tax Class (TAXC) that includes a Iowa State Tax Deduction).

The State Tax Allowance field captures the employee's claim for number of allowances for the withholding allowance amount.

Note: The point 4 functions if the Application Parameter (APPCTRL) MULTI_STATE_TAX parameter is set to N, if the parameter is set to Y, then the system will function as per the point 5.

Employee enrolled in the State Tax Enrollment (TAXS) (Note: this only applies to employees enrolled in a State Tax Class (TAXCS) that includes a Iowa State Tax Deduction).

The State Tax Allowance field captures the employee's claim for number of allowances for the withholding allowance amount.