The Iowa teacher's retention bonus is an unusual situation in that you are issued a Form 1099-NEC which designates it as self-employment income, though it is associated with employment as a teacher.
Please see the discussion in this thread for more information and options from several experts and experienced users.
By entering this income as self-employment and creating a Schedule C, you would pay self-employment tax instead of an employee share of Social Security tax. You would also be entitled to deduct any "business" expenses associated with this income. If you don't report the income this way, you may receive a notice from the IRS as their information return matching program will be looking for the 1099-NEC.
See also this TurboTax article regarding Form 1099-NEC.
See here for instructions from the State of Iowa regarding subtractions from income allowed up to $1,000 for 2022.
In TurboTax, in the Iowa return interview, answer "yes" to the question "Do you have other income?"
The next screen will contain a list of Other Income items. Enter the teacher retention payment in the box provided for "Premium pay and retention bonus ".
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