To clarify my understanding, I’ve outlined the details below:
1. We are married nonresidents in Iowa for the 2024 tax year and sold our home in 2024. Our only Iowa-source income was the capital gain from the sale.
2. The capital gain was 100% eligible for exclusion and is not required to be reported to the IRS.
3. Based on these facts, our Iowa-source net income (IA 126, line 25) was zero.
Given these information, are we required to file an Iowa return for 2024 (IA 1040 / IA 126)? We are reviewing our TurboTax results and trying to finalize our return, but it indicates that we need to file both IA 1040 and IA 126. We’re a bit confused and would appreciate any guidance. Thanks in advance.
We are not able to view your tax return.
2024 Iowa filing requirements for nonresidents may be found here.
f. You were a nonresident or part-year resident and your Iowa-source net income IA 126, line 25 was $1,000 or more, unless below the income thresholds above. In the case of married nonresidents, the spouses' combined income is used to determine if their income is high enough to require them to file an Iowa return. To understand “Iowa-source income,” see the instructions for IA 126, lines 1 through 25.
Common examples of Iowa-source income include:
g. You were a nonresident or part-year resident and subject to Iowa lump-sum tax (even if Iowa-source net income is less than $1,000).