Taxation of Federal Refunds on Iowa Returns for Same-Sex Married Couples

As I have written about before, Iowa taxes you on your federal tax refund. How does this work for same-sex married couples? Do they use the actual amounts received on their separate returns they actually filed, or do they use the “hypothetical” refund amount from their “mock” joint federal return they create as part of preparing the Iowa return?

The short answer is, same-sex couples should use the refund amount from their actual federal returns that were filed with the IRS in the prior year, NOT the amount from the mock return. Each spouse will claim whatever refund they actually received. My source for this is e-mail correspondence I have had with the Iowa Department of Revenue.

Other items, such as the tuition and fees deduction, student loan deduction, Iowa earned income credit, and a host of other deductions and credits do need to be recalculated based on the mock return. But not the federal refund amount.