Iowa income tax is forgiven when a service member’s federal income tax was forgiven because they were killed in a combat zone, are missing in action and presumed dead, or were killed outside the United States by a terrorist act or military action. Tax is forgiven for the year of death or of the missing declaration and for the year before. If the service member was married, all tax for the year of death is forgiven when the return was joint or married filing separately on the combined return, and the same applies to the prior year return; on a married filing separately combined return only the tax attributable to the service member is forgiven.
File or amend the Iowa return with the Iowa Department of Revenue and claim the forgiveness. Prior-year returns cannot be amended to change the filing status, so the filing status that was originally used controls how much is forgiven.
The DD1300 report of casualty or the death certificate, documentation that the federal income tax was forgiven, and the service member’s Iowa returns for the year of death and the year before.
