IA 1120F Iowa Franchise Tax Instructions (Financial Institutions)

# preamble

2025 IA 1120F

# Iowa Franchise Instructions

Recent Changes Investment Subsidiary Combined Reporting For tax years beginning on or after January 1, 2025, financial institutions that own an investment subsidiary may elect to file a combined Iowa franchise return that includes the financial institution and all qualifying investment subsidiaries. Financial institutions that make this election are not required to add back expenses to carry any investment subsidiary included on the combined return.

Third Party Disclosure Designee Taxpayers have the ability to authorize an individual to receive information about this return on the return. Above the signature line is a section where the taxpayer may provide contact information for the pers on they wish to authorize. This authorization is limited to discussing or receiving information about matters related to this return, and does not authorize the individual to act on behalf of the taxpayer. For example, the individual could not sign a Power of Attorney form on behalf of the taxpayer. Authorized Signer The person who signs this return on behalf of the taxpayer must attest that they have authority to act on behalf of the taxpayer in tax matters. This attestation will give the signer full authority to interact with the Department on behalf of the taxpayer without the need to file an additional Representative Certification form. This includes the ability to discuss the return and other tax matters with the Department, take action on behalf of the taxpayer, and to appoint a Power of Attorney to represent the taxpayer before the Department. Iowa Taxable Income (Line 1) The starting point for calculating Iowa net income is federal taxable income after the application of the federal net operating loss deduction. IA 124 Net Operating Loss (NOL) Net operating losses are no longer separately calculated for Iowa tax purposes. Taxpayers should use the IA 124 Net Operating Loss (NOL) Adjustment Schedule (41-177) to calculate any pre-2023 federal NOL carryforward that must be added back or any pre- 2023 Iowa NOL that may be deducted. See IA 124 for more information. Other Additions and Reductions Schedules Schedule D has been discontinued and the Other Reductions that used to be reported there have been consolidated into Schedule A, similar to other Iowa forms. Schedule A includes two columns, one for additions, the other for reductions. The line for additions for Iowa franchise tax deducted on the federal return has also been moved from the main form to Schedule A. Schedule A also has a line for net operating loss adjustments from the IA 124 Net Operating Loss (NOL) Adjustment Schedule (41-177) (see above). Mandatory Electronic Filing Iowa franchise taxpayers are required to file their annual returns electronically if the taxpayer meets any of the following conditions for the tax year: ● The taxpayer has at least $250,000 in gross receipts. ● The taxpayer is claiming $25,000 or more in tax credits on the Iowa return for the year. ● The taxpayer is an S corporation that was required to issue 10 or more Iowa Schedule K-1s to shareholders. See Iowa Administrative Code rule 701 -8.7 for definitions and other important information about the electronic filing requirement. Electronic filing through the Modernized eFile (MeF) program is available to Iowa franchise taxpayers.

General Instructions

# Who Must File

Entities doing business in Iowa as financial institutions must file an IA 1120F Franchise Return for Financial Institutions (43-001). Financial institutions include state banks as defined in Iowa Code section 524.103, subsection 45, state banks chartered under the laws of any of other state, national banking associations, trust companies, federally chartered savings and loan associations, out-of-state state-chartered savings banks, financial institutions chartered by the Federal Home Loan Bank Board, non-Iowa chartered savings and loan associations, and production credit associations.

# When to File

Franchise tax returns must be filed no later than the last day of the fourth month following the close of the financial institution's taxable year or 45 days after the due date of the federal tax return, excluding extensions of time to file, whichever is the latest. In order to claim a refund or credit due to overpayment of tax, an amended return must be filed within three years of the due date of the original return or within one year of the date the overpayment of tax was made. For 2025 calendar year filers, the return is due April 30, 2026.

# Where to File

Electronically file through MeF or Mail your return to: Franchise Tax Processing PO Box 10413, Des Moines IA, 50306-0413 How to Pay Pay electronically through govconnect.iowa.gov , MeF, or ACH credit, or if a making a payment by check, mail in your payment with the Iowa Tax Payment Voucher (96- 048), which is available on govconnect.iowa.gov

2025 IA 1120F Iowa Franchise Instructions, page 2 Make checks payable to "Iowa Department of Revenue" Questions: idr@iowa.gov 515-281-3114 or 800-367-3388 Automatic Extension of Time to File All taxpayers who have paid 90% or more of their correct tax on or before the original due date of their return automatically have an additional six months in which to file their return and pay any additional tax due with no penalty. Taxpayers who have not paid 90% or more of their correct tax on or before the original due date of their franchise tax return are not allowed the additional six - month period of time to file, and owe both penalty and interest on the additional tax due after the original due date of their return. If an additional payment is necessary in order to meet the 90% requirement, it must be made by the original due date of the return. The automatic extension does not change the due date of the return; it only extends the time to file the return. Such payments can be made electronically on govconnect.iowa.gov or by using an Iowa Tax Payment Voucher . Vouchers are available on govconnect.iowa.gov. Interest will accrue on any tax due after the original due date of the return. All elections made on a return filed within six months of the original due date will be considered timely. Amended Returns When filing an amended return, submit the amended IA 1120F, and the IA 102 Amended Return Schedule (41-171). Federal Conformity For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity, meaning the state will automatically conform with any changes made to the Internal Revenue Code (IRC), except as specified by Iowa law. Taxpayers may have ongoing adj ustments as a result of Iowa's nonconformity for tax year 2018 or 2019 that must be reported on the IA 101 Nonconformity Adjustments (42-029) . See IA 101 instructions and Schedule A instructions below. Section 179 Expensing and Bonus Depreciation Expensing and depreciation allowed on the Iowa return may differ from amounts allowed on the federal return. Differences must be reported on the IA 4562A & 4562B Iowa Depreciation Adjustment Schedule (41-105). Registration Information Changes If you are changing the Federal Employer Identification Number (FEIN) or the name of the financial institution, send a letter prior to filing your tax return explaining the circumstances and the effective date of change, and documentation showing proof of the change. Send your letter to: Registration Services PO Box 10470 Des Moines, IA 50306-0470 Apportionment of Income All IA 1120F filers must complete the IA Franchise Schedule 59F Apportionment of Income to Iowa (43-007).

# How to File

Complete all questions on the IA 1120F. Include a complete copy of your federal return as filed with the Internal Revenue Service (IRS). If a copy is not included, this will not be considered a complete return. The preparer must sign and date the return, and enter the preparer's PTIN, Social Security Number, FEIN, or Tax Identification Number. IA 1120F Instructions Iowa Filing Status: Check only one to indicate whether this is a separate Iowa return, or a combined return that includes the financial institution's investment subsidiaries.

Federal filing status: Check only one, to indicate the financial institution's federal return filing status for the tax year.

No longer filing combined returns: Check the box next to "No longer filing combined returns" if you filed a combined return in the immediately preceding tax year and are no longer filing a combined return for the current tax year. You may only stop filing combined returns if all investment subsidiaries of the parent financial institution cease being subsidiaries, if the parent financial institution is no longer subject to Iowa franchise tax, or the Director finds that separate returns would more clearly disclose the taxable income of the combined group.

Line 1: Taxable Income - Enter the amount of federal taxable income (line 30 for federal 1120 filers). Line 2: Interest and Dividends - Enter total interest and dividends from the following sources: ● evidences of indebtedness ● securities of state and other political subdivisions exempt from federal income tax ● obligations of United States possessions purchased after January 1, 1991 If municipal interest taxable for Iowa purposes differs from total municipal interest reported on the federal return, a self-created schedule showing the difference should be included. Line 18: Penalty for Underpayment of Estimated Tax - A financial institution owing $1,000 or more in franchise tax and which has not paid adequate estimated payments is subject to an underpayment of estimated tax penalty in addition to the tax and any late filing and payment penalties. Iowa 2220 penalties may be assessed when the amount or timing of the estimated payments is incorrect even if the return is overpaid by the original due date. Include the IA 2220 Underpayment of Estimated Tax (45-006) with the IA 1120F.

2025 IA 1120F Iowa Franchise Instructions, page 3 Line 19: Late Filing and Payment Penalties: Failure to Timely File a Return: If the return is filed after the original due date of the return and less than 90% of the correct amount of tax was paid by the original due date, multiply the unpaid tax by 5% (.05) and enter that amount on line 19. This penalty is in addition to any penalty for failure to timely pay the tax due, as described below. If you are subject to both penalties, add this penalty amount to the amount calculated below and enter the sum on line 19. Failure to Timely File with Zero Tax Due: Financial institutions which are doing business in Iowa, but have no tax due on line 11 , and are filing their annual franchise tax return after the due date must complete IA 200 Imputed Iowa Late Filing Penalty Worksheet (42-041) to calculate their late filing penalty. Enter the amount from the IA 200, line 6 on line 19 . This penalty is subject to a minimum of $200 and a maximum of $25,000. Failure to Timely Pay the Tax Due: A penalty of 5% must be added to the tax due if less than 90% of the correct amount of tax was paid by the original due date of the return. Multiply the unpaid tax by 5% (.05) and enter that amount on line 19. This penalty is in addition to any penalty for failure to timely file, as described above. If you are subject to both penalties, add this penalty amount to the amount calculated above and enter the sum on line 19. Audit or Examination Deficiency: A penalty of 5% will be added to the unpaid tax if the Department discovers an underpayment during an audit or examination. Fraud: A penalty of 75% will be added to the fraudulent claim or unpaid tax for fraudulent claims or willful failure to file a return. Waivers: Penalties can be waived under limited circumstances, as described in Iowa Code section 421.27. Complete and submit a Penalty Waiver Request (78-629) to request a penalty be waived. This form is now available on govconnect.iowa.gov. Line 21: Interest - For each month the required tax is not paid, interest accrues on the unpaid tax at a rate prescribed by law from the due date of the return until payment is received. Any portion of a month is considered a full month when calculating interest due on unpaid taxes. Line 23: Net Overpayment - Enter the amount of overpayment. If applicable, reduce the overpayment by the penalty on line 20. Line 24: Credit to Next Period's Estimated Tax - Enter the amount of overpayment to be credited to future tax liabilities. The carryforward election can only be made when the return is filed before the end of the next tax period. If a return is filed after the end of the next tax period, the overpayment will not be credited, but instead will be refunded. The total of the amount claimed for refund and the amount claimed for credit to 2026 estimated tax must equal the overpayment amount. Line 25: Refund Requested - Enter the amount of overpayment to be refunded. If you would like your refund directly deposited complete lines 25a, 25b, and 25c, otherwise a paper check will be issued. Do not input your direct deposit information if you have an amount due on line 22. 25a. Input your financial institution's routing number. The routing number for a checking account must be nine digits. 25b. Check either checking or savings to indicate what type of account the refund will be deposited into. 25c. Input your account number. The account number for a checking account may have up to 17 digits. The entire refund amount will be deposited into this one account. Note: The account the refund will be issued to must be located in the United States. IA 1120F Schedule A Instructions Other Additions Line 1: Include additions resulting from cash to accrual adjustments for Iowa franchise tax and for federal tax - exempt interest and dividends. Provide cash to accrual worksheets.

# Line 2: Complete the Expense to Carry Investment

Subsidiary Worksheet below and include a copy with the IA 1120F. This line is not required for eligible groups filing a combined return. IA 1120F Expense to Carry Investment Subsidiary Worksheet Iowa Code section 422.61 does not allow franchise taxpayers to deduct expenses allocable to investments in an investment subsidiary unless they are filing a combined return. The Iowa addition is applicable to all financial institutions with investments in an investment subsidiary. See Iowa Administrative Code rule 701- 602.20 for further details. 1. Total federal deductions from federal 1120, line 27. $ _________ 2. Investment assets in investm ent S ubsidiary $ _________ 3. Total financial institution assets $ _________ 4. Ratio. Divide line 2 by line 3, carried to one ten thousandth of 1% by rounding to six decimals. (For example,.1234505 becomes 12.3451%.) (__ __ . __ __ __ __) 5. Iowa addition. Multiply line 1 by line 4. $ _________ Enter this addition on the IA 1120F, Schedule A, line 2. Line 4: Add any contributions deducted in excess of the federal limitation on a separate company basis. Line 5: Enter any net capital loss included in the computation of IA 1120F, line 1 on a separate company basis.

# Line 6: Include the Iowa depreciation adjustment from IA

4562A.

2025 IA 1120F Iowa Franchise Instructions, page 4 Line 7: Enter the amount of Iowa franchise tax deducted on your federal return. Line 8: Enter the adjustment from IA 124, Part I, line 3.

# Line 9: Add any other additions to income not already included elsewhere including any adjustments from IA

101, if any, to the total entered on this line. Other Reductions Line 1: Include reductions resulting from cash to accrual adjustment for Iowa franchise tax and for federal tax - exempt interest and dividends. Provide cash to accrual worksheets. Line 3: Include any interest expenses disallowed under sections 265(b) or 291(e)(1)(B) of the Internal Revenue Code. Line 4: Deduct net contributions previously not allowed as an Iowa deduction, which were not taken at the federal level. Line 5: Enter any net capital loss previously not allowed as an Iowa deduction, which was not taken at the federal level.

# Line 6: Include the Iowa depreciation adjustment from IA

4562A. Line 7: Enter the Iowa franchise tax refund reported on your federal return. Line 9: Add any other reductions from income not already included elsewhere including any adjustments from IA 101, if any, to the total entered on this line. Amounts entered on this line may include, but are not limited to, the following: ● The net Global Intangible Low -Taxed Income (GILTI) to the extent included on IA 1120F, line 1. ● The amount of a federal, state, or local grant provided to a communications service provider during the tax year, to the extent included on IA 1120F, line 1, if the grant was used to install broadband infrastructure that facilitates broadband service in targeted service areas at or above the download and upload speeds. IA 1120F Schedule C Instructions Payments List the exact amount of each payment. Amended return filers must record the tax amount previously paid or refunded on the original return on Schedule C and reduce or increase net payments accordingly. Confidentiality and Fair Information Practices Notice: Information from this return may be made available to the IRS or to tax officials of another state under a tax information exchange program. Except as allowed by law, information on this return cannot be released to anyone who is not an Iowa Department of Revenue or IRS employee. Any Department of Revenue employee who discloses tax information without legal authority is subject to a fine of $1,000. Any applicable information requested must be provided. The information is necessary to complete, correct, or process tax returns; to calculate tax due; to collect tax, interest, and penalties, or to carry out administrative duties. If necessary information is not provided, or if fraudulent information is provided, penalties and interest may be assessed, and criminal prosecution may result. Without the required information, the exemptions, credits, deductions, or adjustments shown on returns may be disallowed. Third Party Disclosure Designee: If the taxpayer would like to designate an individual to discuss this return with the Department, complete this section with that individual's information. An individual listed in this section will be able to discuss and receive information from the department about this return. This authorization is specific to the corporate income tax return for this tax year. If the taxpayer wishes to have this individual represent the taxpayer on other matters, or for other tax years, the taxpayer must submit an IA 8821 Tax Information Disclosure Designation (14 - 104) form or IA 2848 Power of Attorney (14-101) form. This authorization is limited to the ability to discuss the return and receive return information from the Department. It does not authorize the individual to act on behalf of the taxpayer, or to appoint another person as Power of Attorney for the taxpayer. Authorized Signer: By signing this form, you attest that you are authorized to act on behalf of the financial institution in tax matters. The Department will consider the person who signs this form to have full authority to interact with the Department on behalf of the taxpayer without the need to file an additional Representative Certification (14-108). This includes the ability to discuss the return and other tax matters with the Department, take action on behalf of the taxpayer, and to appoint a Power of Attorney to represent the taxpayer before the Department. Signer's contact information: As an authorized representative of the taxpayer, the Department may be required to send you copies of certain correspondence related to tax matters before the Department. Provide your preferred address for receiving such correspondence. If left blank, correspondence addressed to you will be sent to the address listed for the entity at the beginning of the return. Preparer's Information: If the return was prepared by someone other than the taxpayer, all lines for preparer information must be completed. Enter the FEIN or PTIN for the preparer's identification. A Tax Return Preparer as defined by Iowa Code section 421.62 may be subjected to penalty for failure to include their PTIN.