File Iowa Schedule 130
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Schedule 130 is a supplemental form to Form-1040. As such it is not required that you file this form, and if you do file this form, you must attach it to your Form-1040 in your tax return. Schedule 130 allows Iowa residents who work in another state to redeem a credit for taxes they were required to pay to other states. This situation would arise because most states tax all income that is earned in them (unless certain reciprical agreements between two states exist). Also Iowa taxes its residents on all income they earned, not just income earned in Iowa. This Iowa residents face dual taxation from Iowa (the state of residence) and the other state (where the income was earned). Schedule 130 exists to avoid dual taxation on such income by issuing a credit for any taxes paid to other states.