41-147: IA 147 Franchise Tax Credit 41-147 (2025)
Iowa · Iowa DOR · Used for tax years 2025
The 2025 IA 147 calculates the Iowa Franchise Tax Credit for qualifying shareholders of a financial institution taxed as an S corporation. It compares the income tax on the shareholder’s share of the institution’s income with the shareholder’s share of its franchise tax liability
Who files this form
IA 147 is used to claim the Iowa Franchise Tax Credit. You may qualify if you are a shareholder of a financial institution defined in Internal Revenue Code section 581 that elected S corporation status for federal income tax purposes, and you file one of these returns:
- IA 1040, for individuals.
- IA 1041, for fiduciaries.
- IA 1120, for entities subject to Iowa corporation income tax.
The financial institution must provide the required franchise tax and income information with your IA 1120S Schedule K-1. Without that information, you are not eligible to claim the credit.
What you'll need
Have these records and details ready:
- Your 2025 IA 1040, IA 1041, or IA 1120 income tax return.
- Your IA 1120S Schedule K-1, including the required information from the financial institution’s IA 1120F Franchise Return and IA 1120S Iowa Income Tax Return for S Corporation.
- Your ownership percentage in the S corporation.
- Your shareholder name and SSN or FEIN, plus the financial institution’s name and FEIN.
- The appropriate 2025 tax rate schedule or percentage for your return type.
- The 2025 IA 148 Iowa Tax Credits Schedule, which must also be completed.
How to file
Complete IA 147 and include it with your IA 1040, IA 1041, or IA 1120. File a separate IA 147 for each Franchise Tax Credit received.
On the 2025 IA 148 Iowa Tax Credits Schedule:
- Report each Franchise Tax Credit on a separate line in Part I.
- Enter the credit from IA 147, line 14, in Part I, column D.
- Use tax credit code 04 in column A and leave column B blank.
- Enter any credit exceeding your tax liability as expired in column G.
- Include the financial institution’s name in Part IV, column M, and its FEIN in column N.
Common mistakes
- Claiming the credit without the required K-1 information. You are not eligible if the financial institution did not provide the required information with your IA 1120S Schedule K-1.
- Leaving out IA 148. The IA 148 Tax Credits Schedule must be completed.
- Carrying unused credit forward. Credit exceeding your tax liability cannot be carried forward. Report it as expired in IA 148, column G.
- Combining multiple credits. File a separate IA 147 for each Franchise Tax Credit and report each on a separate line in IA 148, Part I.
- Omitting IA 147 from your return. Include it with your IA 1040, IA 1041, or IA 1120.
Questions people ask
How much credit can I claim?
Claim the smaller of the income tax on your share of the financial institution’s income, shown on line 12, or your share of its net franchise tax liability, shown on line 13. Enter that amount on line 14.
How do I calculate my share of the financial institution’s income?
Multiply your ownership percentage in the S corporation by the amount on its IA 1120S, Part 4, line 21. Enter the result on IA 147, line 2.
Can I carry unused credit forward?
No. Any credit exceeding your tax liability cannot be carried forward and must be entered as expired in column G of IA 148.
What if I receive more than one Franchise Tax Credit?
File a separate IA 147 for each credit. Report each credit on a separate line in Part I of the 2025 IA 148.