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What's New?

Legislative Update Line Changes on the IA 1040 Other News

LEGISLATIVE UPDATE

The 2009 Legislative Summary is available online only.

Legislative changes are incorporated in the information below.

Internal Revenue Service Code Changes: Iowa has not adopted federal Internal Revenue Service Code changes regarding the determination of income that occurred after January 1, 2008.

Some of the provisions that were not adopted are:

  • Tuition and fees deduction for higher education
  • Deduction for educator expenses
  • Election to deduct state sales/use tax as an itemized deduction in lieu of state income tax
  • Itemized deduction for casualty losses without 10% adjusted gross income limitation or $100 floor
  • Expensing of qualified disaster expenses for small business
  • Bonus depreciation for qualified disaster property
  • Waiver of limitations on itemized deductions for charitable contributions for Midwestern disaster relief
  • Tax free treatment of IRA distributions donated to charity
  • Look-back election for the Earned Income Tax Credit for individuals in the Midwestern disaster area

Filing Status: Same-sex married couples must use filing status 2, 3, or 4 when filing Iowa returns. For additional information, please see Iowa Tax Treatment of Same-Sex Marriages (pdf).

Cow-Calf Refund: This refund is no longer available. The cow-calf refund was repealed for claims filed on or after November 1, 2008. No cow-calf refunds will be issued in February 2010 for claims made on 2008 returns.

LINE CHANGES

Line 2 New double-exempt bond - Appropriation Bonds (I-Jobs)

Line 12 Unemployment Compensation

Iowa has not coupled with the exclusion of the first $2,400 of unemployment compensation.

Line 13 Social Security Worksheet

The phase-out of tax on Social Security continues with a 43% reduction established by the Iowa Legislature. This is an increase in the exclusion percentage, which was 32% in 2007 and 2008. For more information, see the 2006 Legislative Summary for SF 2408-C.

Line 14 Section 179 / Bonus Depreciation

Iowa has not coupled with the increased section 179 expensing and has not coupled with 50% bonus depreciation. The section 179 limit for Iowa for 2009 is $133,000 and the investment ceiling limitation is $530,000..

Line 24 Adjustments

  • College Savings Iowa or Iowa Advisor 529 Plan:
    The deductible amount for tax year 2009 cannot exceed $2,800 per beneficiary.
  • Iowa has not coupled with the deductions for: (1) educator expenses and (2) tuition and fees.
  • New:
    • Employee benefits for same-sex married couples
    • Value of health insurance for nonqualified dependents
    • Film production exclusion now pro-rated over four years

Line 26 Filing Thresholds for Taxpayers 65 and Older Increased

An Iowa return is not required for single persons with income of $24,000 or less, and an Iowa return is not required for all other filers with income of $32,000 or less. In the case of married persons, the higher threshold amounts apply even if only one spouse is 65 years or older as of December 31 of the tax year.

To claim this benefit, taxpayers must check an informational box. On the paper form, the box is located in the upper right corner of the first page of the IA 1040.

Additional information can be found in the 2006 Legislative Summary SF 2408-A.

Line 27 Federal Income Tax Refund Received in 2009

Include the recovery rebate credit received in 2009.

Do not include the first-time home buyer credit refund received in 2009 or the $250 federal payment made to Social Security recipients, veterans, and railroad retirees in 2009.

Line 33 FICA Amount

FICA payments for tax year 2009 in excess of $6,621.60 for Social Security tax for each person can be deducted as a federal tax payment.

Line 37 Itemized Deductions

For itemized deduction calculations dependent upon federal Adjusted Gross Income (AGI), the federal AGI thresholds for tax year 2009 are $166,800 and $83,400.

The itemized deduction for state sales and use tax in lieu of state income tax is not allowed. The federal new motor vehicle taxes deduction for qualified new vehicles is not allowed.

If one spouse itemizes deductions, then both spouses must itemize, even if separate Iowa returns are filed.

Line 40 Reminder: Charitable Mileage

Iowa charitable mileage formula uses 39 cents.

Line 41 Standard Deduction for Tax Year 2009

Filing Status 1: $1,780
Filing Status 3 & 4: $1,780 for each spouse
Filing Status 2, 5 or 6: $4,390

Line 43 Alternate Tax Calculation for Taxpayers 65 or Older - Threshold Amount Increased

Taxpayers who are 65 years of age or older - except taxpayers filing Status 1 - who have income just above the threshold amount of $32,000 should complete the alternate tax calculation worksheet for taxpayers 65 or older. In the case of married persons, the alternate tax can be applied even if only one spouse is 65 years or older as of December 31 of the tax year.

Additional information can be found in the 2006 Legislative Summary SF 2408-B.

Line 53 Other Nonrefundable Iowa Credits

Form IA 148 Tax Credits Schedule must be completed and attached.

New: Redevelopment Tax Credit

Line 58 Reminder - Checkoffs

  • Child Abuse Prevention
  • Veterans Trust / Firefighters
  • Fish and Wildlife Fund
  • Iowa State Fair Foundation

Line 65 Reminder - Iowa Earned Income Tax Credit

This credit is 7.0% of the federal Earned Income Tax Credit. The Iowa EITC is refundable. Some taxpayers may be required to make an additional calculation to determine the Iowa EITC.

Line 66 Other Refundable Credits

Form IA 148 Tax Credits Schedule must be completed and attached.

New: Ethanol Promotion Tax Credit

Deleted:

  • Assistive Device Credit (repealed effective 07/01/09 for individual income tax)
  • Ethanol Blended Gasoline Credit
  • Soy-based Transformer Fluid Credit

Line 74 Interest Rate 2010

5% per year; 0.4% per month; 0.013699% per day

OTHER NEWS

Due Date: April 30, 2010

Farmers and Fishers Due Date: If at least 2/3 of income is from farming or commercial fishing, penalty for underpayment of estimated tax may be avoided in one of the following ways: (1) Pay the estimated tax in one payment on or before January 15, 2010, and file the Iowa income tax return by April 30, or (2) File the Iowa income tax return and pay the tax due in full on or before March 1, 2010.

Military

Tax Rate Schedules (pdf)

Payment Options

  • ePay (free direct debit) individual income tax estimated payments and final payment of individual income tax through the Department's eFile & Pay system free of charge.
  • Credit / debit card - Fee is charged by the third-party vendor.
  • Check / money order: Send with IA 1040V (pdf) payment voucher.

Power of Attorney Form (pdf)

The federal power of attorney form is accepted by the Iowa Department of Revenue. You must write a statement on the federal form that indicates you are submitting it for use with State of Iowa forms. The statement needs to be initialed by the taxpayer.

Dependent Child Health Care Coverage: Taxpayers should indicate in the section provided on the IA 1040 and IA 1040A whether dependents have health care coverage.

Taxpayers who do not have health care coverage for their children may be eligible for the state medical assistance program or the hawk-i program. Dependent children already covered under the Medicaid or hawk-i programs are considered to have health care coerage. Those who indicate they do not have health care coverage will receive information about these programs.

Cash for Clunkers: Amounts received under the "Cash for Clunkers" program are not considered income to the vehicle purchaser, but must be reported as income by the dealer.