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WHAT'S NEW?

Legislative Update Specific Line Information Other News

Legislative Update

The 2011 Legislative Summary is available online only.

Legislative changes are incorporated in the information below.

Senate File 512 enacted April 12, 2011, House File 652 enacted May 11, 2011, and Senate File 533 enacted on July 27, 2011 made changes impacting Iowa income tax provisions for tax year 2011.

NOTE: Iowa did not couple with the bonus depreciation provisions allowed for federal tax purposes for the 2011 tax year.

For Individual Income Tax Filers Only:

  • Allow itemized deductions in full for high income taxpayers
  • Maintain increased eligibility for student loan interest deduction
  • Maintain increased expense amount allowed for the child and dependent care credit
  • Coupled with federal earned income tax credit changes
  • Allow teachers to deduct the first $250 of out-of-pocket expenses for classroom supplies
  • Allow individuals to deduct state sales/use tax in lieu of state income tax as an itemized deduction
  • Allow a deduction for tuition and fees for higher education
  • Allow tax free distributions from IRA’s to certain public charities
  • An exemption applies to all pay received from the federal government for military service performed while on active duty status in the armed forces, the armed forces military reserve, or the national guard. Employers paying wages that qualify for this exemption should stop withholding Iowa income tax from those payments immediately.
  • Make an adjustment on the 2011 tax year return for Iowa’s coupling with the federal Tuition & Fees Deduction and Educator Expenses Deduction for 2010. The taxpayer has the option to amend 2010 or adjust 2011.  

For Individual Income Tax Filers as well as Corporate Income Tax (including S Corporations), Partnership, Fiduciary and Franchise Tax:

  • $500,000 Section 179 asset expensing limit for 2011
  • Make an adjustment on the 2011 tax year return for Iowa’s coupling with the federal Section 179 expensing limit for 2010. The taxpayer has the option to amend 2010 or adjust 2011.



SPECIFIC LINE INFORMATION


Step 1

Dependent Child Health Care Coverage: The indication of whether dependents have health care coverage is mandatory and must be completed for 2011. 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 coverage. Those who indicate they do not have health care coverage will receive information about these programs.


Step 2

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 on our Web site.

Line 8 Taxable IRA Distributions - Report the same amount of taxable IRA distributions as shown on your federal return. For federal tax purposes, the entire amount from a 2010 rollover of an IRA (other than a Roth IRA to a Roth IRA) could have been included in 2010 income. Another option was to include the income on the federal return in equal amounts in 2011 and 2012. Whichever option was chosen for federal tax purposes will also apply to the Iowa return.

Line 13 Social Security Worksheet - The phase-out of tax on Social Security continues with a 67% reduction established by the Iowa Legislature. This is an increase in the exclusion percentage, which was 55% in 2010. For more information, see the 2006 Legislative Summary for SF 2408-C on our Web site.

Line 14 Bonus Depreciation - Iowa has not coupled with 100% bonus depreciation. The section 179 limit for Iowa for 2011 is $500,000.

Line 21 Pension/Retirement Income Exclusion - Only the pension income of a taxpayer or spouse who meets the eligibility requirements can be shown on line 21.

Line 24 Adjustments

  • College Savings Iowa or Iowa Advisor 529 Plan:
    The deductible amount for tax year 2011 cannot exceed $2,865 per beneficiary.
  • Iowa has coupled with the deduction for the value of health insurance for nonqualified dependents that are ages 25 or 26.
  • Deductions are available for educator expenses for out-of-pocket expenses and the tuition and fees deduction claimed on the 2011
    federal return.
  • Members of the armed forces, armed forces military reserve, and the national guard in an active duty status can exclude pay received from the federal government for military service performed.
  • Taxpayers who elect not to amend their 2010 return for educator expenses for out-of-pocket expenses, tuition and fees deduction, or section 179 expensing can claim these deductions for 2011.
  • Do not include any deduction for the small business health insurance tax credit that was not allowed as a deduction on the federal return.

Line 27 Federal Income Tax Refund Received in 2011

Do not include any part of the refund received from Earned Income Tax Credit, Additional Child Tax Credit, First-time Homebuyer Credit, Refundable Education Credit, Adoption Tax Credit; or Making Work Pay and Government Retiree Credits.

Line 33 FICA Amount - FICA payments for tax year 2011 in excess of $4,485.60 for Social Security tax for each person can be deducted as a federal tax payment.

Line 37 Itemized Deductions

  • High-income taxpayers do not have to reduce their itemized deductions for 2011.

The itemized deduction for state sales and use tax in lieu of state income tax is allowed.

For Iowa purposes, the itemized deduction for state sales and use tax paid is allowed only if the taxpayer claimed an itemized deduction for state sales and use tax paid on the Federal return. If a taxpayer claimed state income taxes as an itemized deduction on the Federal return, or claimed the standard deduction on the Federal return, the taxpayer cannot claim an itemized deduction for state sales and use tax paid on the Iowa return.

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 2011:

Filing Status 1: $1,830
Filing Status 3 & 4: $1,830 for each spouse
Filing Status 2, 5 or 6: $4,500

Line 53 Other Nonrefundable Iowa Credits

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

Line 58 Reminder - Checkoffs

Child Abuse Prevention Program Fund
Combined: Veterans Trust Fund / Volunteer Firefighter Preparedness Fund
Others: 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.

Line 66 Other Refundable Credits

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

Line 74 Interest Rate 2012

5% per year; 0.4% per month; 0.013661% per day

OTHER NEWS

 

DUE DATE: April 30, 2012

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 17, 2012, and file the Iowa income tax return by April 30, 2012, or (2) File the Iowa income tax return and pay the tax due in full on or before March 1, 2012.

Military

  • See line 24 for additional information regarding changes for 2011.

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 online eFile & Pay system free of charge.
Credit / debit card: Fee is charged by the third-party vendor. Our Web site has information and links.
Check / money order: Send with IA 1040V payment voucher.

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

Supporting Documentation:

  • Do not attach supporting information to the IA 1040.
  • Include all necessary supporting information, but do not staple to the return.
  • Place documents in the following order

    1. Check or Money Order
    2. Payment Voucher (1040V)
    3. W-2s/1099s
    4. IA 1040
    5. Schedules/copy of Federal return