24. OTHER ADJUSTMENTS. Enter the total of other allowable adjustments as described below. Attach an explanation for each adjustment.

a. Accrual method:

Taxpayers who had capital gains in 2009 that were reported on the installment method for federal tax purposes and the entire gain was reported for Iowa in a prior year do not have to report installments.

b. Alternative motor vehicle deduction:

Alternative motor vehicle deduction of $2,000 for those completing federal form 8910 (Alternative Motor Vehicle Credit)

The Internal Revenue Service certifies whether or not a vehicle qualifies.

A complete list of vehicle models that have been certified for the Alternative Motor Vehicle Credit can be seen on the IRS Web site.

c. Beneficiaries, exemption of annuity payments subject to inheritance tax:

Installment payments and lump sum payments received on or after July 1, 2001, by a beneficiary from an annuity of a deceased employee, are exempt from income tax if the payments are included in the deceased employee’s estate for Iowa inheritance tax purposes. If this annuity income is included as part of Iowa gross income and included in the deceased employee’s estate for Iowa inheritance tax purposes, enter that amount on this line.

d. Capital gain from installment sales reported on the 2001 Iowa return using the accrual method:

The installment method for reporting capital gain for accrual accounting taxpayers is adopted for Iowa individual income tax purposes for tax years beginning on or after January 1, 2002. However, if you used the accrual method of accounting and reported the entire capital gain on the 2001 Iowa return which was reported on the installment method for federal tax purposes, deduct the amount reported of any additional installments from that capital gain on this line.

e. Capital or ordinary gain from involuntary conversion related to eminent domain:

A new exclusion of both capital gain and ordinary gain is available for individual income taxpayers relating to capital or ordinary gain income realized by a taxpayer as a result of the involuntary conversion of property due to eminent domain. Eminent domain relates to the authority of certain government agencies or instrumentalities of government to condemn private property for any public improvement, public purpose, or other public use.

If there is no ordinary or capital gain recognized for tax purposes because the converted property is replaced with property that is similar to, or related in use to, the converted property, there is no exclusion allowed for Iowa tax purposes until the remaining gain is recognized for federal tax purposes or until the time of disposition of the replacement property. Any exclusion allowed for Iowa tax purposes does not alter the basis of the property as established for federal tax purposes, so the basis will remain the same for both federal and Iowa tax purposes.

f. Claim of Right Deduction:

If income was repaid in the 2009 tax year and was reported and taxed on a prior Iowa return, that income may be deducted on the 2009 tax return. However, it may be to your advantage to take a credit on line 66. You may take either the deduction on this line or take a credit on line 66, but not both.

Example of Claim of Right Deduction: A taxpayer reported $7,000 in unemployment benefits on the 2007 Iowa return. In early 2009 the taxpayer was notified that $4,000 of the unemployment benefits had to be repaid. The benefits were repaid by the end of 2009. The taxpayer may claim a $4,000 income adjustment on line 24 of the 2009 Iowa return.

g. College Savings Iowa Advisor 529 Education Savings Plans:

If you or your spouse participate in the College Savings Iowa 529 Plan (Iowa Educational Savings Plan Trust) or the Iowa Advisor 529 Plan, each may deduct an amount contributed not to exceed $2,800 per beneficiary. These are Iowa Section 529 Plans. Please note: A rollover from another state's 529 plan qualifies toward the deduction for Iowa income tax.

h. Disability income exclusion:

You may exclude from Iowa tax a portion of the disability pay you received in 2009 if you meet ALL of the following conditions:

• You received disability pay, and
• You were not yet 65 when your tax year ended, and
• You retired on disability and were totally and permanently disabled when you retired, and
• On January 1, 2009, you had not yet reached the age when your employer’s retirement program would have required you to retire.

If you meet all of these conditions, obtain form IA 2440 (pdf). You MUST complete and attach form IA 2440 to take this exclusion. A doctor’s statement must accompany each year’s return attesting to the taxpayer’s complete and permanent disability.

i. Domestic production activities deduction from line 35 of the federal 1040:

Iowa allows the deduction for qualified production activities income set forth in section 199 of the Internal Revenue Code for tax periods beginning on or after January 1, 2005.

j. Employee benefits for same-sex married couples:

The federal and state tax treatment of certain employee benefits will now differ under Iowa law.  Because federal law does not recognize same-sex marriage, certain benefits that are tax-exempt when extended to opposite sex spouses and the children of opposite sex spouses will generally be taxable federally when they are provided for same-sex spouses and their children.

For Iowa tax purposes, if an employee benefit is tax-exempt when extended to the opposite sex spouse of an employee, or to the children of the spouse, the benefit is tax-exempt when extended to a same-sex spouse or to the children of the spouse.

k. Employer Social Security Credit from federal return:

If your business was in the food or beverage industry and you claimed a credit for a portion of employer Social Security tax on employee tips, you may claim a deduction on line 24 for this credit.

l. Federal Alcohol Fuel Credit from federal return:

If you claimed an Alcohol Fuel Credit on your federal tax return, enter the amount of your Alcohol Fuel Credit here and attach a copy of federal form 6478.

m. Film production income exclusion (HF 892-C)

Income received by Iowa residents from qualified film expenditures relating to certain film, television, or video projects is eligible for this exclusion. The film, television, or video project must be registered with the film office of the Department of Economic Development and must have expenditures of at least $100,000 in Iowa.

A qualified expenditure is a payment to an Iowa resident for the sale, rental, or furnishing of tangible personal property or for services directly related to the registered project. The exclusion is allowed only to the extent that income is included in federal adjusted gross income.

A taxpayer who claims the film qualified expenditure tax credit is not eligible for the income tax exclusion.

For projects registered on or after July 1, 2009, the income tax exclusion for qualified film expenditures must be taken over a four-year period, starting with the tax year in which the qualified expenditure occurred and for the ensuing three years.  Consequently, as it relates to defined new projects, the income tax exclusion for a tax year cannot exceed 25% of the amount of the qualified expenditures.  The exclusion remains available only to Iowa residents and Iowa-based businesses.

n. Foreign-earned income exclusion and/or foreign housing deduction from federal form 2555 or form 2555EZ.

o. Gains or losses from distressed sale transactions:

If you need information, e-mail our tax specialists.

p. Health savings account deduction from line 25 of the federal 1040

q. Injured veterans program, contributions to (do not put on IA Schedule A)

An injured veteran's grant program is available under the Iowa Department of Veteran Affairs. Money appropriated for these grants will be given to veterans injured in a combat zone after September 11, 2001. The grants cannot exceed $10,000 per injured veteran. The Department of Veteran Affairs may also receive money from any public or private source for purposes of providing grants to injured veterans.

A deduction is allowed for the amount paid by a taxpayer to the Department of Veteran Affairs for the purposes of providing grants to the injured veterans grant program. Do not claim these amounts on the Iowa Schedule A.

r. Injured veterans program, grants from

The amount of Department of Veteran Affairs grant money received by an injured veteran that is included in the veteran's federal adjusted gross income is not included in the veteran's Iowa net income.

s. In-home health care:

To the extent included in Iowa gross income, deduct any state Supplementary Assistance payments received for unskilled in-home health-related care services to a family member.

t. Military exemptions:

Information: See this file for all military information

u. Net operating loss, Iowa:

Residents: Enter any Iowa net operating loss carryforward from the prior year and attach the supporting schedule.

Nonresidents: Enter any Iowa-source net operating loss carryforward on your Schedule IA 126 (pdf). Nonresidents do not enter net operating losses on the IA 1040 return.

See Iowa Net Operating Loss Worksheet for additional information on the carryback provision.

v. Organ transplant expenses:

A deduction in computing Iowa adjusted gross income is not allowed for taxpayers for un-reimbursed expenses relating to a human organ transplant. The taxpayer, while living, who donates all or part of a designated human organ can claim a deduction for un-reimbursed expenses such as travel expenses, lodging expenses, and lost wages.

The deduction is limited to $10,000, and a taxpayer can only claim this deduction once. If a taxpayer claims this deduction for Iowa tax purposes, the taxpayer cannot also claim these same unreimbursed expenses as an itemized deduction for medical expenses on the Iowa return.

w. Partnership income and / or S corporation income: Modifications that decreased the income:

Enter modifications that decrease the income reported on line 10 of the IA 1040.

x. Speculative shell buildings:

If you are the owner of a qualifying speculative shell building, enter the difference between the depreciation taken on this building on your federal return and the depreciation that you could take under the accelerated cost recovery system of the Internal Revenue Code if the building were classified as 15-year property. Attach a worksheet showing this calculation.

y. Student Loan Interest Deduction from federal return:

Enter the same figure that is allowed on your federal 1040, line 33, or line 18 of federal 1040A.

z. Value of health insurance for nonqualified dependents:

The amount of Iowa taxpayers’ health benefits or insurance coverage attributable to nonqualified tax dependents is not subject to state income tax.

aa. Victim compensation awards (SF 70)

To the extent included in federal adjusted gross income, the following items can be excluded from Iowa adjusted gross income for individual income tax:

• Amounts of victim compensation awards paid under the victim compensation program administered by the Department of Justice under Iowa Code section 915.81
• Amounts of victim restitution payments received pursuant to Iowa Code chapters 910 and 915
• Amounts of damages awarded by a court, and received by a taxpayer, in a civil action filed by the victim against an offender

bb. Vietnam veterans bonus (SF 578)

A Vietnam Conflict Veterans Bonus fund is established under the Iowa Department of Veterans Affairs.

This bonus is available for persons who served on active duty in the United States armed forces from July 1, 1958, through May 31, 1975.

Eligible persons may receive:

• Active duty in the Vietnam service area during the specified period: $17.50 for each month, not to exceed $500.
• Persons who served on active duty during the specified period but not in the Vietnam service area: $12.50 per month, not to exceed $300.

The maximum compensation a person can receive under this bill must be reduced by the amount of any Vietnam veterans bonus received by that person for service prior to July 1, 1973. The amount of bonus received by a Vietnam veteran that is included in the veteran's federal adjusted gross income is not included in the veteran's Iowa net income.

cc. Wages paid to certain individuals:

If you operate a business, you may qualify for an additional deduction of 65% of the wages paid in the first 12 months up to a maximum deduction of $20,000 per qualifying new employee. This deduction is in addition to the wage deduction you were allowed on federal Schedule C. To qualify, the new employee(s) must be disabled or an ex-offender on parole, probation, or in a work release program. All types of businesses may qualify for this deduction for hiring qualifying ex-offenders. However, the deduction for hiring qualifying persons with disabilities is restricted to certain small businesses.

Further information is available online:

• Benefit for hiring ex-offenders
• Benefit for hiring persons with disabilities

dd. Work Opportunity Credit:

If you claimed a Work Opportunity Credit on your federal income tax return, enter the amount here.

ee. Other federal adjustments:

Other federal adjustments prior to the calculation of federal 1040 line 38 (federal AGI) not already taken on the IA 1040.

Married Separate Filers: When the adjustment is attributable to a specific spouse, it is taken by that spouse. When the adjustment is not attributable to any one spouse, it must be prorated based on the net income amounts on line 26. Calculate through line 26 as if the adjustment in question were excluded. If the adjustment is attributable to a dependent, such as the tuition and fees deduction, it is prorated based on net income before the adjustment in question. (Examples of how to prorate)

Go to Line 23

Go to Line 25