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24. OTHER ADJUSTMENTS.

Enter the total of other allowable adjustments as described below. Include an explanation for each adjustment.

Do not include any deduction for the small business health insurance tax credit that was not allowed as a deduction on the federal return.

Accrual method

Alternative motor vehicle deduction

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

Capital or ordinary gain from involuntary conversion related to eminent domain

Claim of Right Deduction

College Savings Iowa Advisor 529 Education Savings Plans

Disability income exclusion

Domestic production activities deduction

Educator Expenses

Employee benefits for same-sex married couples

Employer Social Security Credit from federal return

Federal Alcohol Fuel Credit from federal return

Film production income exclusion

Foreign-earned income exclusion and/or foreign housing deduction from federal return

Gains or losses from distressed sale transactions

Health savings account deduction from federal return

 

Injured veterans program, contributions to

Injured veterans program, grants from

In-home health care

Iowa Veterans Trust Fund

Military exemptions

Net operating loss, Iowa

Organ transplant expenses

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

Segal Americorps Education Award Payments

Speculative shell buildings

Student Loan Interest Deduction from federal return

Tuition and Fees Deduction

Victim compensation awards

Vietnam veterans bonus

Wages paid to certain individuals

Work Opportunity Credit from federal return

Other federal adjustments prior to calculating federal line 38


a. Accrual method

Taxpayers who had capital gains in 2011 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. 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.

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

An 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.

e. Claim of Right Deduction

If income was repaid in the 2011 tax year and was reported and taxed on a prior Iowa return, that income may be deducted on the 2011 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 2009 Iowa return. In early 2011 the taxpayer was notified that $4,000 of the unemployment benefits had to be repaid. The benefits were repaid by the end of 2011. The taxpayer may claim a $4,000 income adjustment on line 24 of the 2011 Iowa return.

f. 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 $2,865 per beneficiary. These are Iowa Section 529 Plans.

A rollover from another state's 529 plan qualifies toward the deduction for Iowa income tax.

g. Disability income exclusion

You may exclude from Iowa tax a portion of the disability pay you received in 2011 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, 2011, 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 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.

h. 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.

i. Educator Expenses

Enter out-of-pocket teacher expenses as allowed on the federal 1040. A deduction is allowed for up to $250 annually of expenses incurred by teachers, instructors, counselors, principals, etc., for books, supplies, computer equipment and materials used in the classroom.

The taxpayer can also choose to make an adjustment on the 2011 tax year return for Iowa's coupling with the federal Educator Expenses Deduction for 2010. The taxpayer has the option to amend 2010 or adjust 2011.

j. Employee benefits for same-sex married couples

The federal and state tax treatment of certain employee benefits for same-sex married couples are not the same. 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 4-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. Iowa Veterans Trust Fund

Income from the Iowa Veterans Trust Fund for the following items can be excluded from Iowa individual income tax:

  • Travel expenses directly related to follow-up medical care for wounded veterans and their spouses
  • Unemployment assistance during a period of unemployment due to prolonged physical or mental illness or disability resulting from military service

u. Military exemptions, including active duty pay

Information: See this file for all military information

v. 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.

w. 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.

x. 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.

y. Segal Americorps Education Award Payments

Federal Segal Americorps education award payments are excluded from Iowa individual income tax.

z. 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. Include a worksheet showing this calculation.

aa. 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.

bb. Tuition and Fees Deduction

Enter the amount from the federal 1040 or federal 1040A.

NOTE: This deduction can only be taken on the Iowa return if the same deduction was taken for federal tax purposes - if the federal Lifetime Learning or American Opportunity credits were taken in lieu of the deduction, no deduction is allowed on the IA1040 even though those credits are not allowed for Iowa purposes.

The taxpayer can also choose to make an adjustment on the 2011 tax year return for Iowa’s coupling with the federal Tuition and Fees Deduction for 2010. The taxpayer has the option to amend 2010 or adjust 2011.  

cc. 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

dd. 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.

ee. 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:

ff. Work Opportunity Credit

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

gg. 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