Updated April 28, 2009
The Iowa Department of Revenue has been informed of federal income tax law changes which may benefit taxpayers affected by the disasters that struck Iowa during 2008. The Iowa Legislature has adjourned its 2009 session. Iowa will not be coupling with the 2008 federal law provisions related to disasters.
See IRS Publication 4492-B for more detailed federal tax relief information.
The FEDERAL tax law changes which apply to federally-declared disaster areas
are listed below:
These are NOT applicable to Iowa.
For businesses:
- Taxpayers can elect to treat certain qualified disaster expenses as a deduction instead of capitalized expenditures that would normally be depreciated over a period of years.
- Taxpayers with qualified disaster losses can carry back these losses to the five previous tax years.
- Taxpayers who claim the Section 179 expensing amount can increase their deduction by as much as $100,000 of qualified section 179 disaster assistance property.
- 50% bonus depreciation is available for qualified disaster assistance property.
- Additional charitable contributions incentives related to disaster relief.
The following disaster provisions are effective for IOWA income tax purposes:
Taxpayers in presidentially-declared disaster areas may claim disaster-related casualty losses on their federal income tax returns for either 2007 or 2008. The option chosen for federal purposes will be automatically allowed for Iowa tax purposes. Taxpayers may amend their 2007 Iowa income tax returns to take advantage of this provision.
The financial assistance received under the “Jumpstart” small business assistance program and the “Jumpstart” housing assistance program must reduce the amount of casualty loss allowed as a deduction on an individual's or small business's federal and Iowa income tax return.
For example, $10,000 of Jumpstart assistance received in 2008 for a $40,000 casualty loss results in only $30,000 allowed as a casualty loss on the federal and Iowa 2008 tax returns. If Jumpstart assistance was not received until 2009, the $40,000 casualty loss can be deducted on the 2008 federal and Iowa returns, and the $10,000 is reported as income on the 2009 federal and Iowa returns.
For more information on these disaster relief provisions, please contact the Taxpayer Services Section of the Department at 800-367-3388 or 515-281-3114 or e-mail at idr@iowa.gov . More information can also be found on the Internal Revenue Services Web site at www.irs.gov .
News story released April 8, 2009
Were your tax records destroyed?
If so, Iowa is following the IRS guidelines on reconstruction of records