Federal Economic Stimulus Package
– Impact on Iowa Taxes

Starting in May, the federal government will begin sending economic stimulus payments to qualifying taxpayers. Eligible taxpayers will receive one-time stimulus payments of up to $600 ($1,200 married filing jointly). There also is a $300 per child payment for qualifying children younger than 17. Many retirees, disabled veterans and low-wage earners who usually are exempt from filing a federal tax return must do so this year in order to receive a stimulus payment. 

While this is a federal program, it may trigger some questions on the part of taxpayers regarding their Iowa income tax returns. The following Q & A's have been developed to address those questions:

Q: Is the federal payment I receive reported on my 2008 Iowa income tax return?

A: The federal economic stimulus payments will not be included as income on the Iowa return.  Therefore, the payment amount received need not be reported as a federal refund on the 2008 Iowa income tax return.

Q: Do I need to file a 2007 Iowa income tax return to receive the federal payment? 

A: An Iowa return is not required to be filed to receive the federal stimulus payment. Even if filing a 2007 federal return to receive the stimulus payment, do not file an Iowa return unless otherwise required to do so.

Q: Will Iowa also be sending stimulus payments?

A: The economic stimulus payment is available at the federal level only. Iowa will not be issuing similar payments.

Q: Will Iowa follow the new section 179 expensing provisions that are part of the federal stimulus package?

A: Iowa has adopted the section 179 expensing increase to $250,000 for 2008.

Q: Will Iowa also follow the new federal bonus depreciation provisions?

A: Iowa did not couple with the 50% bonus depreciation adjustment for assets acquired in 2008. The Web version of the 2007 IA 4562A has been revised accordingly to accommodate fiscal year filers who may potentially need to make an adjustment for this on their 2007 Iowa return.