<%@LANGUAGE="JAVASCRIPT" CODEPAGE="1252"%> Iowa Department of Revenue electronic newsletter: Iowa Tax eNews
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e-News
December 2013 ------------------------------------------------------------------------------------------------------------------------------------------------

In This Issue

IA 1040A and IA 1120A Short Forms discontinued for 2013

The short forms for Iowa individual income tax (IA 1040A) and Iowa corporation income tax (IA 1120A) will be discontinued as of tax year 2013. Taxpayers who may have used these forms in the past will need to use the IA 1040 or IA 1120 beginning in tax year 2013.

This step is being taken due to declining use of the short forms, as well as to allow more taxpayers to file electronically. Iowa short forms weren’t eligible for electronic filing. It is estimated that 97% of current IA 1040A users can eFile for free.

While the IA 1040 and IA 1120 have more lines and schedules than the short forms, taxpayers who were eligible to file a short form in the past will have no need to use most of those additional lines / schedules. Therefore, filing should still be relatively easy.  

End-of-year reminders for withholding filers

With the end of the year approaching, you will want to file your Iowa Verified Summary of Payments Report (VSP) through eFile & Pay. The 2013 VSP must be filed by February 28, 2014.

Iowa does not require you to send in copies of the W-2s or 1099s. Employers are, however, required to keep copies for four years.

The federal government requires employers to provide W-2s and 1099s to employees no later than January 31, 2014, for tax year 2013. W-2s and 1099s are federal forms and can be obtained through the IRS Web site, or by calling the IRS at 1-800-829-3676, or by purchasing them through an office supply company.

The Iowa withholding tax tables will NOT change for 2014. Please continue to use the current tables, which became effective April 1, 2006.

The Iowa W-4 for 2013 is now online.

Itemized Deductions - Use Iowa Schedule A for 2013

The option to substitute the Federal Schedule A for individuals who itemize deductions on their Iowa returns will not be available for tax year 2013. All taxpayers who itemize deductions on the Iowa return must use the Iowa Schedule A beginning with 2013.

Previously, taxpayers who used the Federal Schedule A for Iowa purposes may have been required to make adjustments to the amounts on the federal schedule. It is believed the use of Iowa’s Schedule A for all taxpayers will reduce the possibility of errors connected with those adjustments. In addition, the Iowa Schedule A includes lines for a proration calculation for married taxpayers using filing status 3 or 4. Lines for that calculation are not part of the Federal Schedule A.  

E911 surcharge

The E911 surcharge increased on November 1, 2013 to 51 cents per retail transaction on sales of prepaid wireless telecommunication service.  Prior to 11/1/13, the surcharge rate was 33 cents per retail transaction.

Prepaid telecommunication service includes:

  • Prepaid wireless telephone minute cards;
  • Prepaid phones that include minute plans; or
  • Prepaid wireless service in any other form

Prior to 11/1/13: 

  • Surcharge rate = 33 cents per retail transaction
  • 32 cents reported and paid with the sales/use return
  • Retailer allowed to keep 1 cent

On or after 11/1/13: 

  • Surcharge rate = 51 cents per retail transaction
  • 49 cents reported and paid with the sales/use return
  • Retailer allowed to keep 2 cents

How to report and pay the surcharge amount on the sales/use tax return using eFile & Pay: 

  • The eFile & Pay system will use an amount of 49 cents per transaction on the fourth quarter return, as well as on the annual return for 2013
  • The option to report transactions at 32 cents will not be available on the eFile & Pay system for those periods
  • Due to the different surcharge rates during the periods, the worksheet below should be completed to determine the correct amount to report on the return
  • DO NOT send the worksheet to the Department, but keep it for your records.

E911 Surcharge Worksheet                                                 Number of Transactions                  Rate                Surcharge Amount

  • Number of retail transactions prior to 11/1/13….... ._________________            X       $0.32      =       $ ___________

 

  • Number of retail transactions on or after 11/1/13…._________________             X       $0.49      =      $ ___________
  • Total surcharge amount……………………………………………………………………………….$ ____________

 

  • Divide the amount on line 3 by 0.49 (round to the nearest whole number).……….………………… _______________
  • Enter the amount on line 4 as the “Total number of retail transactions” on the eFile & Pay E911 Surcharge Schedule.  The eFile & Pay system will calculate the surcharge using 49 cents, which will result in the correct amount of surcharge for the period.

 

E911 Surcharge Worksheet Example                                 Number of Transactions                  Rate                Surcharge Amount

  • Number of retail transactions prior to 11/1/13….... .______75_________        X       $0.32     =       $ ____24_______

 

  • Number of retail transactions on or after 11/1/13….______150________         X       $0.49    =      $ ____74 (rounded)
  • Total surcharge amount…………………………………………………………………………….$ ____98________

 

  • Divide the amount on line 3 by 0.49 (round to the nearest whole number).……….……………………… ___200______
  • Enter the amount on line 4 as the “Total number of retail transactions” on the eFile & Pay E911 Surcharge Schedule.  The eFile & Pay system will calculate the surcharge using 49 cents, which will result in the correct amount of surcharge for the period.

                                                                                                                                                                                                                        200 X $0.49 = $ 98

Expanded instructions for 2013 IA 1040 available online soon

Our 2013 IA 1040 Expanded Instructions will soon be posted online; please watch our individual income tax forms page. Be sure to read the "What's New" page once the E.I. is posted. The 2013 printer-friendly PDF version is also coming soon.

Rent Reimbursement forms to be mailed in January

The 2013 Rent Reimbursement Claims will be mailed during the first week of January to those individuals who filed a 2012 form.  The forms sent in this mass mailing will be pre-printed with the claimant's name, address and other important information.  It is to the claimant's benefit to use the pre-printed form whenever possible as the information contained on it speeds processing.

Blank 2013 Rent Reimbursement Claims (not pre-printed) will be available on our Web site Wednesday, 1/15/14.  On that date, they will also be available at the Taxpayer Services office located on the fourth floor of the Hoover State Office Building in Des Moines.

The calculation of the reimbursement amount is now optional for the claimant.  If the claimant chooses, the Department will make that calculation for them. The form also includes a QR code that lists resources to assist with filing a claim.

The Rent Reimbursement program is available to Iowa residents whose total household income is less than $21,698 and one of the following applies:

  • 65 years of age or older by December 31, 2013, or
  • Totally disabled and 18 years of age or older by December 31, 2013.

In addition, the individual must be renting housing in a building subject to property tax.

January 2014: Department offers extended customer service hours

The Iowa Department of Revenue is pleased to announce expanded telephone customer service hours during the month of January 2014, from 8:00 am to 4:45 pm, Monday through Friday.  Walk-in and e-mail customers will continue to be served Monday through Friday, 8:00 am to 4:30 pm.

Customers can reach the Department at:

  •  515-281-3114 / 1-800-367-3388
  • idr@iowa.gov
  • 1305 E. Walnut, 4th Floor, Hoover State Office Building, Des Moines, Iowa   

Telephone service hours will return to normal, 8:00 am to 4:15 pm, on February 3, 2014.

Iowa income tax eFiling set to begin

Iowa individual income tax eFiling is scheduled to begin January 31, 2014. Iowa business income tax eFiling will begin on January 13. Taxpayers should be aware that delays in federal eFiling affect Iowa and may push the start date back.

Snow removal - Applying sand, salt, ice-melt

Snow removal is not subject to Iowa sales tax. The service of applying sand, salt, or ice-melt is likewise not taxable. However, the materials applied – sand, salt, ice-melt – are taxable products.  Sales tax is due on these materials.

  • When the snow removal business applies these materials for their customer and does not make a separately itemized charge for them, that business is the consumer of the materials and owes sales tax to its supplier when they are purchased.  No tax is charged to the snow removal business’ customer for services or materials.
  • In some cases, the snow removal business may separately itemize charges to their customer for the materials. If so, the business may be able to purchase the materials for resale and not pay sales tax to its supplier when three conditions are met.
    1. The business and its customer must agree that the product is being sold separately from the service, and
    2. The product must be sold to the customer in a definite form or amount and with a specific price attached, and
    3. The cost of the product must be itemized on the bill.  

When purchasing products for resale, a valid Sales Tax Exemption Certificate (pdf) will be provided by the snow removal business to the supplier who sells them the materials.  In this situation, the snow removal business must charge sales tax to their customer on the materials, but not on the services.

Can you eFile for free?

Are you 25 or younger?

Are you 65 or older?

Are you in the military?

Do you qualify for earned income credit?

Find out at www.iowa.gov/tax!

File your federal & Iowa returns at the same time from links on our Web site.

Get your refund in days instead of weeks.
eFiling is fast, safe, and easy.

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