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WHAT'S NEW?

Legislative Update Specific Line Information Other News

Legislative Update

The 2010 Legislative Summary is available online only.

Legislative changes are incorporated in the information below.

Internal Revenue Service Code Changes:

Effective with the enactment of Senate File 512 on April 12, 2011, Iowa tax provisions are coupled with federal provisions retroactive to January 1, 2010 in the areas listed below.

For Individual Income Tax Filers Only:

  • Deduction of Educator Expenses
  • Tuition and Fees Deduction for Higher Education
  • Election to Deduct State Sales/Use Tax as an Itemized Deduction in lieu of State Income Tax
  • Earned Income Tax Credit (EITC)
  • Tax Free Distribution from an IRA to Certain Charities for Individuals 70½ and Older

For Individual Income Tax Filers as well as Corporate Income Tax (including S Corporations) filing, Partnership, Fiduciary, and Franchise Tax:

  • Section 179 Asset Expensing
  • Alternative Simplified Research Credit
  • Deduction Related to Small Business Health Insurance Credit
  • Start-up Expenditures

Please see Tax Year 2010 Income Tax Changes for Iowa Taxpayers for additional details.

SPECIFIC LINE INFORMATION


Step 1

Dependent Child Health Care Coverage: The indication of whether dependents have health care coverage is mandatory and must be completed for 2010. Taxpayers who do not have health care coverage for their children may be eligible for the state medical assistance program or the hawk-i program. Dependent children already covered under the Medicaid or hawk-i programs are considered to have health care coverage. Those who indicate they do not have health care coverage will receive information about these programs.


Step 2

Filing Status: Same-sex married couples must use filing status 2, 3, or 4 when filing Iowa returns. For additional information, please see Iowa Tax Treatment of Same-Sex Marriages on our Web site.

Line 8 Taxable IRA Distributions - Report the same amount of taxable IRA distributions as shown on your federal return. For federal tax purposes, the entire amount from a 2010 rollover of an IRA (other than a Roth IRA to a Roth IRA) can be included in 2010 income. Another option is to include the income on the federal return in equal amounts in 2011 and 2012. Whichever option is chosen for federal tax purposes will also apply to the Iowa return.

Line 13 Social Security Worksheet - The phase-out of tax on Social Security continues with a 55% reduction established by the Iowa Legislature. This is an increase in the exclusion percentage, which was 43% in 2009. For more information, see the 2006 Legislative Summary for SF 2408-C on our Web site.

Line 14 Bonus Depreciation - Iowa has not coupled with 50% bonus depreciation.

Line 21 Pension/Retirement Income Exclusion - Beginning with tax year 2010, only the pension income of a taxpayer or spouse who meets the eligibility requirements can be shown on line 21.

Line 24 Adjustments

  • College Savings Iowa or Iowa Advisor 529 Plan:
    The deductible amount for tax year 2010 cannot exceed $2,811 per beneficiary.
  • Effective with the enactment of Senate File 512 on April 12, 2011, Iowa has coupled with the deductions for: (1) educator expenses and (2) tuition and fees.
  • Iowa has coupled with the deduction for the value of health insurance for nonqualified dependents that are ages 25 or 26. NOTE: The information on this issue in the NEW FOR 2010 section of the IA 1040 booklet is no longer correct.
  • Deductions are available for Segal Americorps Education award payments and payments from the Iowa Veterans Trust fund related to travel expenses and unemployment assistance.

Line 27 Federal Income Tax Refund Received in 2010

Do not include any part of the refund received from Earned Income Tax Credit, Additional Child Tax Credit, First-time Homebuyer Credit, Refundable Education Credit, or Making Work Pay and Government Retiree Credits.

Line 33 FICA Amount - FICA payments for tax year 2010 in excess of $6,621.60 for Social Security tax for each person can be deducted as a federal tax payment.

Line 37 Itemized Deductions

  • Certain high-income taxpayers do not have to reduce their itemized deductions for 2010.
  • Contributions eligible for the Endow Iowa tax credit cannot be deducted.

Effective with the enactment of Senate File 512 on April 12, 2011, the itemized deduction for state sales and use tax in lieu of state income tax is allowed.

For Iowa purposes, the itemized deduction for state sales and use tax paid is allowed only if the taxpayer claimed an itemized deduction for state sales and use tax paid on the Federal return. If a taxpayer claimed state income taxes as an itemized deduction on the Federal return, or claimed the standard deduction on the Federal return, the taxpayer cannot claim an itemized deduction for state sales and use tax paid on the Iowa return.

If one spouse itemizes deductions, then both spouses must itemize, even if separate Iowa returns are filed.

Line 40 Reminder - Charitable Mileage - Iowa charitable mileage formula uses 39 cents.

Line 41 Standard Deduction for tax year 2010:

Filing Status 1: $1,810
Filing Status 3 & 4: $1,810 for each spouse
Filing Status 2, 5 or 6: $4,460

Line 53 Other Nonrefundable Iowa Credits

Reminder: Form IA 148 Tax Credits Schedule must be completed and attached.

Line 58 Reminder - Checkoffs

Child Abuse Prevention Program Fund
Combined: Veterans Trust Fund / Volunteer Firefighter Preparedness Fund
Others: Fish and Wildlife Fund; Iowa State Fair Foundation

Line 65 Reminder - Iowa Earned Income Tax Credit

This credit is 7.0% of the federal Earned Income Tax Credit. The Iowa EITC is refundable.

Line 66 Other Refundable Credits

Reminder: Form IA 148 Tax Credits Schedule must be completed and attached.

Line 74 Interest Rate 2011

5% per year; 0.4% per month; 0.013699% per day

OTHER NEWS

 

DUE DATE: May 2, 2011

Farmers and fishers due date: If at least 2/3 of income is from farming or commercial fishing, penalty for underpayment of estimated tax may be avoided in one of the following ways: (1) Pay the estimated tax in one payment on or before January 18, 2011, and file the Iowa income tax return by May 2, 2011, or (2) File the Iowa income tax return and pay the tax due in full on or before March 1, 2011.

Military

Tax Rate Schedules (pdf)

Payment Options:

ePay (free direct debit) individual income tax estimated payments and final payment of individual income tax through the Department’s online eFile & Pay system free of charge.
Credit / debit card: Fee is charged by the third-party vendor. Our Web site has information and links.
Check / money order: Send with IA 1040V payment voucher.

Power of Attorney Form: The federal or military power of attorney form is accepted by the Iowa Department of Revenue. You must write a statement on the federal or military form that indicates you are submitting it for use with State of Iowa forms. The statement needs to be initialed by the taxpayer.