The 2012 Legislative Summary is available online only.
Legislative changes are incorporated in the information below.
NOTE: Iowa did not couple with the bonus depreciation provisions allowed for federal tax purposes for the 2012 tax year.
For Individual Income Tax Filers Only:
- Allow deduction of educator expenses
- Allow tuition and fees deduction for higher education
- Allow election to deduct state sales/use tax as an itemized deduction in lieu of state income tax
- Allow treatment of mortgage insurance premiums as qualified residence interest
- Allow tax free distribution from an IRA to certain charities for individuals 70½ and older
- Allow itemized deductions in full for high income taxpayers
- Maintain increased eligibility for student loan interest deduction
- Maintain increased expense amount allowed for the child and dependent care credit
- Coupled with federal earned income tax credit changes
- Iowa allows the exclusion of 50% of the capital gain from the sale of employer securities of an Iowa corporation to an Iowa based employee stock ownership plan (ESOP), as long as the ESOP owns at least 30% of the outstanding employer securities after the sale.
- Members of the armed forces, armed forces military reserve and the national guard in an active duty status can exclude pay received from the federal government for military service performed.
- An Iowa geothermal heat pump tax credit is available equal to 20% of the federal residential energy tax credit for installations of geothermal energy systems for residential property located in Iowa.
For Individual Income Tax Filers as well as Corporate Income Tax (including S Corporations), Partnership, Fiduciary and Franchise Tax:
2012 section 179 limit for Iowa is $500,000, which is the same as the federal section 179 limit. The phase-out threshold is $2 million.
Do not include any deduction for the small business health insurance tax credit that was not allowed as a deduction on the federal return.
An Iowa solar energy system tax credit is available equal to 50% of the federal tax credit for installations of solar energy systems for residential and business property located in Iowa when an award has been issued by the Department. Click here for additional details.
SPECIFIC LINE INFORMATION
Dependent Child Health Care Coverage: The indication of whether dependents have health care coverage is mandatory and must be completed for 2012. 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.
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.
Lines 2 & 3 Interest & Dividends – Iowa Schedule B (interest and dividend income) redesigned.
Include all interest & dividend income on schedule, then allows adjustments for federal securities, double-exempt municipal bond interest and other nontaxable interest.
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) could have been included in 2010 income. Another option was to include the income on the federal return in equal amounts in 2011 and 2012. Whichever option was 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 77% reduction established by the Iowa Legislature. This is an increase in the exclusion percentage, which was 67% in 2011. 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. The section 179 limit for Iowa for 2012 is $139,000.
Line 21 Pension/Retirement Income Exclusion - Only the pension income of a taxpayer or spouse who meets the eligibility requirements can be shown on line 21.
Line 23 Iowa Capital Gain Deduction – Iowa allows the exclusion of 50% of the capital gain from the sale of employer securities of an Iowa corporation to an Iowa based employee stock ownership plan (ESOP), as long as the ESOP owns at least 30% of the outstanding employer securities after the sale.
Line 24 Adjustments
- College Savings Iowa or Iowa Advisor 529 Plan:
The deductible amount for tax year 2012 cannot exceed $2,975 per beneficiary.
- Iowa has coupled with the deduction for the value of health insurance for nonqualified dependents that are ages 25 or 26.
- Deductions are available for educator expenses for out-of-pocket expenses and the tuition and fees deduction claimed on the 2012
- Members of the armed forces, armed forces military reserve, and the national guard in an active duty status can exclude pay received from the federal government for military service performed.
- Do not include any deduction for the small business health insurance tax credit that was not allowed as a deduction on the federal return.
Line 27 Federal Income Tax Refund Received in 2012
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, Adoption Tax Credit.
Line 33 FICA Amount - FICA payments for tax year 2012 in excess of $4,624.20 for Social Security tax for each person can be deducted as a federal tax payment.
Line 37 Itemized Deductions
High-income taxpayers do not have to reduce their itemized deductions for 2012.
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 2012:
Filing Status 1: $1,860
Filing Status 3 & 4: $1,860 for each spouse
Filing Status 2, 5 or 6: $4,590
Line 53 Other Nonrefundable Iowa Credits
Reminder: Form IA 148 Tax Credits Schedule must be completed and attached.
An Iowa geothermal heat pump tax credit is available equal to 20% of the federal residential energy tax credit for installations of geothermal energy systems for residential property located in Iowa.
An Iowa solar energy system tax credit is available equal to 50% of the federal tax credit for installations of solar energy systems for residential and business property located in Iowa when an award has been issued by the Department.
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 64 Iowa Child & Dependent Care Credit – Now based on line 11 of federal 2441 (limited to federal tax liability).
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 2013
5% per year; 0.4% per month; 0.013699% per day
DUE DATE: April 30, 2013
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 15, 2013, and file the Iowa income tax return by April 30, 2013, or (2) File the Iowa income tax return and pay the tax due in full on or before March 1, 2013.
Tax Rate Schedules(pdf)
Direct Debit payment with the income tax return.
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 Power of Attorney form or a Military Power of Attorney is accepted by the Iowa Department of Revenue. To be valid, the Federal or Military form must include a statement that it is applicable for Iowa purposes at the time it is executed. In the case of a previously executed Federal or Military Power
of Attorney subsequently revised to apply for Iowa purposes, it must contain a written statement that indicates it is being submitted for use with State of Iowa forms and the statement needs to be initialed by the taxpayer.
Iowa allows married taxpayers to file one Iowa Power of Attorney form on behalf of both spouses. The IRS requires separate Power of Attorney forms for each spouse. If the Federal Power of Attorney is being used for Iowa purposes by married taxpayers, both federal forms must be submitted to Iowa.
Many of the online forms on the Department Web site (http://www.iowa.gov/tax/forms/loadform.html) are fillable. If using Adobe Reader Version 11, the form can now be saved after it is filled out.