FOR IMMEDIATE RELEASE
April 13, 2011
DES MOINES - Changes for tax year 2010 Iowa Income Tax filing became effective April 12, 2011 with the enactment of Senate File 512. This legislation couples Iowa tax provisions with federal provisions retroactive to January 1, 2010 in the areas listed below. Taxpayers who are impacted by these changes and have already filed returns for tax year 2010 may want to consider filing an amended Iowa tax return. NOTE: Iowa did not couple with the bonus depreciation provisions allowed for federal tax purposes for the 2010 tax year.
For Individual Income Tax Filers Only:
- Deduction of Educator Expenses: Taxpayers who meet the requirements of an eligible educator in 2010, can deduct up to $250 of qualified expenses he or she paid in 2010 and claimed on line 23 of the federal return. This deduction is claimed as an Other Adjustment on line 24 of the IA 1040.
- Tuition and Fees Deduction for Higher Education: Taxpayers who paid qualified tuition and fees for themselves, a spouse, or dependent(s) are able to take this deduction as claimed on line 34 of the federal return. This deduction is claimed as an Other Adjustment on line 24 of the IA 1040.
- Election to Deduct State Sales/Use Tax as an Itemized Deduction in lieu of State Income Tax: Taxpayers will have the option of claiming an itemized deduction for either other state and local income taxes, or general sales taxes as claimed on the federal Schedule A, line 5. Iowa 1040 Schedule A has been modified to incorporate this change and is available on the Department Web site.
- Earned Income Tax Credit (EITC): The refundable Iowa credit is simply 7% of the federal credit, and there is no longer a need to recalculate the federal credit.
- Tax Free Distribution from an IRA to Certain Charities for Individuals 70½ and Older: Taxpayers age 70½ and older can distribute up to $100,000 from their individual retirement account to certain charitable organizations without including the distribution in gross income.
For Individual Income Tax Filers as well as Corporate Income Tax (including S Corporations), Partnership, Fiduciary, and Franchise Tax:
- Section 179 Asset Expensing: An increase in the Section 179 expense deduction changes the cap for Iowa taxpayers from $134,000 to $500,000 for tax years beginning in 2010. This phases out when purchases exceed $2,000,000. This brings the limit in line with the federal provisions.
- Alternative Simplified Research Credit, Form IA 128S: This tax form immediately replaces the Iowa Alternative Incremental Research Activities Credit, IA 128A, for tax years beginning on or after January 1, 2010. Electronic filing of this form will not be accepted by the Department until April 26, 2011.
- Deduction Related to Small Business Health Insurance Credit: For federal tax purposes, taxpayers claiming this credit must reduce the deduction for health insurance premiums by the amount of the credit. Since the deduction is disallowed for federal tax purposes, it is not allowed as a deduction for Iowa purposes and no adjustment can be made on the Iowa return.
- Start-up Expenditures: Iowa adopts the increase in the amount of start-up expenditures from $5,000 to $10,000 for 2010.
Taxpayers who have already filed tax year 2010 returns should review information provided on the Department’s Web site www.iowa.gov/tax about how to file an amended return.
For More Information:
Additional information can be found on the Department’s Web site: www.iowa.gov/tax. Taxpayers can call for assistance at: 515-281-3114 or 1-800-367-3388 (Iowa, Omaha, Rock Island, Moline) 8:00 a.m. - 4:15 p.m. CT or e-mail: email@example.com
Media Contact: Roger Stirler, Public Information Officer, Iowa Department of Revenue
Phone: 515-281-4908 E-mail: Roger.Stirler@iowa.gov