FOR IMMEDIATE RELEASE
November 3, 2008
Media Contact: Jim McNulty, Iowa Department of Revenue, (515) 281-6183
Income Tax Changes for Victims of 2008 Disasters
The Internal Revenue Service has made changes in federal income tax law that will benefit taxpayers affected by disasters in 2008. At this time, these changes do not impact Iowa tax law (or Iowa tax returns). The Iowa Legislature will decide in early 2009 if these changes will be allowed for Iowa income tax purposes.
On the federal 2008 income tax forms, disaster losses may be claimed an itemized deduction. For taxpayers who do not use the Schedule A, a disaster standard deduction will be provided. Rules for distributions from IRAs, 401(k), and other retirement plans will be relaxed. In addition, the federal return will have disaster options for depreciation, Section 179 expensing, and bonus depreciation. Finally, additional charitable contribution incentives for disaster relief are available.
Some disaster relief provisions are already in effect for Iowa income tax purposes.
Taxpayers in presidentially-declared disaster areas may claim disaster-related casualty losses on their federal income tax returns for either 2007 or 2008. The option chosen for federal purposes will be automatically allowed for Iowa tax purposes. Taxpayers may amend their 2007 Iowa income tax returns to take advantage of this provision.
Payments received under the “Jumpstart” small business assistance program or the “Jumpstart” housing assistance program are qualified disaster relief payments that are exempt from federal and Iowa income tax.
A list of presidentially-declared disaster areas is available on the State of Iowa Flood 2008 Web site at www.flood2008.iowa.gov .
For more information on the Iowa disaster relief provisions, please contact the Taxpayer Services Section of the Department at 800-367-3388 or 515-281-3114 or e-mail at email@example.com .