What's New?

Instruction Year
2020

NEW FOR 2020:

For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity, meaning the state will automatically conform to any changes made to the Internal Revenue Code (IRC), except as specified by Iowa law.

Economic impact payments (EIPs) whether in the form of a rebate or refundable tax credit will not be included in Iowa taxable income, or added back as part of your reportable federal income tax refund.

Paycheck Protection Program (PPP) loans that are forgiven and properly excluded from gross income for federal purposes will also qualify for exclusion from income for Iowa tax purposes.

Iowa follows Internal Revenue Service (IRS) Notice 2020-32, Rev. Rul. 2020-27, and Rev. Proc. 2020-51, disallowing certain deductions for business expenses paid using PPP loans. For more information regarding Iowa’s treatment of PPP loans, see tax.iowa.gov/cares-conformity.

New form: If you amend your IA income tax return on an IA 1040, the IA 102 must be attached. The IA 102 is not required if you are amending on an IA 1040X.

Step 5

Line 14

Iowa has not conformed with federal bonus depreciation provisions for assets acquired in 2020. The IRC section 179 limit applicable to individuals for Iowa for tax year 2020 is the same as the federal limit. See the IA 4562A/B for more information. Taxpayers who had to make adjustments for Iowa’s nonconformity to federal law in 2018 may need to complete form IA 101 in 2020 and later years. See the IA 101 Nonconformity Adjustments form for more information. Iowa has conformed with the federal repeal of like-kind exchanges of personal property for tax year 2019 and later. For tax year 2020 and later Iowa has not conformed with the business interest expense limitation in IRC section 163(j), see IA 163 and IA 163A for more information.

Step 6

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Use code “kk” to report the amount of a federal, state, or local grant provided to a communications service provider during the tax year, to the extent included on Schedule C, line 1, if the grant was used to install broadband infrastructure that facilitates broadband service in targeted service areas at or above the download and upload speeds.

Use code “ll” to report the amount of an Economic Development Authority grant provided under the Iowa Small Business Relief Grant Program, to the extent included on Schedule C, line 1.

Step 8

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A number of adjustments and separate Iowa calculations may be necessary to determine the correct deduction.

Step 9

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The geothermal heat pump tax credit may be available for installations completed in 2020. Total geothermal credits awarded by the Department of Revenue cannot exceed $1,000,000 per year. Applications for 2020 installations are due May 1, 2021. Submit applications through taxcredit.iowa.gov.

Track Your Return: Use Where's My Refund to check the status of individual income tax returns and amended individual income tax returns you've filed within the last year or over the phone at 515-281-3114 or 800-367-3388.