Iowa Subtractions From Income
Payments to an IRA, KEOGH, or SEP
Enter the amount claimed on your federal tax return for payments made to your IRA, Keogh Plan, SEP, SIMPLE, or Qualified Plans. Payments to a Roth IRA are not deductible.
MARRIED SEPARATE FILERS:
- If only one spouse has earned income, that individual can contribute up to $5,500 per year ($6,500 if 50 or older) to an IRA account of the nonworking spouse and up to $5,500 per year ($6,500 if 50 or older) to an IRA account of the individual.
- If both spouses earned income and made contributions to an IRA account, each spouse must claim his or her own contribution, not to exceed $5,500 per spouse ($6,500 if 50 or older).
- If both spouses made contributions to an IRA but only a portion of the contribution is deductible on the federal return, the amount of the IRA deduction that is allowed for federal income tax purposes must be allocated between the spouses in the ratio of the IRA contribution made by each spouse to the total IRA contribution made by both spouses.
- For Keogh Plans, SEPs, SIMPLE, or Qualified Plans, each spouse must claim his or her individual contributions.
One-Half of Self-Employment Tax
Enter the amount of self-employment tax that was deductible on line 27 of your federal 1040 in computing federal adjusted gross income.
MARRIED SEPARATE FILERS: The deduction is allocated in the ratio of self-employment tax paid by each spouse to the total self employment tax paid.
Health Insurance Deduction
Enter 100% of the maount paid for health and dental insurance premiums paid with post-tax funds. This includes supplemental health insurance, such as Medicare part B and D and long term nursing home coverage. Reduce the amount claimed by any reimbursements received.
Penalty on Early Withdrawal of Savings
Enter the amount of any penalty you were charged because you withdrew funds from your time savings deposit before its maturity.
MARRIED SEPARATE FILERS: Divide the penalty amount between spouses based upon registered ownership of the time deposit.
- Jointly held: Divide the penalty equally between spouses.
- Held in name of only one spouse: Allocate the entire penalty to that spouse.
Enter the amount of alimony payments or separate maintenance payments that were deductible on your federal tax return.
MARRIED SEPARATE FILERS: Only the spouse liable for these payments can deduct the alimony paid.
Pension/Retirement Income Exclusion
If you or your spouse receive a pension, annuity, self-employed retirement plan,deferred compensation, IRA distribution, or other retirement plan benefits, you may be eligible to exclude from Iowa income tax part or all of the retirement income that is taxable on your federal return. The Roth conversion income, included in net income, is eligible for this exclusion. Social Security benefits are not included.
The exclusion can be up to $6,000 for individuals who file status 1, 5, or 6 and up to $12,000 for married taxpayers who file status 2, 3, or 4.
To take this exclusion the pensioner or retirement income recipient must meet one of the following conditions;
- 55 years of age or older on December 31, 2015
- disabled, or
- a surviving spouse or a survivor having an insurable interest in an individual who would have qualified for the exclusion in 2015 on the basis of age or disability. A survivor other than surviving spouse is considered to have an "insurable interest" if the survivor is a son, daughter, mother, or father of the annuitant or pensioner.
MARRIED SEPARATE FILERS: If both spouses have pension income,and both meet the eligibility requirements, the exclusion of up to $12,000 is prorated between them in the ratio that each spouse’s pension relates to the total pension received by both spouses. If only one spouse has pension income and meets the eligibility requirements, that spouse takes the entire exclusion of up to $12,000. The spouse who has no pension income receives no exclusion.
Moving Expense Deduction
Enter the deduction for moving expenses incurred in 2015. Attach a copy of federal form 3903.
MARRIED SEPARATE FILERS: This deduction must be divided between spouses based on earned income received after their move. If one spouse can show that the move was made for that spouse, that spouse is entitled to the entire deduction.
Iowa Capital Gain Deduction
This is a deduction of qualifying net capital gain realized in 2015. Line 23 can be more than the net total reported on Schedule D. Unrelated losses are not go be included in the computation of the deduction. An example of an unrelated loss is the sale of common stock at a loss.
Note: This deduction is subject to review by the Iowa Department of Revenue.
MARRIED SEPARATE FILERS: Divide the capital gain deduction based on ownership of the asset.
- Jointly held: Divide equally between spouses.
- If other than jointly held: Divide between spouses based on percentage of ownership.
For additional information, please see Iowa Capital Gain Deduction.
College Savings Iowa or Iowa Advisor 529 Education Savings Plans If you or your spouse participate in the College Savings Iowa 529 Plan (Iowa Educational Savings Plan Trust) or the Iowa Advisor 529 Plan, each may deduct an amount contributed not to exceed $3,163 per beneficiary. A rollover from another state's 529 plan qualifies toward the deduction for Iowa income tax.
To enter this information into the TaxSlayer program, go to the State Section > Iowa return > Enter Myself > Continue > Subtractions from Income > Other Adjustments > Begin > Choose College Savings Iowa from the dropdown menu.
Active Duty Military Pay
Iowa allows its members of the armed forces, armed forces military reserve and the national guard in an active duty status to exclude pay received from the federal government for military service performed, to the extent it was included on line 15 of their Iowa return.
To enter this information into the TaxSlayer program, go to the State Section > Iowa return > Enter Myself > Continue > Subtractions from Income > Other Adjustments > Begin > Choose Military Exemptions from the dropdown menu.
Other Adjustments include:
- Disability Income Exclusion
- Iowa Net Operating Loss
- Gains or Losses from Distressed Sale
- Modifications to Partnerships/ S-Corp Income
- Work Opportunity Credit
- Federal Alcohol Fuel Credit
- Deduction for Wages Paid Certain Individuals
- Speculative Shell Buildings
- In-Home Health Care
- Employer Social Security Credit
- Claim of Right Deductions\ Military Exemptions
- Iowa Educational Savings Plan Trust
- Student Loan Interest Deduction
- Health Insurance Deduction
- Tuition and Fees Deduction (only allowed if same deduction was taken on federal Form 1040)
To see additional descriptions for the list of "Other Adjustments", please click here.