2020 Expanded Instructions - Iowa

Revised 1/4/2021

1040 Instructions

Step 1 ...................................................................... 5 Step 2 ...................................................................... 6 Step 3 ...................................................................... 8 Step 4 .................................................................... 10 Step 5 .................................................................... 11 Step 6 .................................................................... 23 Step 7 .................................................................... 38

Step 8 .................................................................... 44 Step 9 .................................................................... 53 Step 10 .................................................................. 78 Step 11 .................................................................. 88 Step 12 .................................................................. 90 Step 13 .................................................................. 93

Other Information

New for 2020 .......................................................................................................................................................... 3 Conformity with The Internal Revenue Code (IRC)................................................................................................. 4 Who Must File? ....................................................................................................................................................... 4 Amending Tax Returns .......................................................................................................................................... 94 Are You a Resident of Iowa for Tax Purposes? ..................................................................................................... 94 Certified Tax Returns for Nonresidents ................................................................................................................ 95 Confidentiality....................................................................................................................................................... 95 Consumer's Use Tax .............................................................................................................................................. 96 Credits: Refundable or Nonrefundable - What's the Difference? ........................................................................ 97 Do You Owe Tax? Here Are Your Payment Options ............................................................................................. 97 Estimated Payments ............................................................................................................................................. 99 Extension Requests ............................................................................................................................................... 99 Farmers and Commercial Fishers........................................................................................................................ 100 Federal Bonus Depreciation / Section 179 ......................................................................................................... 100 Federal Non-Conformity Issues .......................................................................................................................... 100 How to Prorate.................................................................................................................................................... 100 Injured Spouse .................................................................................................................................................... 101 Instructions and Examples for Schedule IA 126 for Nonresidents and Part-Year Residents Credit................... 101 Iowa 2210 / 2210S General Information ............................................................................................................ 108 Iowa and Illinois Reciprocal Agreement ............................................................................................................. 111 Iowa Income Tax Responsibilities of Native Americans ..................................................................................... 112 Iowa Tax Responsibilities of Servicemembers and their Spouses ...................................................................... 112 Iowans Paid in Foreign Currency ........................................................................................................................ 119 Mailing Address for Returns and Payments ....................................................................................................... 119 Net Operating Losses .......................................................................................................................................... 120 Nonresidents and Part-Year Residents ............................................................................................................... 120 Nonresidents with Gambling Winnings .............................................................................................................. 120 Record Keeping ................................................................................................................................................... 121 Refunds May Be Used to Pay Debt ..................................................................................................................... 121 Rounding to Whole Dollars ................................................................................................................................. 122 Supporting Documentation ................................................................................................................................ 122 What to Do If You Do Not Receive Your W-2...................................................................................................... 122

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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.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.

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.

Line 24: Line 24 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.

Line 37: A number of adjustments and separate Iowa calculations may be necessary to determine the correct deduction.

Line 52: 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..

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 800-3673388.

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Conformity with The Internal Revenue Code (IRC)

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.

For the most part, the calculation of Iowa net income is still the same as the calculation for federal adjusted gross income (AGI). However, the calculation of Iowa net income will be different from the federal AGI calculation when it comes to certain items described later in these instructions, such as bonus depreciation, section 179 special election deductions, and the business interest expense limitation.

Disclaimer: Please be advised that this is an informational document. It should not be relied upon or otherwise cited as precedent. This information is subject to change at any time. If a member of the public wishes to request a binding decision, he or she must file a Petition for Declaratory Order pursuant to 701 IAC 7.24.

Who Must File?

You must file an Iowa return if ...you were a resident or part-year resident of Iowa in 2020 and meet any of the following requirements. Nonresidents, see items f. and g.

In meeting the filing requirements below, you must add back: ? the pension exclusion (line 21, IA 1040) ? the reportable Social Security amount from step 4, IA 1040 ? any amount of lump sum distribution separately taxed on federal form 4972, and ? any net operating loss carryforward

Note to married couples:

Incomes of both spouses must be included when determining who must file.

a) You had a net income (line 26, IA 1040) of more than $9,000 and your filing status is single. ($24,000 if 65 or older on 12/31/20)

b) You had a net income (line 26, IA 1040) of more than $13,500 and your filing status is other than single. ($32,000 if you or your spouse is 65 or older on 12/31/20)

c) You were claimed as a dependent on another person's Iowa return and had a net income (line 26, IA 1040) of $5,000 or more.

d) You were in the military service with Iowa shown as your legal residence even though stationed outside of Iowa unless you are below the income thresholds above. For information about military spouses, see Military Spouses Residency Relief Act.

e) You were subject to Iowa lump-sum tax. f) You were a nonresident or part-year resident and your net income from Iowa sources [line 26, IA 126]

was $1,000 or more, unless below the income thresholds above. In the case of married nonresidents, the spouses' combined income is used to determine if their income is high enough to require them to file an Iowa return. To understand "Iowa-source income," see the instructions for lines 1 through 26 of the IA 126. g) You were a nonresident or part-year resident and subject to Iowa lump-sum tax or Iowa alternative minimum tax (even if Iowa-source income is less than $1,000).

NOTE: If you do not meet any of the above requirements but you had Iowa tax withheld and you wish to receive a refund, you must file an Iowa return.

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Step 1

Before You Begin

Step: 1 Step Subject: Name and Address

Make sure you have received all W-2s, 1099s, and other tax documents needed to prepare your return. Important: Enter your Social Security Number(s) in the appropriate boxes on the form. Otherwise, we may be unable to process your return.

Filing Period

If your filing period is other than calendar year 2020, enter the beginning and ending dates of your fiscal tax year on the line provided above the name and address boxes on the return.

Name and Mailing Address

Enter your name and mailing address on the tax return. If using a foreign mailing address, in place of the domestic city, state, ZIP, include the foreign city, country, and ZIP.

Provide the Department with your updated address if you move after your return is filed. Send an email to IDRCA-Inc@

NOTE: The email address entered will NOT be used to request or provide confidential information without your authorization.

The Iowa Department of Revenue may require proof of any item listed on a return or schedule.

If You or Your Spouse is 65 or Older on 12/31/20 Check the box.

County

Enter the number of the county you lived in as of December 31, 2020. If you do not know your county number, view a list of districts by county and number.

? Nonresidents and part-year residents who moved out of Iowa before December 31, 2020, should enter "00" as your county number.

? Part-year residents who moved into Iowa should enter the number of the Iowa county in which you lived on December 31, 2020.

? Military personnel should enter the county number of their Iowa residence, even if the service member is not physically present in Iowa on the last day of the tax year.

School District Number

Enter the district in which you lived on December 31, 2020. View a list of districts by county and number. This is not necessarily the district where your children attended school. Even if you do not have children, you must enter this number.

Your voter registration card is a good reference for your school district.

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