Tax Credit

I receive 100% compensation because I have 100% individual un-employability. 

Yes. On March 5, 2015 Governor Branstad signed in to law House File 166,  an Act relating to the disabled veteran homestead tax credit. The bill modifies eligibility criteria to include disabled veterans with permanent and total disability ratings based on individual unemployability paid at the 100% disability rate.

Credits are not refundable.  Any credit in excess of the tax liability may be carried forward for up to five years.

Buildings on leased land do not qualify.

The veteran must be an owner to qualify for the credit.  If the property is only in the spouse’s name the property would not qualify for the credit because the veteran is not the owner.

Under Iowa Statutes 425.2 the spouse or a member of the veteran's family may sign the application.

If they qualify under 1d and are receiving DIC, they are noted as the surviving spouse or child on the document.

The adopted child would have to first be established as the owner of the property to qualify.  If the child is not an owner they property would not qualify for the credit.

No. However, the assessor may seek additional information as necessary to determine continued qualification, similar to all tax credits and exemptions.

Iowa Code section 561.2 defines the amount of property that qualifies for homestead treatment and these same definitions apply to the Disabled Veteran Tax Credit. For properties located within city limits the maximum size is 1/2 acre where the home and the buildings if any are located.  For properties located outside the city limits the maximum size is 40 acres which includes the house and any buildings. In either case if the valuation is less than $500 it may be enlarged until it reaches that amount. The Disabled Veteran Tax Credit would only apply to the home in which the applicant lives. Any other dwellings on the property would not qualify.

Applications for Disabled Veteran Tax Credits are public record.  The applicant will need to be aware to limit the provision of private health related information and redact any social security numbers or information from the supporting documentation.

No, the value of the donation for which the tax credit is claimed cannot be included as a charitable contribution on the Iowa tax return, however, the value of the donation may be included as a charitable contribution on the Federal tax return.

Yes, surviving spouses that are receiving DIC payments qualify for the credit even if their spouse was not 100% service connected disability rating. Receiving DIC payments means their spouses death was service connected.  They are not required to have a 100% service connected disability rating as they qualify under 1d.

There is no requirement that the supporting documentation that accompanies the application for the Disabled Veteran Tax Credit be recorded.  The Military Service exemption under Chapter 426A requires the documentation be recorded, so we can assume that is not a requirement for the DVTC because the law is silent.  Once the veteran has provided documentation of the DD214 they no longer need to provide this evidence.

No, after much discussion with VA representatives and others annual reapplication is no longer required.  Instead, a notification to the assessor is required if a veteran or surviving spouse no longer qualifies for the credit.

Residents of Iowa who paid income tax in another state and who reside in a school district with an income surtax or a county with an EMS surtax may be impacted by this decision.  Also impacted are Iowans who paid income taxes to local jurisdictions in other states.

You may request a refund in the following ways:

• If you have already filed Iowa individual income tax returns, file a separate form IA 1040X for each year you are claiming a refund.
• If you have not yet filed an Iowa individual income tax return, file form IA 1040 for each year.

Don’t forget:

• You must indicate the tax year on the top of each IA 1040X.
• A completed, signed copy of the income tax return filed in the other state must also be attached.
• If you are claiming credit for taxes paid in more than one state, a separate form IA 130 must be completed for each state.

The value of the donation is specified by the donor and must reflect the market value of the food at the time of the donation using the guidelines set forth in IRS regulation 1.170A-13(b). 

Taxpayers must receive an authorized food organization receipt when they make their donation to the registered Iowa food bank or food pantry or Iowa emergency feeding organization.  All authorized receipts should be sent together if multiple donations are made throughout the year and must be postmarked by January 15 of the year following the tax year in which the donation was made.

Amended returns must be filed within the normal three (3) year statute of limitations.

The income requirement is no longer applicable therefore an annual reapplication is not necessary. 

Yes, all supporting documentation must be within the last 12 months.

If the assessor verifies the DD214 is recorded and that the document is for the applicant noting the book and page on the application would be sufficient.

A qualifying person who elects to secure the credit provided in this section is not eligible for any other real property tax exemption provided by law for veterans of military service.  If the applicant does not qualify for the disabled veteran additional homestead benefit and had been receiving a homestead prior to this additional benefit in future years, the applicant would be entitled to receive their original homestead without reapplication.

And do we attach a copy of that to the form?

The assessor could document the book and page in the assessor portion of the application if it is recorded in the county in which the applicant is applying.  If the document is not recorded a copy of the DD214 will need to accompany the first application.

The size of the homestead is limited to 1/2 acre in the city limits and up to 40 acres outside of the city limits. The language in 561.2 or 425.15 does not reference valuation limitations.

The Disabled Veteran Tax Credit would apply to both the land and out buildings up to 40 acres.  It would not apply to any other dwellings on the property except for the dwelling in which the applicant lives.

The Farm to Food Donation Tax Credit can be applied to corporate income and individual income taxes.

DIC payments are Dependency and Indemnity Compensation payments to surviving spouses and dependents.

Maryland’s personal income tax on state residents consists of a state income tax and a local tax. Residents who pay income tax to another state were allowed a credit against the state income tax, but not against the local tax. The Supreme Court determined this taxing scheme was unconstitutional because it discriminated in favor of intrastate over interstate economic activity in violation of the dormant Commerce Clause. The Court found this inherently discriminatory as it operates as an impermissible tariff against residents who earn income in interstate commerce.

A surviving spouse who is the beneficiary of a qualified veteran's estate may continue to receive the credit already granted to the homestead until the spouse changes homesteads or remarries.
If the surviving spouse changes homesteads, or the homestead did not receive the credit during the qualified veteran’s life, the surviving spouse will need to provide a current DIC (Dependency and Indemnity Compensation) or CPD (Compensation and Pension Death) letter to receive the tax credit. A surviving spouse who receives DIC payments is eligible for the credit even upon remarriage.

The local VA or the veteran can call 800-827-1000 for assistance and request a current benefits rating letter. 

“Apparently wholesome food”, meaning food that meets all quality and labeling standards imposed by Federal, State, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. The donated food may not be damaged, out of condition, or unfit for human consumption. A food commodity that meets the requirements for donated foods pursuant to the Federal Emergency Food Assistance Program satisfies this requirement.

A tax credit is available to taxpayers that produce a food commodity and donate it to a registered Iowa food bank or food pantry or an Iowa emergency feeding organization.

The filing deadline for the application is July 1 of the current assessment. Applications received after July 1 would apply to the following assessment year.

The tax credit is equal to 15% of the value of the food commodities donated in the tax year as reported on authorized receipts to the Department of Revenue and valued according to the federal guidelines for charitable contribution of food under the Internal Revenue Code section 170(e)(3)(c), or $5,000, whichever is less.

1a: If they qualify under 1a; USC Chapter 38 they would have to provide documentation that they received assistance in purchasing or remodeling their property USC 21.801, 21.802 or 2101, 2102.

1b, 1c: For persons qualifying under 1b or 1c verification from the US Department of Veterans Affairs indicating a permanent rating combined total 100% service connected disability or permanent and total disability ratings based on individual unemployability paid at the 100% disability rate. A Benefits Summary Letter is sufficient documentation. They would also have to provide a DD214 with the initial application to show that they meet the requirements of section 35.1.

1d: The owner of the homestead if a surviving spouse or child receiving DIC payments qualifies under 1d of the new language and documentation of DIC payments is sufficient to qualify.

2a: If a veteran qualifies under 1a, 1b or 1c, their surviving spouse as the beneficiary of the veteran’s estate may continue to receive the credit unless the surviving spouse remarries or changes homesteads.

The Department will process claims for refunds as soon as possible. All claims will be processed in the order received.

Section 190B.01 through 190B.306 (program description); Section 422.11E (individual income tax; and Section 422.33 (30) (corporate income tax). Search for these sections of the Iowa Code at the website for the Iowa Legislature.

The Iowa Department of Revenue will issue tax credit certificates based on authorized food donation receipts issued by registered emergency food organizations and submitted to the Department by donors.

Individual taxpayers and C corporations may be awarded this tax credit, as well as Individual members of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual shall claim the credit based upon the pro rata share of their earnings from the business entity.

Yes. Follow the instructions on form IA 130 to claim credit for income taxes paid to other states and to local jurisdictions in other states.

No. You must file a return for each year for which you are requesting a refund.