Iowa Nonconformity: Taxpayer Certainty and Disaster Tax Relief Act of 2019

Under Section 101 of the Act

The exclusion from gross income of up to $2,000,000 for a discharge of qualified principal residence indebtedness has been extended for tax years 2018, 2019, and 2020.  Iowa is not conformed with this extension for tax years 2018 and 2019.

• Iowa treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change. If a taxpayer files an original 2018 Iowa income tax return that excludes this income from the calculation of federal adjusted gross income, the taxpayer should add back the excluded amount on the 2018 Nonconformity Adjustments Worksheet, line 30.
• Iowa treatment for Tax Year 2019: Taxpayers should add back on the 2019 IA 101 Nonconformity Adjustments form, line 12, the amount excluded for federal tax purposes

Under Section 102 of the Act

The deduction for certain mortgage insurance premiums has been extended. For federal purposes, taxpayers who choose to itemize deductions are allowed to deduct certain qualified mortgage insurance premiums in tax years 2018, 2019, and 2020. Iowa has not conformed with this provision for tax years 2018 and 2019.

• Iowa treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change. If a taxpayer files an original 2018 Iowa income tax return the taxpayer may not include any amount attributable to mortgage insurance premiums as a deduction on the IA 1040, Schedule A, even though such amounts may have been allowed on the federal 1040, schedule A.
• Iowa treatment for Tax Year 2019: Taxpayers should not take a deduction for mortgage insurance premiums on the IA 1040, Schedule A, even though such amounts may have been allowed on the federal 1040, schedule A, line 8d.

Under Section 103 of the Act

The threshold on the itemized deduction for unreimbursed medical expenses has been lowered from the extent that such expenses exceed 10 percent of Adjusted Gross Income (“AGI”) to the extent that such expenses exceed 7.5 percent of AGI for tax years 2019 and 2020. Iowa is not conformed with this extension for tax year 2019.

• Iowa treatment for Tax Year 2019: Taxpayers may only claim an itemized deduction for unreimbursed medical expenses to the extent that such expenses exceed 10 percent of AGI, as modified for Iowa purposes. For more information, see the 2019 IA 1040 expanded instructions, line 37.

Under Section 104 of the Act

The above-the-line deduction for qualified tuition and related expenses for higher education has been extended for tax years 2018, 2019, and 2020.  Iowa is not conformed with this extension for tax years 2018 and 2019.

• Iowa treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended return because of this federal change. If a taxpayer files an original Iowa income tax return this deduction should not be claimed on the IA 1040, line 24.
• Iowa treatment for Tax Year 2019: Taxpayers should not take a deduction for qualified tuition and related expenses on the IA 1040, line 24, even though such amounts may be allowed on the federal 1040, Schedule 1, line 21.

Under Section 118 of the Act

2019 various tax benefits for certain businesses and employers operating in empowerment zones, including accelerated expensing deductions on qualifying equipment under section 179, and deferral of capital gains tax on the sale of qualified assets sold and replaced.

1. Increased 179 expensing under IRC § 1397A for assets placed in service by empowerment zone businesses does not apply for Iowa purposes in 2018 and 2019. To the extent such businesses claimed increased federal section 179 expensing for assets placed in service in 2018 and 2019, those businesses will still be limited to the regular Iowa section 179 limitations for that year and will need to make adjustments on the IA 4562A.
   • Iowa treatment for tax year 2018: If a taxpayer amends a 2018 federal return to take advantage of the nonrecognition of gain on the sale of qualified empowerment zones assets, the taxpayer need not amend the 2018 Iowa return, as the gain should already have been properly recognized on the originally filed return. For an originally filed 2018 Iowa return that includes a nonrecognition of gain under IRC section 1397B in federal adjusted gross income or federal taxable income, the taxpayer must add back on the 2018 Nonconformity Adjustments Worksheet, line 30, any amount of gain that qualified for nonrecognition for federal purposes.
   • Iowa treatment for tax year 2019: If a taxpayer elects the nonrecognition of gain on a sale of empowerment zone property provided in IRC section 1397B for federal purposes, the taxpayer must add back any gain that qualified for federal nonrecognition on the sale as a positive adjustment on IA 101 Nonconformity Adjustments form, line 12.
2. Sales of qualified empowerment zone assets in tax years 2018 and 2019 do not qualify for the nonrecognition of gain provisions under IRC section 1397B for Iowa purposes.
   • Iowa treatment for tax year 2018: If a qualifying empowerment zone business amends their 2018 federal income tax return to claim increased section 179 deductions under IRC section 1397A for property placed in service during that year, the taxpayer need not amend their 2018 Iowa return, because the taxpayer should already have taken the proper Iowa section 179 deduction on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deductions based on the different Iowa and federal section 179 deductions for the empowerment zone business’s property. For an originally filed 2018 Iowa return, make adjustments similar to those described in the instructions for tax year 2019 below.
   • Iowa treatment for tax year 2019: If a qualifying empowerment zone business placed in service property eligible for increased section 179 deductions under IRC section 1397A for federal purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to apply the regular section 179 deduction limitation amount for the property for Iowa purposes.

Under Section 122 of the Act

The $1.01-per-gallon income tax credit for certain second generation biofuel sales or biofuel mixture sales or uses has been extended for 2018, 2019, and 2020. If you claim this credit for any of the applicable years, you may take a reduction to the extent the credit increased your federal AGI (individuals), or federal taxable income (corporations), reported on your Iowa return. The adjustment is made on the IA 1040, line 24, code l, or IA 1120, Schedule A, line 12.

Under Section 124 of the Act

The federal credit under IRC section 30B for purchases of new qualified fuel cell motor vehicles has been extended for such vehicles purchased in calendar years 2018, 2019, and 2020. Iowa is not conformed with this extension for tax years 2018 and 2019. Therefore, the $2,000 deduction under Iowa Code 422.7(45) for vehicles qualifying for the federal credit does not apply for tax years 2018 and 2019, if the vehicle was purchased in calendar years 2018, 2019, or 2020.

Iowa treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change.  If a taxpayer files an original 2018 Iowa income tax return, the taxpayer should not claim the $2,000 Iowa deduction for any qualifying vehicle purchased in calendar years 2018 or 2019 and placed in service in tax year 2018.

Iowa treatment for Tax Year 2019: Taxpayers should not claim the $2,000 Iowa deduction for any qualifying vehicle purchased in calendar years 2018, 2019, or 2020, and placed in service in tax year 2019.

Under Section 131 of the Act

The provision provides a deduction for energy efficiency improvements to lighting, heating, cooling, ventilation, and hot water systems of commercial buildings. This provision has been extended for federal purposes for tax years 2018, 2019, and 2020. Iowa is not conformed with this deduction for tax years 2018 and 2019.

• Iowa treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change.  If a taxpayer files an original 2018 Iowa income tax return that includes this deduction in the calculation of federal income, the taxpayer should add back the deduction amount on the 2018 Nonconformity Adjustments Worksheet, line 30. The taxpayer may then use the IA 4562A to claim regular depreciation deductions for the increased basis of the property.
• Iowa treatment for Tax Year 2019: Taxpayers should add back on the 2019 IA 101 Nonconformity Adjustments form, line 12, the deduction amount taken for federal tax purposes. The taxpayer may then use the IA 4562A to claim regular depreciation deductions for the increased basis of the property.

Special rule for sales or dispositions to implement Federal Energy Regulatory Commission (FERC) or State electric restructuring policy for qualified electric utilities under Section 132 of the Act

This provision renews the ability of taxpayers to elect to recognize gain from qualifying electric transmission transactions ratably over an 8-taxable-year period beginning with year of the transaction for tax years 2018, 2019, and 2020, rather than recognizing the gain entirely in the year of the transaction. Iowa is not conformed with this election for tax years 2018 and 2019.

• Iowa treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return that recognizes the entire gain should not file an amended Iowa return because of this federal adjustment. For tax years 2019 and later following the transaction, taxpayers who elected to amend their 2018 federal income tax return to recognize the gain over an 8-taxable-year period should deduct on the IA 101 Nonconformity Adjustments form, line 12, the portion of the gain included in federal income, until the gain is fully recognized for federal purposes.
  
  For an originally filed 2018 Iowa return that includes this federal adjustment, make adjustments similar to those described in the instructions for tax year 2019 below.
• Iowa treatment for Tax Year 2019: Taxpayers who elect to recognize the gain over an 8-taxable-year period for a 2019 transaction for federal tax purposes will need to add back the remaining portion of the gain on IA 101 Nonconformity Adjustments form, line 12 of their 2019 return. In other words, the remaining 7/8 of the gain must be added to Iowa income for tax year 2019. For tax years 2020 and later following the transaction, taxpayers should deduct on the applicable tax year IA 101 Nonconformity Adjustments form, line 12, the portion of the gain included in federal adjusted gross income, until the gain is fully recognized for federal purposes.

Modification of income for purposes of determining tax-exempt status of certain mutual or cooperative telephone or electric companies under Section 301 of the Act

The provision modifies the definition of income used to determine the tax-exempt status of a mutual or cooperative telephone or electric company to exclude certain government grants, contributions, and assistance. Specifically, the provision excludes from income (1) grants, contributions, and assistance provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or by local, state, or regional governmental entities for disasters or emergencies; and (2) certain grants or contributions provided by a government entity for electric, communications, broadband, internet, or other utility facilities or services.

• For Iowa purposes in tax years 2018 and 2019, in determining whether at least 85% of their income consists of amounts collected from members for the sole purpose of meeting losses and expenses, mutual or cooperative telephone or electric companies must take into account income from grants provided pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act or similar state, local or regional grants, and income from grants by government entities for purposes substantially related to providing, restoring, or relocating electric, communication, broadband, internet, or other utility facilities or services, even though such grants are not treated as income in making this determination for federal purposes.
• This may mean that some mutual or cooperative telephone or electric companies receiving these grants will be subject to Iowa income taxes in 2018 and 2019, even though they qualify as non-profit corporations for federal tax purposes for those years.

Under Section 302 of the Act

This provision repeals the increase to Unrelated Business Income (UBI) of an exempt organization for expenses related to qualified transportation fringe benefits paid or incurred by the exempt organization. This repeal is retroactive to amounts paid or incurred on or after January 1, 2018. The now-repealed provision was originally enacted in the Tax Cuts and Jobs Act of 2017 (Public Law 115-97, section 13703). Iowa was not conformed with this addition to UBI for Tax Year 2018. Iowa is not conformed with this repeal for Tax Year 2019, meaning this addition to UBI will apply to exempt organizations for Iowa tax purposes in tax year 2019, even though it does not apply for federal tax purposes.

• Iowa treatment for Tax Year 2018: Exempt organizations that already filed a 2018 IA 1120 and subtracted this income from their UBI on the 2018 Nonconformity Adjustments Worksheet need not file an amended Iowa return because of this federal change. If an exempt organization files an original 2018 IA 1120 to report UBI, no Iowa adjustment to the federal UBI amount should be necessary.
• Iowa treatment for Tax Year 2019: Exempt organizations may be required to file an IA 1120 to include this income addition in its Iowa UBI even though no such addition is required for federal purposes.

Under Section 108 of the SECURE Act

Beginning on December 21, 2019, certain loans made from a qualified employer plan through a credit card or other similar arrangement must be treated as distributions from the plan for federal purposes, even if they meet all other requirements for the exception to this treatment under IRC section 72(p)(2).

• Iowa Treatment for Tax Year 2019: For 2019 only, taxpayers are not required to treat such loans as distributions for Iowa purposes. If, for Iowa purposes, the taxpayer applies the exception in IRC section 72(p)(2) to a loan that was treated as a distribution for federal purposes because it was made using a credit card or other similar arrangement, the taxpayer will be subject to all other requirements of section 72(p)(2) and may have to treat the loan as a distribution for Iowa purposes in a later year if the repayment terms are not met.

Under section 302 of the SECURE Act

(Updated July 31, 2020)

The SECURE Act allows tax-free distributions from 529 plans to pay for certain expenses required for participation in an apprenticeship program, and for distributions used to make certain student loan payments beginning in 2019. On June 29, 2020, Governor Reynolds signed House File 2641 into law. That legislation allows Iowa taxpayer's to make certain withdrawals from Iowa 529 plans to pay for certain expenses required for participation in an apprenticeship program and to make certain student loan payments for tax years beginning on or after January 1, 2019 without having to include such withdrawals as income for Iowa tax purposes.

For tax years 2018, 2019, and 2020 racehorses 2 ½ years old or younger placed in service during the tax year may be classified as 3-year property for federal depreciation purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead treats these horses as 7-year property.

• Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to reclassify a racehorse placed in service during that year as 3-year, rather than 7-year property, the taxpayer need not amend their 2018 Iowa return, because the racehorse should already have been properly classified as 7-year property on the original return. In future years the taxpayer will need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal class lives for the racehorse. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
• Iowa treatment for tax year 2019: If a taxpayer placed in service a qualifying racehorse and classified it as 3-year property for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to treat the racehorse as 7-year property for Iowa purposes.

For tax years 2018, 2019, and 2020 certain motorsports entertainment complex property placed in service during the tax year may be classified as 7-year property for federal depreciation purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead treats this motorsports entertainment complex property as 39-year property.

• Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to reclassify motorsports entertainment complex property placed in service during that year as 7-year, rather than 39-year property, the taxpayer should not amend their 2018 Iowa return, because the property should already have been properly classified as 39-year property on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal class lives for the motorsports entertainment complex property. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
• Iowa treatment for tax year 2019: If a taxpayer placed in service a qualifying motorsports entertainment complex property and classified it as 7-year property for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to treat the property as 39-year property for Iowa purposes.

For tax years 2018, 2019, and 2020 certain property placed in service and predominately used for business purposes unrelated to gaming on an Indian reservation during the tax year may qualify for an accelerated depreciation schedule as provided in IRC section 168(j)(2) for federal purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead such property would be subject to normal class life depreciation schedules for the type of property.

• Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to reclassify Indian reservation business property placed in service during that year to take advantage of the accelerated recovery period allowed under IRC section 168(j)(2), the taxpayer need not amend their 2018 Iowa return, because the property should already have been properly classified on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal class lives for the Indian reservation business property. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
• Iowa treatment for tax year 2019: If a taxpayer placed in service qualifying Indian reservation business property and took advantage of the accelerated recovery period allowed under IRC section 168(j)(2) for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to use the regular class life for the property for Iowa purposes.

This provision extends a special deduction under IRC section 181 for costs related to qualified film, television, and theatrical productions of up to $15 million of the aggregate cost ($20 million for certain areas) of a qualifying film, television, or theatrical production in the year the expenditure was incurred, for productions commencing in 2018, 2019, or 2020. Taxpayers claiming this deduction are not allowed to take other depreciation or amortization deductions for the production. Iowa has not conformed with this provision for tax years 2018 and 2019.

• Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to claim this deduction, the taxpayer should not amend their 2018 Iowa income tax return. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
• Iowa treatment for tax year 2019: If a taxpayer files a 2019 Iowa income tax return that includes this deduction in federal adjusted gross income or federal taxable income, the taxpayer should add back such deduction on the IA 101 Nonconformity Adjustments form, line 12. To the extent that these costs would have been eligible for depreciation or other amortization deductions but for the taxpayer’s election to take advantage of the IRC section 181 deduction, the taxpayer may take such depreciation or amortization deductions in 2019 and later years using the IA 4562A.

For tax years 2018, 2019, and 2020 certain second generation biofuel plant property placed in service during the tax year may qualify for a special depreciation allowance as provided in IRC section 168(l) for federal purposes. Iowa does not conform to this treatment for tax years 2018 and 2019, and instead such property would be subject to normal depreciation deduction amounts.

• Iowa treatment for tax year 2018: If a taxpayer amends their 2018 federal income tax return to take advantage of the special depreciation allowance for second generation biofuel plant property under IRC section 168(l), the taxpayer need not amend their 2018 Iowa return, because they should already have taken the proper Iowa depreciation deduction for the property on the original return. In future years the taxpayer may need to make adjustments on the IA 4562A to account for the differences in allowable depreciation deduction based on the different Iowa and federal deduction amounts. For an originally filed 2018 return, make adjustments similar to those described in the instructions for tax year 2019 below.
• Iowa treatment for tax year 2019: If a taxpayer placed in service qualifying second generation biofuel plant property and took advantage of the special depreciation allowance under IRC section 168(l) for federal depreciation purposes, the taxpayer must use the IA 4562A to make appropriate adjustments to use the regular depreciation deduction amounts for the property for Iowa purposes.

Under Section 202 of the Act

This provision allows taxpayers who take qualified disaster distributions to include the distribution amount in their income in equal amounts over a three-year period for federal purposes. Additionally, a taxpayer may repay qualified disaster distribution amounts over a three-year period beginning on the day after the distribution was made and repayments will be treated as a trustee-to-trustee transfer. A “qualified disaster distribution” generally includes a distribution of up to $100,000 from certain retirement plans made after an incident period begins but before July 17, 2020, to an individual who lives in a qualified disaster area during the incident period and who suffered an economic loss from the disaster.

To the extent any qualified disaster distribution is timely repaid for federal tax purposes but included in income for Iowa tax purposes, the taxpayer may have a different tax basis in their retirement account for federal and Iowa purposes.

• Iowa Treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change.  If a taxpayer files an original 2018 Iowa income tax return that includes a deferral of a qualified disaster distribution described above the taxpayer must include the entire taxable amount of their distribution as income in the year that the funds were distributed. If the taxpayer’s federal adjusted gross income does not include the entire distribution, the taxpayer should add back the remaining amount on the 2018 Nonconformity Adjustments Worksheet, line 30. When this occurs, the taxpayer will be entitled to a deduction in tax years 2019 and later for these distribution amounts if they are included in federal adjusted gross income. This future deduction should be claimed on the IA 101 Nonconformity Adjustments form, line 12.
• Iowa Treatment for Tax Year 2019: Taxpayers who take a qualified disaster distribution in 2019 and elect not to include the full amount in income for federal tax purposes must make an adjustment to include the entire distribution in income for Iowa tax purposes. This addition should be made on the IA 101 Nonconformity Adjustments form, line 12. When this occurs, the taxpayer will be entitled to a deduction in tax years 2020 and later for these distribution amounts if they are included in federal adjusted gross income. This future deduction should be claimed on the IA 101 Nonconformity Adjustments form, line 12.
  
  Note: If in 2019 or a later year, the taxpayer’s federal adjusted gross income includes income from a qualified disaster distribution related to federally-declared disaster areas in 2016 (P.L. 115-97), the Hurricanes Harvey, Irma, and Maria disaster areas in 2017 (P.L. 115-63), or the California wildfire disaster area in 2017 and 2018 (P.L. 115-123), the taxpayer will be entitled to a subtraction for that income, but only if such distribution was already included in Iowa income in a prior tax year. This subtraction, if available, should be made on the IA 101 Nonconformity Adjustments form, line 12.

Under Section 202 of the Act

This provision allows individuals who received qualified distributions—certain distributions from retirement plans that were received between 180 days before the applicable incident period and 30 days after the incident period and that were intended to be used to purchase or build a principal residence in a qualified disaster area, but which was not actually used for that purpose—to recontribute an amount equal to the distribution in an eligible retirement plan. Such recontributions are treated as a trustee-to-trustee transfer for federal purposes. Iowa was not conformed to this provision for tax years 2018 and 2019.

To the extent any disaster distribution described above is timely repaid for federal tax purposes but included in income for Iowa tax purposes, the taxpayer may have a different tax basis in their retirement account for federal and Iowa purposes.

• Iowa Treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change. If a taxpayer files an original 2018 Iowa income tax return that excludes these withdrawals from federal income as a qualified recontribution, as described above, the taxpayer must include the entire taxable amount of their distribution as income for Iowa purposes on the 2018 Nonconformity Adjustments Worksheet, line 30, in the year that the funds were distributed.
• Iowa Treatment for Tax Year 2019: If a taxpayer’s 2019 Iowa income tax return excludes these withdrawals from federal income as a qualified recontribution, as described above, the taxpayer must include the entire taxable amount of their distribution as income for Iowa purposes on the IA 101 Nonconformity Adjustments Worksheet, line 12, in the year that the funds were distributed.

Under Section 202 of the Act

This provision allows qualified individuals (individuals whose principal place of abode was located in a qualified disaster area at any time during the incident period of the qualified disaster and who suffered an economic loss as a result of the qualified disaster) to take a larger maximum loan amount ($100,000 vs. $50,000) from a qualified employer plan in the period of 180 days beginning on December 20, 2019. It also provides qualified individuals with an extended period to repay certain outstanding loans before they are considered a deemed distribution and included in income. Iowa is not conformed with these provisions for tax years 2018 or 2019.

To the extent any qualified plan loan is not classified as a deemed distribution and is therefore properly excluded from federal income under the provisions as described above, but is included in income for Iowa tax purposes, the taxpayer may have a different tax basis in their retirement account for federal and Iowa purposes.

• Iowa Treatment for Tax Year 2018: Taxpayers who already filed a 2018 Iowa income tax return should not file an Iowa amended return because of these provisions. If a taxpayer files an original 2018 Iowa income tax return that excludes a deemed distribution from federal income because the taxpayer qualified for an extended loan repayment period under this provision, the taxpayer should add back the deemed distribution on the 2018 Nonconformity Adjustments Worksheet, line 30.
  
  If in a subsequent tax year the taxpayer is required to include these amounts in federal income as a deemed distribution, the taxpayer may subtract this deemed distribution on the IA 101 Nonconformity Adjustments form, line 12, to the extent previously included in 2018 Iowa income as described above.
• Iowa Treatment for Tax Year 2019: If the taxpayer’s 2019 Iowa income tax return excludes a deemed distribution from federal income because the taxpayer qualified for an extended loan repayment period under this provision, the taxpayer should add back the deemed distribution on the IA 101 Nonconformity Adjustments form, line 12.
  
  If the taxpayer was allowed to take a larger loan than the maximum allowed under IRC section 72(p)(2) because of this provision for federal purposes, the taxpayer must include any amount in excess of the regular maximum loan limitation as an addition to income on the IA 101 Nonconformity Adjustments form, line 12.
  
  If in a subsequent tax year the taxpayer is required to include these amounts in federal income as a deemed distribution, the taxpayer may subtract this deemed distribution on the IA 101 Nonconformity Adjustments form, line 12, to the extent previously included in Iowa income as described above.
  
  Note: If in 2019 or a later year, the taxpayer’s federal adjusted gross income includes a deemed distribution resulting from failure to repay a loan that was previously granted a federal repayment extension under disaster-related provisions for Hurricanes Harvey, Irma, or Maria (P.L. 115-63), or the California wildfires (P.L. 115-123), the taxpayer will be entitled to a subtraction for that income to the extent it was included in Iowa income in a prior tax year. This subtraction, if available, should be made on the IA 101 Nonconformity Adjustments form, line 12.

Under Section 204 of the Act

This provision suspends the current limits on charitable contribution deductions described in IRC § 170 under certain circumstances. Qualified contributions must be made in cash, to specified types of charitable organizations, for disaster relief efforts in a qualified disaster area. Qualified contributions must be made between January 1, 2018, and January 19, 2020. Taxpayers must receive a written statement from the charitable organization to support the application of this section. The Act imposes increased limits on deductions under this section, but allows for a carryforward of five years if the taxpayer’s contributions exceed those limits. Special rules apply for corporations and pass-through entities.

• Iowa Treatment for Tax Year 2018: For tax year 2018 Iowa was not conformed with this provision. Taxpayers who already filed a 2018 Iowa income tax return should not file an amended Iowa return because of this federal change. If a taxpayer files an original 2018 Iowa income tax return that includes this increased charitable deduction in the calculation on the federal Schedule A, the taxpayer should recompute the deduction amount on the IA 1040, Schedule A.
• Iowa Treatment for Tax Year 2019: For qualified disaster relief contributions made in tax year 2019, the taxpayer should recompute the deduction amount on the IA 1040, Schedule A to reflect the regular charitable contribution limitations for Iowa purposes.

Under Section 204 of the Act

This provision allows a deduction for qualified disaster-related personal casualty losses—losses of non-business property that occur in a qualified disaster area, during the incident period, and that are attributable to the qualified disaster. Where a taxpayer has a net disaster loss, this provision allows the taxpayer to deduct the amount of the loss if the loss amount exceeds $500 per casualty. This provision also removes the 10% threshold which generally requires the loss to exceed 10% of the taxpayer’s adjusted gross income (“AGI”) in order to be deductible. The provision allows taxpayers to deduct net disaster losses even if they choose to claim the standard deduction and do not otherwise itemize deductions.

• Iowa Treatment for Tax Year 2018: For tax year 2018, Iowa did not conform with these provisions. Use the IA 4684 to calculate your Iowa personal casualty loss deduction.
• Iowa Treatment for Tax Year 2019: For tax year 2019, this special relief is not available for casualty losses from disasters occurring on or after January 1, 2019. If the taxpayer claims a casualty loss on their federal 4684 using the modified thresholds described above for a casualty loss related to a disaster occurring on or after January 1, 2019, the taxpayer should recompute their deduction on the IA 1040, Schedule A, line 18, using the regular thresholds.

Under Section 204 of the Act

This provision allows taxpayers in designated disaster areas to refer to earned income from the preceding year for purposes of determining the Earned Income Tax Credit (“EITC”). Iowa has a refundable, state-level earned income tax credit that is equal to a percentage of a taxpayer’s federal EITC.

• Iowa Treatment for Tax Years 2018 and 2019: For tax years 2018 and 2019, Iowa taxpayers are required to calculate their federal EITC for Iowa tax purposes using the income earned in the current tax year, even if they would be permitted to use a prior year for federal purposes.

Under Section 205 of the Act

This provision provides any individual with a principal place of abode in or any taxpayer with a principal place of business in a disaster area and certain other qualified taxpayers an automatic 60-day extension with regard to any tax filing.

• Iowa Treatment for Tax Year 2018, 2019, and 2020: This provision became effective on December 20, 2019 and is prospective only. It provides a mandatory 60-day extension to file any federal tax return to certain individuals living in, working in, or visiting a declared disaster area or to businesses located in declared disaster areas. This provision does not apply to state tax returns in Iowa. Iowa taxpayers should consult the Department’s website or contact the Department for information about state-specific, disaster-related filing deadline extensions, if any apply.