2017 Iowa Code Title X - FINANCIAL RESOURCES Chapter 422 - INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES Section 422.9 - Deductions from net income.
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INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES, §422.9
422.9 Deductions from net income.
In computing taxable income of individuals, there shall be deducted from net income the
larger of the following amounts:
1. An optional standard deduction, after deduction of federal income tax, equal to one
thousand two hundred thirty dollars for a married person who files separately or a single
person or equal to three thousand thirty dollars for a husband and wife who file a joint return,
a surviving spouse, or a head of household. The optional standard deduction shall not exceed
the amount remaining after deduction of the federal income tax. The amount of federal
income tax deducted shall be computed as provided in subsection 2, paragraph “b”.
2. The total of contributions, interest, taxes, medical expense, nonbusiness losses, and
miscellaneous expenses deductible for federal income tax purposes under the Internal
Revenue Code, with the following adjustments:
a. Subtract the deduction for Iowa income taxes.
b. Add the amount of federal income taxes paid or accrued, as the case may be, during
the tax year and subtract any federal income tax refunds received during the tax year. Where
married persons, who have filed a joint federal income tax return, file separately, such total
shall be divided between them according to the portion of the total paid or accrued, as the
case may be, by each. Federal income taxes paid for a tax year in which an Iowa return was
not required to be filed shall not be added and federal income tax refunds received from a
tax year in which an Iowa return was not required to be filed shall not be subtracted.
c. Add the amount by which expenses paid or incurred in connection with the adoption
of a child by the taxpayer exceed three percent of the net income of the taxpayer, or of the
taxpayer and spouse in the case of a joint return. The expenses may include medical and
hospital expenses of the biological mother which are incident to the child’s birth and are paid
by the taxpayer, welfare agency fees, legal fees, and all other fees and costs relating to the
adoption of a child if the child is placed by a child-placing agency licensed under chapter
238 or by a person making an independent placement according to the provisions of chapter
600. If the taxpayer claims an adoption tax credit under section 422.12A, the taxpayer shall
recompute for purposes of this subsection the amount of the deduction by excluding the
amount of qualified adoption expenses, as defined in section 422.12A, used in computing the
adoption tax credit.
d. Add an additional deduction for mileage incurred by the taxpayer in voluntary
work for a charitable organization consisting of the excess of the state employee mileage
reimbursement over the amount deductible for federal income tax purposes. The deduction
shall be proven by the keeping of a contemporaneous diary by the person throughout the
period of the voluntary work in the tax year.
e. Add the amount, not to exceed five thousand dollars, of expenses not otherwise
deductible under this section actually incurred in the home of the taxpayer for the care of a
person who is the grandchild, child, parent, or grandparent of the taxpayer or the taxpayer’s
spouse and who is unable, by reason of physical or mental disability, to live independently
and is receiving, or would be eligible to receive if living in a health care facility licensed
under chapter 135C, medical assistance benefits under chapter 249A. In the event that the
person being cared for is receiving assistance benefits under chapter 239B, the expenses not
otherwise deductible shall be the net difference between the expenses actually incurred in
caring for the person and the assistance benefits received under chapter 239B.
f. Add the amount of the mortgage interest credit allowable for the tax year under section
25 of the Internal Revenue Code to the extent the credit decreased the amount of interest
deductible under section 163(g) of the Internal Revenue Code.
g. If the taxpayer has a deduction for medical care expenses under section 213 of the
Internal Revenue Code, the taxpayer shall recompute for the purposes of this subsection the
amount of the deduction under section 213 by excluding from medical care, as defined in
section 213, the amount subtracted under section 422.7, subsection 29.
h. For purposes of calculating the deductions in this subsection that are authorized under
the Internal Revenue Code, and to the extent that any of such deductions is determined by
an individual’s federal adjusted gross income, the individual’s federal adjusted gross income
is computed in accordance with section 422.7, subsections 39, 39A, 39B, and 53.
Wed Feb 08 03:44:37 2017
Iowa Code 2017, Section 422.9 (37, 3)
§422.9, INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES
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i. The deduction for state sales and use taxes is allowable only if the taxpayer elected to
deduct the state sales and use taxes in lieu of state income taxes under section 164 of the
Internal Revenue Code. A deduction for state sales and use taxes is not allowed if the taxpayer
has taken the deduction for state income taxes or claimed the standard deduction under
section 63 of the Internal Revenue Code. This paragraph applies to taxable years beginning
after December 31, 2003, and before January 1, 2008, and to taxable years beginning after
December 31, 2009, and before January 1, 2015.
j. Subtract charitable contributions under section 170 of the Internal Revenue Code to the
extent such contribution was made to an organization for the purpose of deposit in the Iowa
education savings plan trust established in chapter 12D, and the taxpayer designated that any
part of the contribution be used for the direct benefit of any dependent of the taxpayer or any
other single beneficiary designated by the taxpayer.
3. If, after applying all of the adjustments provided for in section 422.7, the allocation
provisions of section 422.8, and the deductions allowable in this section subject to the
modifications provided in section 172(d) of the Internal Revenue Code, the taxable income
results in a net operating loss, the net operating loss shall be deducted as follows:
a. The Iowa net operating loss shall be carried back three taxable years for an individual
taxpayer with a casualty or theft property loss or for a net operating loss in a presidentially
declared disaster area incurred by a taxpayer engaged in a small business or in the trade
or business of farming. For all other Iowa net operating losses, the net operating loss shall
be carried back two taxable years or to the taxable year in which the taxpayer first earned
income in Iowa whichever year is the later.
b. The Iowa net operating loss remaining after being carried back as required in
paragraph “a” or “d” or if not required to be carried back shall be carried forward twenty
taxable years.
c. If the election under section 172(b)(3) of the Internal Revenue Code is made, the Iowa
net operating loss shall be carried forward twenty taxable years.
d. Notwithstanding paragraph “a”, for a taxpayer who is engaged in the trade or business
of farming as defined in section 263A(e)(4) of the Internal Revenue Code and has a loss
from farming as defined in section 172(b)(1)(F) of the Internal Revenue Code including
modifications prescribed by rule by the director, the Iowa loss from the trade or business of
farming is a net operating loss which may be carried back five taxable years prior to the
taxable year of the loss.
4. Where married persons file separately, both must use the optional standard deduction
if either elects to use it, and both must claim itemized deductions if either elects to claim
itemized deductions.
5. A taxpayer affected by section 422.8 shall, if the optional standard deduction is not
used, be permitted to deduct only such portion of the total referred to in subsection 2 above
as is fairly and equitably allocable to Iowa under the rules prescribed by the director.
6. In determining the amount of deduction for federal income tax under subsection 1 or
subsection 2, paragraph “b”, for tax years beginning in the 2008 calendar year, the amount of
the deduction for the tax year shall not be adjusted by the amount received during the tax year
of the income tax rebate provided pursuant to the federal Recovery Rebates and Economic
Stimulus for the American People Act of 2008, Pub. L. No. 110-185, and the amount of such
income tax rebate shall not be subject to taxation under this division.
7. A taxpayer is allowed to take the deduction for disaster-related casualty losses under
section 165(h) of the Internal Revenue Code, as modified by the Heartland Disaster Relief Act
of 2008, Pub. L. No. 110-343, in computing net income for state tax purposes.
[C35, §6943-f9; C39, §6943.041; C46, 50, 54, 58, 62, 66, 71, 73, 75, 77, 79, 81, §422.9; 82
Acts, ch 1023, §9, 10, 30, 32, ch 1192, §1, 2, ch 1226, §4, 6]
83 Acts, ch 179, §7, 22; 84 Acts, ch 1305, §31; 87 Acts, ch 233, §493; 87 Acts, 2nd Ex, ch 1,
§7 – 9; 88 Acts, ch 1028, §17 – 20; 89 Acts, ch 268, §5; 91 Acts, ch 159, §9; 91 Acts, ch 210, §2;
92 Acts, ch 1222, §4, 6; 94 Acts, ch 1046, §9; 94 Acts, ch 1166, §4 – 6, 12; 95 Acts, ch 5, §2, 14;
96 Acts, ch 1168, §1, 3; 97 Acts, ch 41, §32; 97 Acts, ch 135, §5, 9; 98 Acts, ch 1078, §5, 12; 99
Acts, ch 95, §5, 6, 12, 13; 99 Acts, ch 114, §25; 2001 Acts, ch 132, §22, 24; 2001 Acts, 1st Ex,
ch 3, §1, 2; 2002 Acts, ch 1069, §6, 13, 14; 2003 Acts, ch 139, §6, 11, 12; 2003 Acts, ch 142, §7,
Wed Feb 08 03:44:37 2017
Iowa Code 2017, Section 422.9 (37, 3)
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INDIVIDUAL INCOME, CORPORATE, AND FRANCHISE TAXES, §422.9
11; 2005 Acts, ch 24, §5, 10, 11; 2005 Acts, ch 140, §37 – 39, 73; 2006 Acts, ch 1158, §13; 2008
Acts, ch 1027, §1, 3; 2009 Acts, ch 60, §4, 17; 2011 Acts, ch 41, §3, 5, 20, 23, 24; 2011 Acts,
ch 131, §144, 146; 2013 Acts, ch 1, §3, 7, 8; 2013 Acts, ch 70, §3, 9; 2014 Acts, ch 1113, §2, 3;
2015 Acts, ch 1, §3, 7, 8; 2016 Acts, ch 1107, §3, 5, 6
Referred to in §422.4, §422.5, §422.7, §422.16, §422.21
2013 amendment to subsection 2, paragraph i, takes effect February 14, 2013, and applies retroactively to January 1, 2012, for tax years
beginning on or after that date; 2013 Acts, ch 1, §7, 8
2014 amendment to subsection 2, paragraph c applies retroactively to January 1, 2014, for tax years beginning on or after that date; 2014
Acts, ch 1113, §3
2015 amendment to subsection 2, paragraph i, takes effect February 17, 2015, and applies retroactively to January 1, 2014, for tax years
beginning on or after that date; 2015 Acts, ch 1, §7, 8
For provisions relating to the deduction of state sales and use taxes for tax years beginning during the 2015 calendar year, see 2016 Acts,
ch 1007, §2, 4, 5
For provisions relating to the determination of federal adjusted gross income for purposes of calculating deductions in light of the
disallowance of additional first-year depreciation under §168(k) of the Internal Revenue Code for tax years beginning during the 2015
calendar year, see 2016 Acts, ch 1007, §3 – 5
Subsection 2, paragraph j takes effect May 25, 2016, and applies retroactively to January 1, 2016, for tax years beginning on or after that
date; 2016 Acts, ch 1107, §5, 6
Subsection 2, NEW paragraph j
Wed Feb 08 03:44:37 2017
Iowa Code 2017, Section 422.9 (37, 3)
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