Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 40 - Determination of Net Income › Rule 701-40.48 - Health Insurance Premiums Deduction

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 1996, the
				  amounts paid by a taxpayer for health insurance for the taxpayer, the
				  taxpayer's spouse, and the taxpayer's dependents are deductible in computing
				  net income on the Iowa return to the extent the amounts paid were not otherwise
				  deductible in computing adjusted gross income. However, amounts paid by a
				  taxpayer for health insurance on a pretax basis whereby the portion of the
				  wages of the taxpayer used to pay health insurance premiums is not included in
				  the taxpayer's gross wages for income tax or social security tax purposes are
				  not deductible on the Iowa return.
In situations where married taxpayers pay health insurance
				  premiums from a joint checking or other joint account and the taxpayers are
				  filing separate state returns or separately on the combined return form, the
				  taxpayers must allocate the deduction between the spouses on the basis of the
				  net income of each spouse to the combined net income unless one spouse can show
				  that only that spouse's income was deposited to the joint account.
In circumstances where a taxpayer is self-employed and takes
				  a deduction on the 1996 federal return for 30 percent of the premiums paid for
				  health insurance on the federal return, the taxpayer would be allowed a
				  deduction on the Iowa return for the portion of the health insurance premiums
				  that was not deducted on the taxpayer's federal return, including any health
				  insurance premiums deducted as an itemized medical deduction under Section 213
				  of the Internal Revenue Code.
For purposes of the state deduction for health insurance
				  premiums, the same premiums for the same health insurance or medical insurance
				  coverage qualify for this deduction as would qualify for the federal medical
				  expense deduction. Thus, premiums paid for contact lens insurance qualify for
				  the health insurance deduction. Also eligible for the deduction for tax years
				  beginning in the 1996 calendar year are premiums paid by a taxpayer before the
				  age of 65 for medical care insurance effective after the age of 65, if the
				  premiums are payable (on a level payment basis) for a period often years or
				  more or until the year the taxpayer attains the age of 65 (but in no case for a
				  period of less than five years). For tax years beginning on or after January 1,
				  1997, premiums for long-term health insurance for nursing home coverage are
				  eligible for this deduction to the extent the premiums for long-term health
				  care services are eligible for the federal itemized deduction for medical and
				  dental expenses, irrespective of the limitations set forth in Section
				  213(d)(10) of the Internal Revenue Code. For example, a 55-year-old taxpayer
				  who paid $1,050 in premiums for long-term health insurance for nursing home
				  coverage for the 2004 tax year would be allowed a deduction for Iowa purposes
				  for the entire $1,050, even though the Limitation for the federal itemized
				  deduction for medical expenses in Section 213(d)(10) of the Internal Revenue
				  Code for these premiums for this taxpayer is $980.
Amounts paid under an insurance contract for other than
				  medical care (such as payment for loss of limb or life or sight) are not
				  deductible, unless the medical charge is stated separately in the contract or
				  provided in a separate statement.
This rule is intended to implement Iowa Code section
				  4227.
				  as amended by 1997 Iowa Acts, Senate File 129.