Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 303 - Determination of Taxable Income › Rule 701-303.5 - Itemized Deductions

Current through Register Vol. 47, No. 3, July 24, 2024
Deductions may be itemized on the Iowa return to the same
				  extent that they are allowable on the federal return with the following
				  exceptions:
(1) To the extent that
				Iowa income taxes were included in itemized deductions allowable for federal
				income tax purposes, they must be subtracted from the itemized deductions to be
				deducted on the Iowa return.
(2)
				For the tax years beginning on or after January 1, 2004, and before January 1,
				2008, and for tax years beginning on or after January 1, 2010, but before
				January 1, 2014, the itemized deduction for state sales and use taxes is
				allowed on the Iowa return only if the taxpayer elected to deduct state sales
				and use taxes as an itemized deduction in lieu of the deduction for state
				income taxes on the federal return under Section 164 of the Internal Revenue
				Code.
If the taxpayer elected to deduct state income taxes as an
				  itemized deduction on the federal return, taxpayer cannot claim an itemized
				  deduction for state sales and use taxes on the Iowa return. In addition, if
				  taxpayer claimed the standard deduction in accordance with Section 63 of the
				  Internal Revenue Code on the federal return, taxpayer cannot claim an itemized
				  deduction for state sales and use taxes on the Iowa return.
If the taxpayer is allowed to deduct state sales and use
				  taxes as an itemized deduction on the Iowa return, taxpayer cannot claim an
				  itemized deduction on the Iowa return for either the school district surtax
				  imposed under Iowa Code section
				  257.21 or the emergency medical
				  services income surtax imposed under Iowa Code chapter 422D.
(3) Adoption expense deduction. Unreimbursed
				amounts paid by the taxpayer in the adoption of a child if placed by an
				adoption service provider under Iowa Code chapter 600, which exceed 3 percent
				of the taxpayer's net income, or the combined net income of a husband and wife
				in the case of married taxpayers filing a joint return, will be allowed as a
				deduction in the year paid. Qualifying expenses include all medical, hospital,
				legal fees, welfare agency fees, and all other costs relating to the adoption
				of a child. Those expenses claimed for adoption purposes may not be claimed
				elsewhere on the individual income tax return for tax years beginning before
				January 1, 2014. For tax years beginning on or after January 1, 2014, an
				adoption tax credit equal to certain qualified adoption expenses can be claimed
				in accordance with rule
				701-42.52 (422), but the
				expenses claimed for the credit cannot be allowed as a deduction under this
				subrule.
EXAMPLE: The Joneses, a married couple whose combined net
				  income for 2014 is $100,000, incur $6,000 of qualified adoption expenses and
				  claim a $2,500 adoption tax credit in accordance with rule
				  701-42.52 (422). The amount of
				  expenses in excess of 3 percent of their combined net income is $3,000. Since
				  the taxpayers claimed a $2,500 adoption tax credit, only $500 of expenses is
				  eligible for the deduction.
(4) Deduction for expenses for the care of
				certain disabled relatives.
a. For tax years
				beginning on or after January 1, 1983, a deduction from net income may be taken
				for expenses incurred by a taxpayer for care of a disabled person who is unable
				to live independently. Such care must be provided in the home in which the
				taxpayer resides throughout the year. A person is considered to be incapable of
				living independently if as a result of a physical or mental defect the person
				is incapable of caring for the person's hygienical or nutritional needs or
				requires the full-time attention of another person for personal safety or the
				safety of others. The fact that an individual, by reason of a physical or
				mental defect, is unable to engage in any substantial gainful activity, or is
				unable to perform the normal household functions of a homemaker or to care for
				minor children, does not of itself establish that the individual is physically
				or mentally incapable of self-care. An individual who is physically handicapped
				or is mentally defective, and for such reason requires the constant attention
				of another person, is considered to be physically or mentally incapable of
				self-care.
To qualify for the deduction, in addition to being disabled,
				  the person must be the grandchild, child, parent or grandparent of the taxpayer
				  or the taxpayer's spouse, and
(1) Be
				receiving medical assistance benefits under Iowa Code chapter 249A;
				or
(2) Be eligible to receive such
				benefits under the income and resource levels established in Iowa Code chapter
				239B; or
(3) Would be eligible to
				receive such benefits if living in a health-care facility licensed under Iowa
				Code chapter 135C.
Expenses incurred for a taxpayer's disabled spouse do not
				  qualify for the deduction.