Tax Tip Tuesday: A Crucial Time
As you open this email, you are probably saying to yourself, wait a minute, it’s not Tuesday! You are correct, but the content this week is very time sensitive so we are here early.
The first item today is the Iowa Caucus tonight. We have a great opportunity to influence who will be on the ballot for president this November. There are many different approaches to tax policy from the various candidates so this is going to be very important. Please be sure to participate tonight.
The second item today is related to a bill in the Iowa legislature. Every year the legislature needs to pass a bill that couples the Iowa tax law with the federal tax code. In prior years, this has happened with the exception of coupling with bonus depreciation. This year there is a major hold-up.
The conformity (coupling) bill HF 2092 passed the Iowa House Thursday by a vote of 82-14 and couples with all of the federal tax provisions, except bonus depreciation. The bill now moves to the Iowa Senate where the outlook is less than positive. Governor Branstad is not recommending coupling for tax year 2015. So it’s looking like the Senate will agree with the Governor.
If there is no tax year 2015 coupling, it would mean most of the changes that are effective for federal tax purposes beginning in tax year 2015 will not be effective for Iowa.
Some items that may impact your Iowa tax return are:
Deduction for state and local sales taxes
Above the line deduction for teacher classroom expenses ($250)
Above the line deduction for qualified tuition and related expenses
Discharge of indebtedness on principal residence excluded from gross income
The largest potential item is that the section 179 deduction would be limited to $25,000 for Iowa versus the $500,000 limit for federal. This would result in the need to maintain an extra set of depreciation schedules.
It is very important to reach out to anyone you know in the Iowa Senate and encourage them to support the coupling bill as soon as possible.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.