Tax Tip Tuesday: The Government Shut Down & Iowa Individual Tax Returns
Normally I would be telling you now when the IRS will begin accepting tax returns. However, this year is not normal. Part of the government shutdown includes parts of the IRS (except the part that collects any tax due). We will let you know when we hear more on this.
This week we are also looking at some changes as they apply to Iowa individual tax returns.
On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was passed and signed by the president. This law made numerous changes to the itemized deductions claimed by individuals in calculating their individual income taxes.
On May 30, 2018, Iowa Governor Kim Reynolds signed an extensive state tax reform bill to improve Iowa’s tax structure. This bill conforms with many provisions of the federal TCJA, but in most cases not until tax years beginning on or after January 1, 2019. As a result, Iowa individual income taxes for tax year 2018 will generally be calculated using the Internal Revenue Code that was in effect in 2017, so there will be significant differences between federal and Iowa itemized deductions which may require Iowa adjustments.
Here are some important points for tax year 2018:
Federal income tax payments are deductible on the Iowa tax return. This has not changed for Iowa tax purposes.
Standard vs. Itemized Deductions: Taxpayers retain the ability to choose itemized deductions for Iowa tax purposes even if they claim the standard deduction for federal tax purposes. It is very possible that many people will find it advantageous to itemize for Iowa purposes even if they claim the standard deduction for federal tax.
***Please Note*** We are making a change to Tax Tip Tuesday. It will now be released every other Tuesday instead of each week. If there are special items we need to let you know about sooner, we will issue a special edition.
Disclaimer: The items included in the Tax Tip Tuesday 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 advice 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.