Filing your Iowa tax return for the 2020 tax year was more complex than in prior years due to changes in deadlines and tax rules resulting from the COVID-19 pandemic. The Iowa Department of Revenue extended specific filing and payment dates, provided penalty relief, and adopted federal tax changes that impacted individuals and small business owners. Understanding these rules is essential for avoiding penalties, claiming the deductions you are entitled to, and ensuring an accurate return.
This guide is designed for Iowa residents, part-year residents, nonresidents with Iowa-source income, and small business owners who must file Iowa tax returns. It explains the 2020 filing requirements, significant deadline changes, and key provisions you should know before you begin. You will also find step-by-step instructions, lists of required forms, and tips for avoiding common mistakes.
Whether you are filing as single, married, filing separately, jointly, head of household, or qualifying widow(er) with a dependent child, filing correctly and on time is critical. An accurate return helps you avoid additional fees, comply with Iowa’s tax laws, and speed up your refund if one is due. By following the process outlined here, you will be better prepared to meet Iowa’s requirements and confidently file your tax return.
Overview of Iowa State Income Tax for 2020
Filing your Iowa tax return for the 2020 tax year required understanding specific income thresholds, residency rules, and special provisions introduced due to the COVID-19 pandemic. The Iowa Department of Revenue also implemented key changes to tax conformity and deductions, making it essential for taxpayers to review the requirements carefully before filing.
Who Needs to File
Depending on their income and filing status, Iowa residents, part-year residents, and nonresidents with Iowa-source income may be required to file an Iowa income tax return.
- Residents with single filing status: You must file if your net income exceeds $9,000. The threshold increased to $24,000 if you were 65 or older on December 31, 2020.
- Residents with a filing status other than single: You must file if your net income exceeds $13,500. On December 31, 2020, the threshold increased to $32,000 for those 65 or older.
- Dependents: If you were claimed as a dependent on another person’s Iowa return and had a net income of $5,000 or more, you must file.
- Military service members: If Iowa was your legal residence, you must file an Iowa tax return even if stationed outside the state.
- Special tax situations: If you were subject to Iowa lump-sum tax or Iowa alternative minimum tax, a return is required regardless of income level.
Nonresidents and part-year residents must file an Iowa tax return if they had $1,000 or more in Iowa-source net income or were subject to the Iowa lump-sum tax or alternative minimum tax. Even if you do not meet these requirements, you should still file if Iowa tax were withheld and you wish to claim a refund.
Filing Deadlines for 2020
Due to the COVID-19 pandemic, Iowa extended its deadlines for the 2020 tax year to give taxpayers additional time to comply.
- Original filing deadline: April 30, 2020, the standard Iowa income tax deadline for calendar year filers in a normal year. Filing by this date usually avoids penalties and speeds up refunds.
- Extended filing deadline: July 31, 2020, the Iowa Department of Revenue granted an automatic three-month extension due to COVID-19, giving taxpayers more time to file without requesting an extension.
- Extended payment deadline: July 31, 2020, without penalty or interest—Payments for 2020 taxes could be delayed until this date, providing temporary financial relief during the pandemic.
Iowa maintains its standard April 30 filing deadline for most other tax years unless the Iowa Department of Revenue announces otherwise.
Key Changes for 2020
The 2020 tax year included several significant changes for Iowa taxes that affected individual and small business filers.
- Rolling conformity with the federal tax code: Beginning January 1, 2020, Iowa adopted rolling conformity, meaning the state automatically conforms to changes in the Internal Revenue Code (IRC) unless excluded explicitly under Iowa law.
- COVID-19 relief payments: Economic Impact Payments (EIPs) were not included in Iowa taxable income, whether received as a rebate or refundable credit.
- Paycheck Protection Program (PPP) loan forgiveness: Forgiven PPP loans were excluded from Iowa taxable income, and deductions for expenses paid with forgiven loans were fully allowed, consistent with federal law under the Consolidated Appropriations Act, 2021.
- Non-conformity with federal bonus depreciation: Iowa did not conform to federal bonus depreciation rules for assets acquired in 2020, meaning adjustments were required for state tax purposes.
- Section 179 deduction: The Iowa Section 179 limit for individuals matched the federal limit for the 2020 tax year.
- Business interest expense limitation: Iowa did not conform to the federal business interest expense limitation under IRC Section 163(j) for 2020.
- Military retirement pay exemption: Retirement pay from service in the U.S. Armed Forces, Military Reserve, or National Guard was entirely exempt from Iowa income tax.
These provisions were intended to provide tax relief during the pandemic while ensuring Iowa’s tax laws aligned with federal updates where appropriate.
Required Iowa Tax Forms
Filing an accurate Iowa tax return for the 2020 tax year means using the correct forms for your situation. The Iowa Department of Revenue provides separate forms for individuals, nonresidents, amendments, and business filers.
Main Individual Forms
- IA 1040 – Iowa Individual Income Tax Return: The primary form for reporting income, deductions, and credits for Iowa residents, part-year residents, and nonresidents with Iowa-source income.
- IA 126 – Iowa Nonresident and Part-Year Resident Credit Schedule: Used by nonresidents and part-year residents to calculate the credit for taxes paid to other states and to properly report Iowa-source income.
- IA 1040X – Amended Iowa Individual Income Tax Return: Filed when you need to correct an error or change information on a previously filed Iowa tax return.
- IA 102 – Schedule for Amended Return: Required when amending a return on Form IA 1040 (not needed if you are filing an IA 1040X).
Common Schedules and Credits
- IA Schedule A – Iowa Itemized Deductions: These are used to list deductions such as mortgage interest, medical expenses, and charitable contributions when itemizing instead of taking the standard deduction.
- IA 4562A/B – Iowa Depreciation/Section 179 Adjustment: Adjusts depreciation amounts and Section 179 expenses to match Iowa’s rules, which may differ from federal depreciation rules.
- IA 100 Series – Iowa Capital Gain Deduction: Various forms (IA 100A–F) used to report and claim capital gain deductions for qualifying asset sales.
- IA 163/163A – Business Interest Expense Adjustment: Federal business interest expense deductions are adjusted for Iowa tax purposes.
- IA 101 – Nonconformity Adjustments: Used when Iowa tax rules differ from federal law on certain income or deduction items.
- IA 1040ES—Estimated Tax Payment Vouchers: These vouchers are for individuals who need to make quarterly estimated tax payments.
- IA 2210/2210S – Underpayment of Estimated Tax: Calculates any penalties for underpaying estimated taxes during the year.
- IA 1040V – Individual Income Tax Payment Voucher: Submitted with your payment if you are mailing a check or money order.
Small Business Forms
- IA 1040 (Schedule C) – Business Income: Reports profit or loss from a sole proprietorship, using information from the federal Schedule C.
- IA 1065 – Iowa Partnership Return of Income: Filed by partnerships to report income, deductions, and partner shares.
- IA 1120S – Iowa Income Tax Return for S Corporations: Used by S corporations to report income and distribute pass-through income to shareholders.
- IA 1120 – Iowa Corporation Income Tax Return: Filed by C corporations to report Iowa taxable income and calculate corporate tax.
Step-by-Step Instructions for Completing Your Iowa Tax Return
Filing your Iowa tax return for the 2020 tax year is easier when you follow each step in order. These instructions outline the key actions for completing Form IA 1040 accurately.
Step 1: Enter Personal Information
Provide your name, address, Social Security Number(s), and Iowa school district code. Use “0000” if you were a nonresident for the whole year or “9999” if you moved out before December 31.
Step 2: Choose Your Filing Status
Select the correct status—single, married filing jointly, married filing separately (combined or separate returns), head of household, or qualifying widow(er). The choice can affect your tax owed, and married taxpayers may benefit from comparing joint and separate filings.
Step 3: Claim Exemption Credits
Claim $40 for yourself and each dependent, plus $20 for each person age 65 or older and/or blind. These credits reduce your Iowa income tax directly.
Step 4: Report Social Security Benefits
Iowa does not tax Social Security income, but you must calculate and report it using the worksheet provided. This information is used for eligibility and alternate tax calculations.
Step 5: Report All Income
List all taxable income on the appropriate IA 1040 lines, including wages, interest, dividends, business profits, capital gains, pensions, unemployment benefits, and gambling winnings.
Step 6: Apply Adjustments to Income
Enter any eligible adjustments, such as educator expenses, HSA contributions, self-employment taxes, retirement plan contributions, student loan interest, and Iowa-specific adjustments.
Step 7: Calculate Deductions and Tax
You can choose the standard deduction or itemize deductions, subtract exemptions, determine taxable income, calculate your Iowa tax, claim credits, and figure your final balance due or refund.
Common Mistakes to Avoid
- Missing signatures: An unsigned Iowa tax return is incomplete and will not be processed. This can delay your refund or lead to penalties if you owe tax. Always sign and date your return before filing.
- Incorrect Social Security Numbers: A single-digit error may cause the Iowa Department of Revenue to reject your return. Double-check your Social Security Number and the numbers for all dependents.
- Not reporting all income: Iowa requires you to report all taxable income, including part-time work, freelance earnings, and gambling winnings. Leaving out income can trigger an audit or incur additional tax and interest.
- Using the wrong tax year forms: Each has its forms and instructions. Using the wrong year’s forms can create calculation errors and processing delays.
- Forgetting required attachments: Missing W-2s, 1099s, or federal schedules can delay your return. If you are mailing your return, ensure all supporting documents are included.
Filing Methods
The Iowa Department of Revenue allows taxpayers to file electronically or by mailing a paper return. Your choice may depend on how quickly you want your return processed and whether you prefer using tax software or completing forms manually.
Electronic Filing (e-file)
E-filing is the fastest and most accurate way to file your Iowa tax return. It reduces errors, speeds up processing, and lets you choose direct deposit for faster refunds. If you meet eligibility requirements, you can e-file through commercial tax software, a tax professional, or the Iowa Free File program.
Paper Filing
If you file a paper return, complete all required forms and schedules, sign and date your return, and attach all W-2s, 1099s, and federal schedules as needed. If you owe tax, include payment with Form IA 1040V. Make a copy of your entire return before mailing.
- Mailing addresses for paper filing:
- With payment: Iowa Income Tax Document Processing, PO Box 9187, Des Moines, IA 50306-9187
- Without payment (refund or zero balance): Iowa Income Tax Document Processing, PO Box 9187, Des Moines, IA 50306-9187
How to Make a Payment
The Iowa Department of Revenue offers several ways to pay your state income tax, including secure online systems and traditional methods. Choosing the right option depends on your preference, timing, and whether you want to pay electronically or by mail.
Electronic Payment Options
- Direct debit (e-check): Pay directly from your checking or savings account through the Iowa EasyPay system. This method is free, secure, and ensures your payment is credited quickly.
- Credit or debit card: You can pay online using Visa, MasterCard, Discover, or American Express. Convenience fees apply, but this option can be helpful if you need to pay immediately.
- ACH credit: Instruct your bank to transfer funds to the Iowa Department of Revenue. You must coordinate with your financial institution to set up this transfer.
Traditional Payment Options
- Check or money order: Make payable to “Iowa Department of Revenue” and include Form IA 1040V with your payment. Mail to the address for returns with payment to ensure proper processing.
- In-person payment: Pay at the Iowa Department of Revenue office in Des Moines. Bring your completed payment voucher to speed up processing.
Estimated Tax Payments
If you expect to owe $200 or more in Iowa income tax for the next year, you may need to make quarterly estimated payments. For 2020, these payments were due April 30, June 30, September 30, and January 31 of the following year. Use Form IA 1040ES or pay online through EasyPay Iowa to stay current and avoid penalties.
Iowa Small Business Relief Tax Deferral Program
In 2020, the Iowa Department of Revenue offered a special program allowing small businesses affected by COVID-19 to defer sales and withholding tax filings and payments due between March 20 and April 30. This temporary relief helped businesses to preserve cash flow during the early stages of the pandemic.
Tracking Your Refund or Balance Due
After filing your Iowa tax return, you can monitor the status of your refund or check your balance due through the Iowa Department of Revenue’s online tools and phone services.
Where’s My Refund Tool
- Online access: The “Where’s My Refund” tool lets you check the status of your individual or amended Iowa income tax return filed within the past year.
- Information needed: You will need your Social Security Number and refund amount.
- How to use it: Visit the Iowa Department of Revenue website at revenue.iowa.gov/taxes/wheres-my-refund or call 515-281-3114 (or 800-367-3388 toll-free).
Refund Processing Times
- Average timeframe: Refunds are typically issued within 30 days, though paper returns often take longer than e-filed ones.
- Factors affecting speed: Delays can occur due to errors, incomplete forms, a high filing volume, or additional review requirements.
- Fraud prevention holds: Some refunds may be held until March 1 if refundable credits are claimed.
Missing Refunds
If your refund check has been issued but not received within three weeks, contact the Iowa Department of Revenue to report the issue and request further instructions.
Final Filing Checklist
Review this checklist before submitting your Iowa tax return to ensure everything is complete and accurate.
- Completed and signed IA 1040: Ensure all required fields are filled in and the form is signed and dated.
- Correct filing status selected: Double-check that your filing status matches your situation for the 2020 tax year.
- All income reported: Verify that wages, interest, dividends, business income, and other taxable amounts are included.
- Exemptions and deductions claimed: Confirm that personal exemptions, dependents, and deductions are accurately recorded.
- Required attachments included: Attach W-2s, 1099s, and applicable federal schedules or Iowa forms.
- Payment voucher completed if paying by check: Use Form IA 1040V and mail it to the correct address if tax is owed.
- Bank account information verified for direct deposit: Avoid refund delays by confirming routing and account numbers.
- Math and totals checked: Review calculations to prevent errors that could delay your refund or create underpayment issues.
- Copy of return kept for records: Store copies of your Iowa and federal returns with supporting documents for at least three years.
Frequently Asked Questions
What if I missed the 2020 Iowa tax filing deadline?
If you missed the July 31, 2020, extended deadline, file your Iowa tax return as soon as possible. Penalties and daily interest may apply if you owe tax, including a 5% failure-to-file penalty. There is no penalty if you are due a refund, but you must file within three years to claim it. Filing promptly also prevents further interest from accruing.
Can I e-file my Iowa individual income tax return for free?
Yes, many Iowa taxpayers qualify for free electronic filing through the IRS Free File program, which partners with certain tax software companies. Eligibility is based on income, age, and filing status. Check the Iowa Department of Revenue website for a list of approved providers. E-filing is faster, reduces errors, and allows for direct deposit of refunds.
What deductions are most commonly missed in Iowa?
Taxpayers often overlook deductions such as educator expenses, student loan interest, health insurance premiums for the self-employed, charitable contributions, Iowa 529 college savings plan contributions, and federal income tax paid or refunded. Reviewing Iowa’s deduction list before filing can help ensure you claim all eligible amounts and reduce your Iowa income tax liability for the year.
How do I request an Iowa tax filing extension?
Iowa grants an automatic six-month extension to file (until October 31 for calendar year filers) if at least 90% of your individual income tax liability is paid by the original due date. No separate form is required for the extension. However, this does not extend the time to pay. Any remaining balance after April 30 will accrue penalties and interest.
Can I file jointly if I moved in or out of Iowa mid-year?
Yes, married couples can file jointly on their Iowa tax return even if one spouse moved into or out of Iowa during the year. You must complete Form IA 126 to prorate income and claim credit for taxes paid to other states. In some cases, filing separately may result in lower Iowa income tax, so compare both options.
How does Iowa tax military income and retirement pay?
For 2020, military retirement pay from the U.S. Armed Forces, Reserves, or National Guard is fully exempt from Iowa income tax. Active duty pay for nonresident service members is not taxable in Iowa. National Guard and Reserve members who are Iowa residents must pay Iowa tax on training and drill pay, but certain active duty pay may be exempt.
Are unemployment benefits taxable in Iowa?
Yes, for the 2020 tax year, Iowa required taxpayers to report the full amount of unemployment benefits received. This differs from the federal American Rescue Plan’s temporary exclusion of part of those benefits. Include all unemployment compensation on line 12 of Form IA 1040, but exclude any benefits paid by the Railroad Retirement Board’s sickness or unemployment programs.
