From Representative Sharon Steckman –
Teachers, businesses, homeowners and students will now be able to take the deductions approved by the federal government late last year. I’m pleased we are able to make things easier for Iowa taxpayers.
Due to a delay at the federal level, businesses, teachers, homeowners, and students have been waiting for state action before they file their 2014 taxes in order to claim deductions renewed by the federal government in December. For the last several years, Iowa has generally “coupled” with these federal changes.
Each year, the Legislature must pass an Internal Revenue Code (IRC) update bill to conform state and federal tax laws. This is important, since failure to do so would complicate the tax system, by requiring different calculations for state and federal tax returns and would require many tax filers to possibly have to file amended returns. Major provisions of this year’s bill include:
• Business Costs: Allows small businesses and farmers to expense the first $500,000 of equipment costs (Section 179)
• Mortgages: Allows deduction of the cost of mortgage insurance
• Teachers: Extends the $250 teacher deduction for out-of-pocket classroom expenses
• Work Opportunity: Businesses receive a tax credit on wages paid if they hire a hard-to-employ individual
• Higher education: Tuition and fee deductions
Working families today can claim the Earned Income Tax Credit on their 2014 taxes; if they meet certain income requirements, they could receive a refund up to $6,143. Thousands of hard-working families may not realize they are eligible for a refundable tax credit for last year. As Iowans begin to work on their 2014 returns, I want to be sure that everyone who is eligible claims this credit.
Last year, around 222,000 families in Iowa benefited from the Earned Income Tax Credit, which is now the largest federal cash benefit to low-income workers. A single filer without dependents could receive as much as $496 and a family of five with an income of under $47,000 could receive up to $6,143.
According to the Internal Revenue Service, about 25% of eligible workers don’t claim the credit.