What Iowa filers have to find out about deadlines and credit


Here are a few notable ways the very latest tech can save a whole lot of time, money and headaches when it comes to pandemic-year taxes.


For the second year in a row, April 15 doesn’t loom so large.

Federal and state officials have pushed back the filing deadlines for income taxes again this year, giving filers, preparers and government employees more time to adjust to new rules responding to the COVID-19 pandemic. But importantly, those delays don’t apply to every tax filer, so taxpayers need to stay up on the specific details of the new rules.

In addition to the adjusted deadlines, filers need to be aware of benefits the federal government created this year that can save them money. Some are one-time adjustments in response to the pandemic, giving filers a rare chance to save a little bit extra.

So to answer the most important question first: If not this Thursday — April 15 — when do you need to file?

For most people filing individual income tax returns, the federal deadline is now May 17. For state income taxes, the Iowa Department of Revenue has delayed the deadline to June 1 from April 30.

Filers can, as always, request an extension. Ying Sa, founder of Community CPA, a Des Moines tax and accounting service, said filers would then need to submit their paperwork by Oct. 15.

However, an extension does not provide more time to actually pay income taxes. The reprieve is only to help people sort out paperwork issues, and they may still owe penalties and interest on payments not mailed by the original filing deadline.

Here are more tax questions and answers:

Do I have to pay income taxes on my stimulus check?

No. That money is tax exempt. 

Can my income taxes help me receive stimulus money retroactively?

Yes. The federal government provided a stimulus payment of up to $1,200 per individual (not including extra funds for parents) last spring, followed by up to $600 per individual in January.

But Congress put limits on who could receive the stimulus. Individuals needed to make $75,000 or less a year to get the full benefit. Married couples needed to make $150,000 a year or less.

To determine who qualified, the Internal Revenue Service looked at income tax statements that workers provided in 2019 and 2020 for the prior year. Some workers missed out because they were earning too much money in those years, even if their income shrank during the pandemic.

If the income tax statements they file this year show that they earned less in 2020 than the $75,000 per individual or $150,000 per married couple, they can get the full previous stimulus payments in the form of a tax credit.

More: Iowa not on track to trigger automatic 2023 income tax cuts, state panel says

Workers may face a similar issue with the latest $1,400 stimulus checks, issued beginning in March. But they will need to take up that issue when they file next year, said Nate Beck, a certified public accountant with McGowen Hurst Clark Smith.

What do I need to know about taxes on unemployment insurance benefits?

The federal and state governments are both providing an exemption on the first $10,200 of unemployment insurance benefits received.

This exemption applies to workers with annual household incomes of $150,000 or less. The benefit cannot be shared across married couples. 

More: Iowans who’ve already filed tax returns won’t have to amend them to take advantage of unemployment waiver

For example, if a husband received $15,000 in unemployment insurance benefits in 2020, and a wife received $5,000, the government will exempt the first $10,200 of the husband’s benefits and all $5,000 of the wife’s benefits. The husband cannot shift some of his benefit to the wife to decrease their joint income tax bill.

The $10,200 exemption applies regardless of the type of unemployment insurance a worker received.

I’m self-employed but had to take time off because of the pandemic. Are there any tax benefits for me?

Yes. The federal government created tax credits for sick leave and family leave tied to the COVID-19 pandemic. To receive the benefit, workers need to fill out IRS Form 7202.

The sick leave tax credit provides benefits for up to 10 working days. Self-employed workers can get it if they:

  • Were diagnosed with COVID-19.
  • Felt symptoms of the coronavirus and sought a diagnosis.
  • Had to stay home because of local, state or federal government restrictions.
  • Stayed home on the advice of a health care provider.

To determine the sick leave tax credit, divide your total annual income by 260. Then multiply that figure, considered your average daily income, by the number of sick days they took. The federal government caps the total benefit at $511.

The family leave tax credit may be more generous. It applies to self-employed workers who had to take time off because their:

  • Child’s school closed.
  • Normal child care provider became unavailable.

The family leave tax credit equals 67% of a worker’s average daily earnings, capped at $200 a day. Workers can claim this benefit for up to 50 days last year, starting on April 1, 2020.

Will I be penalized if I withdrew money from my retirement account to make ends meet?

Not this year.

Normally, withdrawing money from tax-deferred savings accounts before the age of 60 will result in a 10% penalty on top of an individual’s claimed income. 

But under the COVID-19 relief package Congress passed in March 2020, people could withdraw up to $100,000 combined from their 401(k), 403(b) or traditional individual retirement accounts — without penalty. 

The exemption applies as long as individuals withdrew the money before Dec. 30, 2020.

Can I get a break for my home office upgrades?

Probably not. As part of a 2019 tax law change, the federal government removed home office deductions for any income taxes through 2025.

“Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the IRS wrote.

Self-employed workers and independent contractors may still qualify for deductions.

What benefit can I get for charitable contributions in 2020?

To incentivize people to continue giving to charity last year, Beck, the CPA, said, the federal government offered to let filers claim an extra deduction if they gave to charity.

Filers are eligible for a deduction of up to $300 on their income taxes this year, on top of the standard deductions of $12,400 for individuals and $24,800 for married couples.

Do I need to pay taxes on the COVID-19 stimulus I received for my business?

It depends.

Forgivable loans through the federal Paycheck Protection Program are tax exempt, as are the U.S. Small Business Administration’s Economic Injury Disaster Loan grants.

But, Sa, the Community CPA founder, said, the federal and state governments are treating Iowa’s COVID-19 relief grants different.

If businesses received funds through programs like the Iowa Economic Development Authority’s small business grant relief or bar and restaurant relief programs, they do not need to pay income taxes to the state. However, the federal government is still taxing those funds, Sa said.

“The best advice we can give to the public is to not assume,” she said. “Ask the question so the tax professionals can research and give you the answer.” 

If I file quarterly estimates, can I wait until May 17?

People who make quarterly estimated payments — often, self-employed workers — will still need to file by April 15. On the state side, Iowa Department of Revenue spokesman John Fuller said in an email that the agency pushed the deadline for these payments back to June 1.

Beck said he worries self-employed workers will be confused. Normally, they submit both their quarterly estimates and federal income taxes at the same time.

More: The tax deadline’s been extended, but you may still owe money by April 15

Beck said a bill in Congress could delay the federal government’s quarterly estimate deadline. But at this point, he said, a delay would come too late because many workers already are filing, and accountants are crunching numbers. Self-employed workers should plan to file by Thursday.

“It may still happen,” Beck said. “But it doesn’t help people in my profession very much. It’s not like we wait until the last day to do all those calculations.”

What about corporate taxes? Can they be filed later?

No delays this year.

On the federal side, S corporations and partnerships already needed to file by March 15. C corporations must file by Thursday.

The Iowa Department of Revenue also has not moved deadlines for corporate or partnership income taxes. Those are due April 30.

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tj[email protected], 515-284-8215, or on Twitter at @LetsJett.

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