Iowa Disability Income Exclusion
The Iowa Disability Income Exclusion (Form IA 2440) allows certain disabled retirees under age 65 to exclude a portion of their disability income from Iowa state taxable income. This exclusion is designed to provide tax relief to individuals who are unable to work due to disability and have limited income.
Eligibility Criteria
- Must be retired and under the age of 65.
- Must be disabled.
- Federal adjusted gross income (AGI) must be below $20,200 for single filers.
- If married and both spouses are retired, under 65, and disabled, the AGI limit is $25,400.
How the Exclusion Works
The maximum exclusion amount is reduced dollar-for-dollar by any amount over $15,000 on line 4a (federal AGI). The exclusion is calculated by subtracting the amount over $15,000 from the maximum allowable exclusion. The resulting amount is then entered on IA 1040 Schedule 1, line 19b, using code “h”.
How to Claim the Exclusion
To claim the Iowa Disability Income Exclusion using Online Taxes (OLT) software:
- From within your tax return (Online), click on "State" in the left menu (or tap the three dots in the top-right corner for mobile devices).
- Click "Start or Revisit Iowa state."
- Navigate to the "Subtractions" section and locate Form IA 2440 (Iowa Disability Income Exclusion).
- Follow the on-screen instructions to complete the form.
Important Notes
- This form is only for retirees under 65 who are disabled and meet the income thresholds.
- The exclusion is not available for individuals who are not disabled or who are over age 65.
- Only federal adjusted gross income (AGI) is considered for eligibility and calculation.
Source:
Form IA 2440 - Iowa Disability Income Exclusion
Form IA 1040 - Individual Income Tax Return
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.