Iowa’s taxation of married couples has quirks that can throw a taxpayer or tax preparer for a loop. For example, Iowa has 3 different filing statuses a married couple can choose from, and most deduction items are allocated pro rata between spouses who file separately.
At first blush, the answer to the question posed in the title of this post would seem to be yes. Unfortunately, the answer is actually “no.”
Iowa Taxes and Married Filing Separately, Issue 8, 9 & 10: Moving Expenses, Student Loan Interest, Deductions Relating to a Dependent
Iowa’s taxation of married couples has quirks that can throw a taxpayer or tax preparer for a loop. This post will look at allocating moving expenses, student loan interest, and deductions relating to a dependent.
I always get sideways looks from people when I say this: turning a profit is not a bad thing. Yes, you’ll have to pay tax on that profit, and that stinks. And yes, of course you should deduct everything you possibly can. But when you show losses in a business venture, that means you spent more money than you brought in.
Iowa allows an exclusion of up to $12,000 of pension/retirement account income for taxpayers age 55 and older. When taxpayers file separate tax returns, the $12,000 exclusion might need to be allocated.