IDOR Extends Filing Deadline and Provides Unemployment Compensation Instructions
On March 29, 2021, the Iowa Department of Revenue announced a filing and payment extension for individual taxpayers, from April 30, 2021, to June 1, 2021. In the same notice, IDOR provided instructions for reporting unemployment compensation on 2020 returns.
Order 2021-01, issued March 29, states that Iowa is extending the filing and payment deadline to June 1, 2021, for 2020 individual income tax returns and first quarter estimated income tax payments for individuals.
Specifically, the Order allows Iowa residents or non-resident individuals required to file Iowa returns an extension for filing the IA 1040 Individual Income Tax Return and all supporting forms and schedules, and any associated tax payments, including quarterly estimated income tax payments due April 30, 2021. The Order does not include business filers and other tax types for individuals. The Department has provided several FAQs to address questions about the extension.
No late-filing or underpayment penalties will be due for qualifying taxpayers who comply with the extended filing and payment deadline. Interest on unpaid taxes will be due beginning on June 2, 2021.
In its March 29 announcement, IDOR also provided instructions for reporting unemployment compensation on 2020 returns.
The notice clarifies that, because of Iowa’s rolling conformity with the Internal Revenue Code, certain unemployment compensation excluded by the American Rescue Plan Act will not be included in Iowa income. Because of ARPA, the first $10,200 of unemployment compensation income is excluded from Iowa taxation for qualifying taxpayers.
Because ARPA was enacted subsequent to many taxpayers filing their returns, taxpayers were unable to take advantage of this change. Consequently, IDOR will begin making unemployment compensation related automatic adjustments. The adjustment process may take up to 90 days due to cross-checking these amounts against 1099s and validating eligibility to ensure accuracy and eliminate fraud.
Taxpayers will not need to file an amended Iowa tax return if their only adjustment pertains to unemployment compensation. Taxpayers filing an original 2020 individual income tax return should report the unemployment compensation exclusion amount on Form IA 1040, line 14, using a code of M.
Refund Processing Update
The Announcement also states that IDOR is processing state income tax refunds in 28 days, slightly under the goal of 30 days. Taxpayers can check the status of their refunds online at the IDOR website, Where’s My Refund.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.