@KathrynG3
Thank you for replying in such a timely manner 🙂 Is the essence of your reply saying that the income from a Covid-19 distribution CANNOT be spread over a three-year period for Iowa tax purposes? I've been following the topic since last year and have read things a little differently.
As you noted, the IA 1040 expanded instructions state "For tax years beginning on or after January 1, 2020, Iowa has adopted rolling conformity, meaning the state will automatically conform to any changes made to the Internal Revenue Code (IRC), except as specified by Iowa law. For the most part, the calculation of Iowa net income is still the same as the calculation for federal adjusted gross income (AGI). However, the calculation of Iowa net income will be different from the federal AGI calculation when it comes to certain items described later in these instructions, such as bonus depreciation, section 179 special election deductions, and the business interest expense limitation."
There is no specific mention of retirement account distributions here or in the non-conformity guidance the IDR has published throughout the past year.
Further, the IA 1040 expanded instructions for IA line 9 "Taxable Pensions and Annuities" state specifically "The same amounts of pensions and annuities are taxable for Iowa as are taxable for federal, with the exception of military retirement pay."
This suggests to me that Iowa is accepting spreading COVID distributions as long as they qualify under the Federal tax rules.
That said, I've entered my 1099-R information into Turbo Tax Deluxe Online and have answered all of the inquiries regarding the distribution being related to COVID-19 and did NOT check the box requesting that it all be taxed this year. For Fed, the taxable portion of my distribution is 1/3 of the total amount. However, for Iowa, the entire distribution is being used to calculate my Iowa refund/(liability).
I'm OK with this treatment if it is correct (and it may even be worth the slight additional cost to avoid the paperwork headaches that may arise in 2022 and 2023) but am hesitant to proceed with the filing process when it seems that the right answer as to deferral for Iowa is ambiguous at best. Is there any way to concretely resolve the question? Thank you very much for your time and expertise,
