Health Insurance Premium deduction Iowa

[mschmidtbob]

For 2023, Iowa allows health insurance premiums to be deducted from taxable income IF a person is over 55 AND their income is less than $100K. When determining income for this instance, one must add back in pensions or other retirement income received from a source that is not taxable in Iowa. In my case, the amount I converted from my  regular IRA to a Roth IRA exceeds that amount. This is retirement income that is not taxed in Iowa.  Nevertheless, TT deducts my health insurance premiums from my taxable income for Iowa, reducing my Iowa tax burden. This is an error. Trying to call TT and talk to someone is very difficult. Has anyone else noticed this?

[Brian Frank · Accepted solution]

I noticed the software is not doing this correctly as well.  It automatically calculates the pension/retirement exclusion, but fails to enter it when checking for the $100k limit.  If you go into forms view you can go to where the calculation for the health insurance deductions is and manually enter the amount non taxed to Iowa to get it to calculate correct.  In forms view go to Form IA 1040.  Scroll down to the schedule 1.  There is a place to manually enter "Pensions or other retirement income not taxable to Iowa."

That being said in my opinion they need to fix the software to pick that up.  There will be a lot of incorrect returns out there.

[mschmidtbob]

Excellent suggestion! I was just going to not enter the health insurance premiums paid, but your solution is more correct. Do you know how the TT guarantee works, since there is clearly an error.

[Brian Frank]

I don't, I'm just another user that happened to have the same issue.