Form 41 127A – Fill Out and Use This PDF

The 41 127A form, provided by the Iowa Department of Revenue, plays a crucial role for retirees under the age of 65 who are disabled, allowing for an exclusion of certain amounts of disability income from Iowa state tax. This form is specifically designed for those who retired on disability and whose disability income was reported in full on their federal income tax return, but who meet specific criteria to qualify for this Iowa tax exclusion. It necessitates careful documentation, including a physician’s statement of permanent and total disability, to ensure precision in the exclusion process.

To efficiently navigate through the process of claiming your disability income exclusion in Iowa, ensure that all requisite tests are met and documentation is accurately completed. Click the button below to start filling out your form for a smoother tax filing experience.

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Form 41 127A PDF Details

In navigating the intricacies of tax regulations, the Iowa Department of Revenue has developed the IA 2440 form, facilitating a significant tax benefit for retirees under 65 who are navigating life with a disability. This document, serving as a cornerstone for those who retired on disability, outlines a procedure to exclude a portion of disability income from Iowa state tax, contingent upon meeting specific criteria detailed within the form and instructions. The eligibility for this exclusion is predicated upon the recipient's age, the permanence and totality of the disability, the timing of retirement relative to the employer's retirement policy, and, for married individuals, the filing status of their federal income tax return. Moreover, it allows for the calculation of excludable disability pay—either actual weekly disability pay or a standard $100 per week, subject to certain adjustments and ceilings based on federal adjusted gross income, with a detailed breakdown to compute the allowable exclusion. Accompanying this, a physician's statement or a Veterans Administration certification is required to substantiate the claim of permanent and total disability. The IA 2440 form, thus, serves not only as a procedural document but also as an essential financial lifeline for those qualifying Iowan retirees under 65 grappling with the additional challenges posed by disability.

Question	Answer
Form Name	Form 41 127A
Form Length	2 pages
Fillable?	No
Fillable fields	0
Avg. time to fill out	30 sec
Other names	0941127 iowa disability income exclusion form

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Iowa Department of Revenue			2009 IA 2440
www.state.ia.us/tax			2009 IA 2440

			Disability Income Exclusion
			Applies to retirees under 65 who are disabled

YOUR NAME

SPOUSE’S NAME

SOCIAL SECURITY NUMBER	DATE OF BIRTH
SOCIAL SECURITY NUMBER	DATE OF BIRTH

DATE RETIRED:	EMPLOYER’S NAME (and Payer’s name if other than employer):

YOU

SPOUSE

	COLUMN 1			COLUMN 2
	Spouse - Combined		Taxpayer, Joint,
	Only		Separate, or Single
1. TOTAL DISABILITY INCOME RECEIVED DURING THE TAX YEAR	1. __________________________________
2. EXCLUDABLE DISABILITY PAY. See instructions.
a. Multiply $100 by the number of weeks your Disability Payments were
$100 or more. ENTER TOTAL	a. __________________________________
b. If you received Disability Payments of less than $100 for any week
ENTER THE TOTAL YOU RECEIVED FOR ALL SUCH WEEKS	b. __________________________________
c. If you received Disability Payments for a partial week ENTER THE
SMALLER OF EITHER THE AMOUNT YOU RECEIVED OR THE HIGHEST
EXCLUSION ALLOWABLE FOR THE PERIOD. See instructions	c. __________________________________
d. ADD Lines a, b, and c. ENTER TOTAL	d. __________________________________
3. ADD amounts on line 2d column 1 and column 2. ENTER TOTAL		3. ________________
4. LIMIT ON EXCLUSION. See instructions.
a. ENTER YOUR FEDERAL ADJUSTED GROSS INCOME FROM FEDERAL 1040		a. ________________
b. AMOUNT USED TO FIGURE EXCLUSION DECREASE		$15,000
b. AMOUNT USED TO FIGURE EXCLUSION DECREASE		b. ________________
c. SUBTRACT line 4b from line 4a. ENTER DIFFERENCE. If line 4b is greater than
line 4a, enter zero		c. ________________
5. SUBTRACT line 4c from line 3. ENTER DIFFERENCE here and on line 24 of IA1040		5.

Physician’s Statement of Permanent and Total Disability

NAME OF TAXPAYER WITH DISABILITY

SOCIAL SECURITY NO.

I certify that the taxpayer named above was permanently and totally disabled on the date he or she retired.

Date retired: ____________

PHYSICIAN’S NAME

PHYSICIAN’S ADDRESS

PHYSICIAN’S SIGNATURE

DATE

41-127a (09/08/09)

IA 2440 General Instructions

If you retired on disability and reported your disability income in full on your federal income tax return, you may qualify to exclude a portion of your disability income from Iowa tax. To qualify for the exclusion you must meet ALL of the tests below.

WHO CAN EXCLUDE DISABILITY?

You can take the exclusion if you meet all these tests:

•You received disability pay.

•You were not yet 65 when your tax year ended.

•You retired on disability and were permanently and totally disabled when you retired.

•On January 1 of this tax year, you had not yet reached the age when your employer’s retirement program would have required you to retire.

•You took the exclusion in a prior year and did not elect to treat your disability income as a pension for federal purposes.

•If you were married at the end of the tax year, you must have filed a joint federal income tax return for the tax year, unless you did not live with your spouse at any time during the year.

If you meet these tests, you can take the exclusion until the earliest of the following dates:

(1)The first day of the tax year in which you turn 65.

(2)The first day of the tax year for which you choose to treat your disability income as a pension.

(3)The day you reach the age when your employer’s retirement program would have required you to retire.

WHAT IS PERMANENT AND TOTAL DISABILITY?

A person is permanently and totally disabled when:

•He or she cannot engage in any substantial gainful activity because of a physical or mental condition; and

•A physician determined that the condition (1) has lasted or can be expected to last continuously for at least a year; or (2) can be expected to lead to death.

TREATING DISABILITY INCOME AS A PENSION

In previous tax years federal law allowed you to elect to treat your disability income as a pension, subject to cost recovery, instead of taking the exclusion. For tax years 1984 and thereafter the same option exists for individuals receiving disability income. They may choose for federal tax purposes to either treat their disability income as a pension or to take a disability income credit computed on federal Schedule R.

If you elect to treat your disability income as a pension for federal tax purposes, or have elected to do so in a previous year, you cannot take the Iowa disability income exclusion.

IA 2440 Specific Instructions

Line 1 - Enter your total disability income received in the tax year. If married and filing separately on the combined return form for Iowa tax purposes, and both spouses receive disability income, report these amounts separately using both columns 1 and 2.

Line 2 - You can exclude either your actual weekly disability pay or $100 a week, whichever is less. Use lines 2a, 2b, and 2c as applicable to figure your maximum exclusion.

Line 2c - If you received disability pay for part of a week, follow the steps below.

Step 1. Divide $100 by the number of days a week you normally worked before you retired.

Step 2. Divide the disability pay you received by the number of days it covered in that week.

Step 3. Compare the Step 1 and Step 2 amounts. The smaller amount is your daily rate. Your exclusion for the week is based on it.

Step 4. Multiply your daily rate by the number of days you received disability pay in the short week. The result is your exclusion for that week.

Step 5. Add your exclusion for that week to your exclusion for any other short weeks. Enter the total on line 2c.

Disability payments are made for part of a week when one of the following happens after the first day of the taxpayer’s normal workweek:

(1)The disability retirement begins.

(2)The disability retirement ends because the taxpayer reaches required retirement age.

(3)The taxpayer dies.

Line 2d - Add lines 2a, 2b, and 2c and enter total.

Line 3 - Add line 2d, columns 1 and 2, and enter the total.

Line 4 - Generally, the maximum disability income exclusion is $5,200. This can increase to a maximum of $10,400 if married and both spouses receive disability income and qualify for the exclusion.

The maximum exclusion is reduced, dollar for dollar, by any amount over $15,000 on line 4a. That line shows your federal adjusted gross income.

Line 5 - Subtract the amount on line 4c from the amount on line 3. This is your disability income exclusion. Enter this amount on line 24 of your IA 1040.

PHYSICIAN’S STATEMENT

Attach to form IA 2440 a physician’s statement of permanent and total disability. You can use the physician’s statement on form IA 2440 for this purpose. If the physician’s statement is on a separate form, be sure to attach the completed statement to form IA 2440 and file it with your tax return.

If the Veterans Administration (VA) certifies that you are permanently and totally disabled, you can attach the VA form instead of the physician’s statement. The VAform must be signed by a physician of the VA disability rating board.

If both taxpayer and spouse take the exclusion, each must file a statement.

41-127b (10/02/09)

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1. Whenever filling out the Form 41 127A, be certain to incorporate all necessary fields in the corresponding area. This will help hasten the work, making it possible for your information to be handled without delay and correctly.

Part number 1 of filling out Form 41 127A

2. The third stage is usually to fill out all of the following blanks: SMALLER OF EITHER THE AMOUNT YOU, d ADD Lines a b and c ENTER TOTAL, ADD amounts on line d column and, LIMIT ON EXCLUSION See, a ENTER YOUR FEDERAL ADJUSTED, b AMOUNT USED TO FIGURE EXCLUSION, c SUBTRACT line b from line a, line a enter zero c, SUBTRACT line c from line ENTER, Physicians Statement of Permanent, NAME OF TAXPAYER WITH DISABILITY, SOCIAL SECURITY NO, I certify that the taxpayer named, Date retired, and PHYSICIANS NAME.

Be really mindful when completing a ENTER YOUR FEDERAL ADJUSTED and line a enter zero c, because this is the part where a lot of people make some mistakes.

3. Within this part, look at PHYSICIANS ADDRESS, PHYSICIANS SIGNATURE, and DATE. Each of these have to be filled out with highest accuracy.

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Form 41 127A – Fill Out and Use This PDF

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