How Minnesota Tax Breaks Will Affect Taxpayers

Published On: 15th May 2014

From the internet

Minnesota has a brand new tax cut bill, but the 2013 tax season has already been moving full steam ahead. This has 2013 tax filers wondering what this means for them.

On March 28, Governor Mark Dayton signed a $508 million bill which returns some of Minnesota’s tax surplus to Minnesotans, placing more money in their pockets. The new tax bill is also expected to make filing taxes simpler for tax filers.

According to the governor’s website, the new tax bill confirms Minnesota’s tax code to the federal tax code. The result is a simplified Minnesota income tax procedure and tax cuts to the middle class throughout Minnesota. Officials have stated that one in ten taxpayers in the state will benefit from these cuts and the number of taxpayers that will benefit will grow in 2014.

For those taxpayers who have not filed their 2013 income tax returns yet, waiting until April 3 to file can prove beneficial. It is estimated that one million filers have yet to file. It is on April 3 that the new forms and instructions will be available. If taxpayers file before then, they could experience a delay in receiving their tax credits.

For those that have already filed, the Minnesota Department of Revenue has said it will review every tax return to determine whether or not adjustments are warranted and the refunds will be automatically completed. If the tax refund cannot be paid automatically, then the department will contact those taxpayers to have them file amended returns. The disadvantage to this is that paper amendments can take up to six months before taxpayers see refunds.

Some of the credits include:

  • You have one or more children, are filing a joint return with your spouse, and your modified adjusted gross income is between $25,000 and $45,000. This will result in a Working Family Credit that has an average tax savings of $334.
  • You own your home and have a mortgage – If your modified adjusted gross income is less than $110,000, you may be able to deduct your mortgage insurance premiums.
  • You used to own a home and had a mortgage but your lender agreed to a short sale or foreclosed on your home. If that happened to you, then you can exclude the amount of the forgiven debt from your income.

Other individuals that benefit include K-12school teachers or school employees, students that paid tuition and fees, those who paid student loan interest, parents with children in K-12 who have to pay tuition, students that received specific scholarships, employees of employers that helped pay for their education or adoption expenses, and individuals who are 70.5 years of age or older.

For taxpayers that used direct deposit for their 2013 state taxes, any adjustments will be deposited in the same way. If direct deposit wasn’t used, then a paper check will be issued.

Taxes are still due by April 15, unless the taxpayer filed for an extension through the IRS. Until then, tax program vendors are expected to update their information by April 3so taxpayers can file through their preferred programs.