Minnesota’s Snowbird Tax

Published On: 26th February 2013

From the internet

Minnesota can be rather cold and so is the snowbird tax in a way.

The way the snowbird tax works is that someone can spend six months and one day in another state and pay no state income tax, but they come back to Minnesota and take advantage of the benefits the state has to offer for the other five months and 29 days.

Now the state is looking at how to resolve this issue. Because there are so many individuals that head to Florida or Arizona for the winter and then come back when the weather warms up in Minnesota, the governor wants to make sure they pay taxes.

As of now, the details are rather sketchy, but the idea is for these individuals to be taxed on their income, even if they are considered nonresidents. He wants the law to apply to anyone who spends 60 days or more in Minnesota per year. The income earned in the state is already taxed no matter what the residence status is, but many vacationers and senior citizens that own homes in other states are only living in Minnesota in the summers.

Basically, this tax would hit the incomes of those who do not spend the required six months and one day in the state. The state Revenue Department has not said exactly how many individuals would be affected by the new tax, but it does estimate that tax revenue would increase by $30 million in just a couple of years.

At the same time, the tax man will have to demand that these individuals show proof of where they were located during the year. This means that airline tickets and other types of receipts could be used as proof.

The stance of the governor is that such a move would create a fair and sustainable tax that would mean that everyone would be paying more. Everyone will already be paying more if the personal income tax raises from 7.85% to 9.85%. The governor has also proposed lowering sales tax from 6.875% to 5.5%, but sales tax would extend to items that are not currently taxed like clothing, OTC medications, and business services. Such a move would add $2.1 billion in revenue to finance the 8% increase in spending.

Source: WSJ