Minnesota tax changes and what you should do - FOX 35 News Orlando

EXPLAINER: Minnesota tax changes and what you should do

Posted: Updated:
ST. PAUL, Minn. (KMSP) -

The $440 million tax cut package was signed into law by Gov. Mark Dayton after a relatively quick passage in both the Senate and House. The governor said the cuts will put "more money in the pockets of Minnesota families and businesses".

The bill aligns federal and state tax codes, but what exactly does it mean to average tax payers?

TAX CREDIT + DEDUCTION CHANGES

Working Family Credit: Boosts the credit to more closely follow the Federal Earned Income Tax Credit. Average $334 benefit for families earning $25,000-$40,000 a year.

Mortgage Insurance Deduction: Homeowners can deduct mortgage insurance premiums from their Minnesota income if their modified adjusted gross income is less than $110,000.

Mortgage Debt Forgiveness: Homeowners whose lender agreed to accept less than they owed in a "short sale" or foreclosure of their home can exclude the amount of debt forgiven by the lender from their Minnesota income.

Deduction for Educator Expenses: K-12 school teachers or school employees who bought classroom supplies with their own money can deduct up to $250 of their purchases.

Higher Education Tuition Deduction: Those who paid tuition and fees to a college, university or other post-secondary school may be able to deduct up to $4,000 of the tuition and fees from their Minnesota income if their modified adjusted gross income is below $80,000 for individual returns or $160,000 for joint returns

Student Loan Interest Deduction: Those who paid student loan interest that could be deducted on their federal tax returns may be able to deduct up to $2,500 of the interest from their Minnesota income if they have modified adjusted gross income below $75,000 for individual returns or $155,000 for joint returns

Education Savings Accounts: Those with a child in grades K-12 who used distributions from a Coverdell Education Savings account to pay for their education can exclude those distributions from their Minnesota income.

National Health Corps Scholarships: Those who received a National Health Service Corps Scholarship program or F. Edward Hebert Armed Forced Health Professions Scholarship and Financial Assistance program may be able to exclude those benefits from their Minnesota income.

Employer-Provided Assistance

- Education: Those whose employer helped pay for certain college or post-secondary training can exclude up to $5,250 of these benefits from Minnesota income.

- Adoption: Those whose employer helped pay for adoption expenses can exclude up to $12,970 of these benefits from their Minnesota income if their modified adjusted gross income is below $234,580.

- Transit: Those who received up to $245 per month of employer provided transit passes and van-pooling benefits can exclude the value of those benefits from their Minnesota income.

Tax-Free Charitable IRA Deductions: Those who are 70½ or older and made a contribution to a qualified charitable organization directly from their IRA can exclude up to $100,000 of IRA distributions from their Minnesota income.

For a list of small business tax cuts, go to http://bit.ly/1m2Bzvw

WHAT SHOULD YOU DO?

These changes align Minnesota's tax forms more closely with federal forms. If you properly claimed these benefits on your federal return, they will carry over to your Minnesota return.

If you have not filed your 2013 taxes: Wait until April 3 to allow for software changes

If you already filed for 2013: The state will notify you if you need to do anything else. If you qualify for a new deduction or credit, 1 of 3 things will happen after a review:

1. The state will adjust your return and send a refund and a letter explaining the adjustment.

2. The state will request more information, then use that information to adjust your return.

3. If your return cannot be adjusted, you will get a notice to file an amended return to get the benefits of these changes.

Federal and state income tax returns must be filed by April 15, 2014.

WHO DOES THIS AFFECT?

1.4 million Minnesota taxpayers (50 percent) have already filed their taxes.

These tax changes will benefit about 1 in 10 Minnesota taxpayers, according to the Department of Revenue.

WHERE IS MY REFUND?

To check the status of your refund, go to www.revenue.state.mn.us and click "Where is my refund?" under "Individuals" or call 651-296-4444 / 1-800-657-3676.

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