Do you live in Minnesota? Minnesotans have great conditions to live under despite the cold temperatures. The people are friendly and their tax code is praised for being fair and one of the most progressive in the country.
Let’s take a look at Minnesota taxes for individuals and what you should know when you file your tax return. Remember Minnesota taxes are for sales, property, and county property. Here’s everything you need to know.
- Consider if You Are a Full-time Resident?
Full-time residents of Minnesota who have lived there for more than 183 days must file a declaration before filing their Minnesota tax return. They can file a state income tax return as long as their gross income reaches a set minimum in each tax year.
If you do not file federal returns, you must file state returns if you live outside Minnesota and wish to claim refundable credits (refunds) for the state tax already paid.
The COVID-19 pandemic has changed many of the deadlines for filing tax so be sure to check up online for the latest details.
- Minnesota Has an Individual Income Tax System
The Individual Income Tax System in Minnesota has four brackets for tax. These have rates of, 9.85%, 7.85%, 6.80% and5.35% respectfully.
Your tax status as well as your yearly income determine your tax rate. The status you use on your income tax return in Minnesota must match the status you used on your federal income tax return.
Minnesota recognizes federal filings as single, married, widowed, dependent, child of a married filing, or household manager. Don’t try to obfuscate or hide any of this information as this is considered tax evasion. The penalties are severe.
If your income is below $90,000, you can use the 2019 tax table. This is included with your Form M1 (Individual Income Tax Return). Some brackets match the 2019 tax rate, and they apply to your taxable income in Minnesota of $90,000 or more. In Minnesota, deductions and credits are known as SALT.
Starting in 2019, the Minnesota standard deduction reflects the federal standard deduction amount. However, if you or your partner are married or you are older than 65, there is an additional standard allowance.
- State Vs. Federal Rules and Deductions Are Different
Some states require you to do the same thing when you return to the state as when you return to the federal level.
These are the deductions that you will be able to take on your Minnesota State tax return if you list the Minnesota State Standard Deduction and take the deduction.
You can choose to use the standard deduction. Alternatively, you can list deductions on your income tax return. This would work on your federal income tax return.
This means that you can get the standard deductions on your federal return and your state tax deductions on that return. This enumeration gives you greater tax benefits at the state level than the standard deductions.
- There Are K12 Education Costs Deduction
You could be entitled to a deduction for school-related costs. You can pay for children from kindergarten until 12th grade to be eligible. This deductible is available for all schools and children schooled at home even if your child attends school in a nearby state.
As of the 2019 tax year, no personal tax exemptions will be available in Minnesota. Instead, the state allows a tax exemption of up to $4,250 for each qualified dependant you claim. The total allowance can be reduced if your income exceeds a certain threshold, regardless of your registration status.
To qualify, your child must not be dependent on someone who does not return, and the amount you can deduct depends on the level of your children at school.
- There Are Subtraction Discounts for Seniors and the Disabled
Minnesota has a subtraction of taxable income for people 65 and older who are disabled. You must qualify for the tax code requirements to claim the deduction. You cannot claim the deduction for the same costs if you take out the K-12 education loan.
If you, your partner, or another relative have participated in a living donation or a particular organ, you may qualify for deductibility of up to $10,000 for qualifying expenses related to that donation.
If your gross income is more than around $20,00 ($10,000 if filed jointly), the amount you can claim under the individual deduction is limited.
The amount of Work-Family Credit depends on how much you own, your number of children, and whether you are married.
This means that if the amount of credit goes beyond your tax liability, the government will reimburse you the difference. Do remember this can take some time to process.
The difference between the deduction and the tax credit. Minnesotans with incomes between W-2 wages and self-employment have no income limit on their enrollment status, several qualifying children, or qualifying family loans.
The Child and Dependent Care Credit is a repayable loan and works like the federal loan for care costs. If you have income and other qualifications you can deduct qualifying expenses that you pay for the care of your child or other dependents while working or looking for a job.
Minnesota Taxes: File Them on Time
It’s important that if you are eligible for Minnesota taxes that you file them on time. You don’t want to be on the wrong end of the tax authorities and end up with a costly fine.
But you also want to do your research to make sure you are getting exactly what you want. You don’t want to miss out.
For more be sure to check out the other articles on our site.