Minnesota 2020 Tax Changes
The Minnesota legislature passed legislation which has been signed into law that will largely bring the Minnesota individual tax system into conformity with the federal law as changed by the 2018 Tax and Jobs Act.
Most individual taxpayers will use the standard deduction on both their federal and Minnesota 2020 tax returns.
It will be possible to itemize deductions on the federal and/or Minnesota return for a very limited number of taxpayers.
Minnesota has changed the starting point on the return to Adjusted Gross Income. In addition to the standard deduction as mentioned above, there will also be a deduction for dependent exemptions (not taxpayer or spouse) as in prior federal law.
Minnesota does not allow the Qualified Business Income deduction.
In some situations, taxpayers will have their 2018 returns adjusted for certain changes that were implemented retroactively after the 2019 filing season.
Following is a list of changes that affect individuals and sole-proprietors (Schedule C small business)... starting with the 2018 tax year in most cases:
First Time Homebuyer Savings Account - (Earn tax free (MN only) interest on home savings)
Section 529 Plan Credit - (Get up to a $500 rebate for contributing as little as $1,000 to a college savings account for your children or grandchildren. ) (Instant 50% return in some cases)
Clarification on Minnesota Residency Rules.
Social Security Benefit Subtraction. (No action needed. Some will see a tax break).
Student Loan Credit - (We need additional information to get you the credit. Please write down with your records the original amount of your student loan(s) , the amount of payments made in 2019, and bring the 1098-E showing the amount of interest paid.
Teacher Credit for attaining Master's degree.
Expanded MN credit for child care expenses.
Political Contribution Refund. Get up to $50 back for political contributions made
during the tax year. Obtain Form PCR to apply for the refund separately from
your income tax return.
Minnesota Estate taxes kick in at the following levels: (Federal estate tax threshold is much higher).
2019 Estates in excess of $2,700,000.
2020 Estates in excess of $3,000,000.
Small farms and businesses should consult with an estate planning attorney regarding different rules and possible exclusions.
This page is not a comprehensive review of Minnesota tax changes, too numerous to outline here.
Todd's Tax Service LLC
Todd's Tax Service LLC
Base tax prep fee includes the above items on your return if they apply. (Excluding Estate tax returns)