Minnesota 2018 Tax Changes
Todd's Tax Service LLC
Minnesota has adopted some of the federal changes effective for the 2018 and 2019 tax years.
Because these changes were made after the tax season was nearly over in 2019, Minnesota Revenue is planning to make adjustments to certain returns and notify taxpayers of those changes by U.S. Mail. Please send us a copy of any notices you receive from MN Revenue for your file.
Most taxpayers will use the standard deduction when filing their 2019 federal and Minnesota tax returns. In isolated instances, itemizing your deductions may be advantageous. We will call this to the attention of our clients for whom it is applicable.
Items in bold require action prior to December 31, 2018. This page focuses on changes that affect individuals and sole-proprietors (Schedule C small business)...
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 2017, 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
July 1 - December 31 2017. Obtain Form PCR to apply for the refund separately from
your income tax return.
Note: the following was "live" during the 2019 tax season. (See above section for updated information - this retained here as a reference point.)
The Minnesota legislature has not passed legislation adopting federal tax changes that impact 2018 returns.
Last tax season, we informed clients about the federal changes and the potential simplification implied by increasing the federal standard deduction. Unfortunately, Minnesota has not conformed to these attempts to simplify filing for some taxpayers.
For most clients, the hassle of keeping records to itemize deductions only on the Minnesota return will not be worth the trouble or expense. (Additional tax prep fees apply.) In cases where there could be a significant advantage to clients to itemize deductions on the MN return, we will discuss this situation on a case by case basis with our clients. There will be a higher tax preparation fee associated with these cases.
In the unlikely event that Minnesota legislators make retroactive changes to the Minnesota tax code as it impacts 2018 filings, be aware that you could receive an additional refund after filing if Minnesota retroactively conforms to the federal changes already on the books. Also, in cases where you itemized deductions on the Minnesota return, you could have to pay back funds if those deductions are retroactively disallowed.
Minnesota legislators knew of the federal changes throughout their entire 2018 legislative session. Gridlock and bureaucratic entrenchment prevented a common sense solution to this situation, causing more work for all involved in the tax filing process.
Minnesota Changes 2018 and 2019 Returns
Base tax prep fee includes the above items on your return if they apply.