Many hardworking Minnesotans will receive greater tax refunds, and nearly all business owners can breathe a sigh of relief now that a comprehensive tax bill is law. While this is certainly positive news, the reality is the Legislature could have done even more to fix last year’s burdensome tax increase mistakes and give back hard-earned money that rightfully belongs to taxpayers.
Less than a quarter of last year’s $2 billion tax increases will be returned to Minnesotans in the form of business-to-business tax repeals, the gift tax repeal, and income tax conformity. Conformity allows filers to take advantage of federal standard deductions and credits on their state tax returns, which result in higher tax refunds, including:
-
Deduction for student loan interest
-
Excluding employer-provided education assistance
-
Excluding discharged debt on home short-sale
-
Deduction for qualified tuition and related expenses
-
Deduction for mortgage insurance premiums
-
Deduction for educator expenses
-
Deduction for employer-provided adoption assistance
Several legislators agree that returning just one-fourth of what was taken from taxpayers is not enough, especially in light of the fact the state has a $1.2 billion surplus.
The House originally tried to give back more. I successfully offered an amendment to return about $80 to working moms and dads with children in daycare by reinstating the Dependent Care Credit for tax year 2013. I believe Minnesota working families—especially those with young children—deserve greater tax relief. Unfortunately, this important provision was not included in the final bill sent to the Governor last Friday.
We also tried to eliminate the “marriage penalty” for 640,000 low- and middle-income earners, saving $112 per tax return for married filers this year. Unfortunately, this also was defeated.
Additionally, the House bill would have provided retroactive refunds to businesses who have already incurred $56 million in new taxes. The final bill does not provide that relief, and it certainly cannot bring back the businesses that left the state or jobs that were lost because these taxes were signed into law in the first place.
At the end of the day, the final bill didn’t go as far as I would have liked, though it is an important first step to offer tax relief to Minnesotans. Be assured I will continue to fight for more relief for taxpayers. There is still ample room in the budget surplus—and time in the legislative session—for action.
Tax Conformity: Do I need to re-file my taxes?
April 15th is just around the corner, and I have been contacted by several tax preparers and concerned constituents about what to expect with delayed tax conformity now that half of all Minnesotans have already filed their taxes. Many are asking if they need to re-file to benefit from newly available tax deductions and credits.
If you have already filed and are affected by the changes just made via the tax bill, the Department of Revenue (DOR) has advised that one of three things will happen:
-
The DOR will fix your return and send a letter explaining what was fixed.
-
The DOR will request more information from the taxpayer to fix a return.
-
The DOR will notify taxpayers that it cannot adjust an existing return and the tax filer will have to provide an amended return.
Taxpayers are advised to contact the DOR at (651)556-3000 if they have additional questions. Local residents can check my website (www.house.mn/48b) for any new guidance issued by the DOR on filing for tax year 2013.
Please continue to send me your thoughts, ideas and suggestions. I can be reached at rep.jenifer.loon@house.mn or 651-296-7449. I look forward to hearing from you!