Minnesota Property Tax Refund

During the last few weeks of the legislative session, the legislature passed, and Governor Dayton signed, a bill that will provide additional property tax refunds for those that qualify.

For renters, the amount of the refund they will receive will increase by 6%, while homeowners will see a 3% increase.  There is no change in who is eligible for the refunds, just more money for those that already do.

For those who have already completed their property tax returns, nothing more needs to be done.  The Department of Revenue will recalculate the additional refund and send the correct amount along with a letter explaining the calculation. Property tax returns filed going forward will be correct from the outset.

The Department will also be sending letters to those taxpayers that appear to qualify for the refund but haven’t filed a 2011 or 2012 property tax return. We make a habit of checking to see which of our clients will qualify, but if you do get a notice from them, please let us know.

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.

July 1st Update

Starting today, a number of tax-related changes agreed to during the last legislative session go into effect, along with the effect of one key U.S. Supreme Court ruling.  Below is a summary of the key points.

  • The new, 9.85% top Minnesota tax rate went into effect, but is retroactive to January 1st, 2013. Those that are single with taxable income of more than $150,000, and married couples with more than $250,000 in taxable income will see the new 9.85% rate imposed on income over those amounts. This also points to a significant marriage penalty, since two single people can earn $50,000 more than a married couple before the new tax kicks in.
  • Starting with Minnesota tax refunds issued in 2014, those not choosing direct deposit will instead be issued a prepaid debit card; paper checks will no longer be issued.
  • The following items paid by an employer on behalf of an employee will now be subject to Minnesota income tax (these items are still exempt on the Federal level, but starting January 1, 2013 not for Minnesota). In these cases, Box 16 of the employee’s 2013 W2 will likely exceed Box 1.
    • Up to $5,250 of education expenses for education not directly related to the employees job. This includes many tuition reimbursement programs.
    • Up to $12,970 of adoption expenses paid on behalf of an employee or reimbursed to them.
    • Transit passes and vanpool expenses in excess of $125 per month.
  • The U.S. Supreme Court overturned the Defense of Marriage Act (DOMA), which clears the way for same-sex couples that are legally married in their state of residence to file joint tax returns. Beginning August 1st, 2013, same-sex couples will be allowed to marry in the State of Minnesota, allowing them to file jointly on both the Federal and State tax returns, which simplifies the process significantly. Those couples with income from states other than those that allow same-sex marriage will still face significant hurdles to correctly filing in multiple states.

We’re working hard to keep up on the changes as they come about, including the impending enactment of most of the Affordable Care Act.

This Just In: MN 2% Contractor Withholding Repealed

The Minnesota Department of Revenue announced today that, effective June 30, 2012, businesses paying individuals in the construction trades will no longer be required to withhold 2% of the payment and remit it as income tax withholding to the State.

This is great news for all of you in the real estate and construction trades.  It makes conducting business with your contractors after that date a much simpler process.  Payments made prior to June 30 will still be under the old rules, so be sure to withhold as needed for payments made through this date.

Questions?  Give us a call and we’ll be happy to discuss the finer points with you.