MINNEAPOLIS — In less than two weeks, Minnesotans will be able to start filing income taxes before the April 15 deadline.Lawmakers approved it in the last parliament $3 billion plan This includes tax cuts for seniors and low- and moderate-income households.
What you need to know before tax return season Starts on January 29th.
Rebate checks are taxed by the IRS
About 2.1 million Minnesotans qualified for one-time rebate checks, part of a massive $17.6 billion budget surplus that lawmakers had to address during the 2023 session. is.
The rebate was $260 per individual tax filer, $520 for married couples filing jointly, and an additional $260 for each of up to three dependents. So if you meet the income requirements, a family of five could get up to $1,300 back in their pocket.
Married couples filing jointly with annual incomes of less than $150,000 and taxpayers with annual incomes of less than $75,000 are eligible for a one-time refund.
When tax season comes around, Minnesotans won't owe state taxes on these payments, but they will still owe money to the IRS. Lawmakers approved the rebates about two weeks after the federal coronavirus emergency ended. Before that deadline, the payment would have been harmless.
This angered Gov. Tim Walz and forced the IRS to reconsider. Republican Rep. Pete Stover, who represents Minnesota's 8th Congressional District, is also pressuring federal tax authorities to find relief.
But for now, you can expect to pay Uncle Sam a minimum of $26 and a maximum of $286, depending on the size of the rebate.
child tax credit
A child tax credit for low-income families has been hailed by Democrats in charge of the tax bill as the “centerpiece” of the tax bill. Columbia University researchers predict It could reduce child poverty in Minnesota by one-third.
The credit is $1,750 per child and begins to phase out for households making more than $35,000 a year.
If Minnesotans earn more than that, they may be eligible for a smaller credit, depending on their income and number of children. There is no limit to the number of eligible children a family can apply for.
The new tax law also made adjustments to existing tax laws.Oak family credit. This change combines the two credits, resulting in the same phase-out timeline. For example, a married couple with three children under the age of 18 who file jointly can receive up to $5,600 in deductions. It will be completely phased out for people making more than $81,666 a year, according to the Minnesota Legislature's nonpartisan research staff.
An estimated 265,000 households will be affected by this new loan. Minnesotans can take the deduction even if they are not legally required to file a tax return. The Department of Revenue estimates that 10-15% of eligible households are in this situation. However, you must submit a file to claim credit.
Most recipients of the new child tax credit can: Free tax preparation services and can Create files for free, According to a ministry spokesperson.
Credits will be provided as part of your refund.
social security tax reduction
Retired couples with incomes up to $100,000 and individuals with incomes up to $78,000 will no longer pay any state taxes on their Social Security benefits starting with the 2023 tax year. Half of the state's seniors already pay no state taxes on these benefits. DFL tax officials said during the session that the changes would increase that number to 76%.
In 2022, Republican and Democratic leaders in a divided Congress reached an agreement to completely eliminate state taxes on Social Security, regardless of income. However, the trade was canceled before the end of the session. The issue will be carried over to the 2023 session.
