4 Minnesota tax law changes most likely to affect filers
Tax day is just three weeks away. But if you've put off filing your taxes this long, keep putting it off.
That's what the Minnesota Department of Revenue is advising as it scrambles to implement several tax changes approved by the Legislature last Friday.
Todd Koch, a CPA and tax preparer at John A. Knutson & Co. in Falcon Heights, told MPR News' Morning Edition about which changes to watch out for. Below are highlights from the conversation.
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4 changes that are most likely to affect people
1) "What you see most often is, there's a mortgage insurance deduction that you can get on your federal return. And these premiums are deductible for federal (returns). Before the law changed, they had to be added back.
2) "That was also the same for educator expenses, where an educator can deduct up to $250 of their classroom expenses that they paid out of pocket.
3) "There's also a potential $4,000 higher education deduction that people were able to deduct on their federal return that they couldn't on Minnesota.
4) "And lastly would be the student loan interest deduction that people can deduct up to $2,500 in student loan interest."
3 biggest changes
1) "There are some that are very large that people need to be aware of. If you short-sold your home during 2013, you might have an adjustment of over $30,000 to $50,000 on a short sale. That has a huge impact to those people.
2 & 3) "Also, if you had adoption assistance or education assistance in 2013, those adjustments can be over $5,000 to almost $13,000."
Most people unaffected
"What's really important that people understand is, yes, it may impact one out of 10 people, but that means nine out of 10 people are fine filing their returns as they are.
"Also, many of the differences are relatively small. You know, if you're an educator, and you are now getting to deduct your $250 of school supplies, your tax difference will be somewhere between $5 and $20 for most people."
On what to do next
"The best thing if you've already filed is just wait. The Minnesota [Department of] Revenue is going to go through the returns, and figure out, if either a) they can adjust it for you, and if they can, they will send you your refund, and they will send an explanation.
Or if they need more information, they will ask you for information. Or they may let you know you have to amend your return. But if you amend in the meantime, it's very likely that you will create more of a problem than a benefit."
Bad timing for tax preparers
"There's not been a time I can recall where they've changed so many taxes in such a short amount of time. We're talking about just the individual income tax part here, but they changed individual taxes, corporate taxes, sales taxes, state taxes, and gift taxes; all have retroactive components.
So it's been very stressful to try and understand this and help people out, but we're doing our best to get a handle on everything."