Tricounty News

Law Changes May Affect 2008 Taxes For Individuals

Saint Paul-Minnesota has adopted most federal tax changes enacted by Congress for the 2008 tax year under a new law signed by Gov. Tim Pawlenty. Some of the changes contained in the law resulted in the elimination of Department of Revenue Schedule M1NC, Federal Adjustments.  As a result, some taxpayers who used this schedule in calculating their Minnesota taxable income will have to file an amended individual income tax return for 2008. No further action is required for taxpayers who claimed federal deductions for higher education tuition and fees or for teacher classroom expenses, but who had no other adjustments on Schedule M1NC. However, taxpayers with other adjustments on Schedule M1NC should re-file their Minnesota tax return as outlined below.  This includes taxpayers aged 70-1/2 or older who reported non-taxable direct transfers from IRA accounts to charitable organizations. Taxpayers who have not yet filed their 2008 Form M1: · Do not complete Schedule M1NC, since the schedule is now obsolete. · Taxpayers claiming the college tuition and fees and/or educator expenses deduction on their federal returns must add back these deductions on line 12 of the newly revised Schedule M1M, Income Additions and Subtractions.   · Taxpayers who use tax software should be sure to download the latest program updates. Taxpayers who have already filed their Minnesota return and included Schedule M1NC: · File an amended return if you added back tax-free charitable transfers from IRA accounts or reported any federal adjustments other than tuition and fees and educator expenses.  You must use Form M1X, Amended Minnesota Income Tax. · Taxpayers who used tax preparers should contact those professionals for updated forms and information. The legislation (HF 392) conforms Minnesota's income tax to most federal changes enacted through Dec. 31, 2008.  It does not include any provisions of the recently passed federal stimulus law, which generally take effect with tax year 2009. Conforming to federal tax law helps provide clear and consistent rules that help reduce taxpayer confusion and make it easier to calculate and file state taxes.   For additional information-including updated copies of all affected forms, schedules and instructions-go to the Department of Revenue website: www.taxes.state.mn.us.