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State approves new tax breaks: Officials suggest some taxpayers wait until April 3 to file

Minnesotans entitled to share in $49 million of new individual income tax breaks should wait a week and a half to file tax returns, state revenue officials say.

“It will allow them to get their refunds quicker,” Assistant Revenue Commissioner Terri Steenblock said Monday.

If taxpayers who qualify for one of 10 new breaks file returns now, Revenue Commissioner Myron Frans added, it could be months before they get their refunds. If they wait to file until April 3, tax officials expect software and tax preparers to be ready to handle law changes state legislators and Gov. Mark Dayton approved Friday.

April 15 remains the income tax deadline.

The tax bill lawmakers passed and Dayton signed on Friday set aside $1 million for the Revenue Department to undertake the job.

While tax cuts overall amounted to $443 million, just $49 million of them affect individual income tax returns being filed now.

“About 1 in 10 taxpayers probably will be able to benefit,” Frans said, meaning that up to 275,000 people will split the $49 million in new tax breaks.

Taxpayers who do not qualify for the new tax breaks can go ahead and file returns now.

Frans said that he expects Minnesotans to have a lot of questions, so his department is increasing the number of operators at its call center, available at 651-296-3781 and 800-652-9094.

New tax breaks

Minnesotans may take advantage of 10 newly enacted tax breaks. All are designed to more closely match state tax law with federal law, which results in taxpayer savings.

-Working family credit: New law moves the credit closer to the federal earned income tax credit for families earning $25,000 to $40,000 annually.

-Mortgage insurance deduction: Minnesotans making less than $110,000 a year may deduct mortgage insurance premiums.

-Mortgage debt forgiveness exclusion: Homeowners whose mortgage lenders agreed to accept less than they owed on their homes may exclude the amount of debt the lender forgave.

-Educator expenses deduction: Kindergarten through 12th grade school employees who buy classroom supplies with their own money may deduct up to $250 of the purchases.

-Higher education tuition deduction: Those who paid tuition and fees to a post-secondary school may be able to deduct up to $4,000 if income is below $80,000 for individual returns or $155,000 for joint returns.

-Student loan interest deduction: Students may be able to deduct up to $2,500 of student loan interest if returns show incomes below $75,000 for individual returns or $155,000 for joint returns.

-Education savings account exclusion: Taxpayers with a child in grades K-12 who used distributions from a Coverdell Education Savings Account may exclude those payments from income.

-National Health Corps scholarship exclusion: Taxpayers who received a National Health Service Corps scholarship or Armed Forces Health Professions scholarship and financial aid may be able to exclude those payments from income.

-Employer-provided education, adoption and transit assistance exclusion: Those whose employers provide education, adoption and transit assistance may be able to exclude some of those benefits from income.

-Tax-free individual retirement account exclusion: Taxpayers 70.5 years old and older who donate to charities from their IRAs may exclude up to $100,000 from income.

Don Davis, INFORUM

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