The American Taxpayer Relief Act (ATRA) extended some federal tax provisions relating to itemized deductions through 2013. Minnesota did not conform to these provisions for tax year 2013. View a detailed list of the acts and provisions extended by ATRA.
To account for these differences, we created Schedule M1SA, Minnesota Itemized Deductions. Taxpayers must complete Schedule M1SA if they filed a federal Schedule A and any of the following apply:
Their Minnesota adjusted gross income (AGI) exceeds $178,150, or $89,075 if they’re married and file a separate return.
They made a charitable donation from an IRA distribution that could not be deducted on their federal Schedule A.
Their Minnesota AGI is different from their federal AGI and they claimed certain deductions that are limited to a percentage of AGI. Examples include medical and dental expenses, charitable donations, casualty and theft losses, and miscellaneous deductions subject to the 2 percent of AGI floor.
They are affected by any of the nonconformity items listed below.
Mortgage Insurance Premiums (Line 7)
ATRA extended a provision that allows taxpayers, whose income is below certain limits, to deduct the cost of premiums for insurance covering the mortgage on their qualified principal residence.
For Minnesota purposes, taxpayers must reduce their itemized deductions by the amount of their federal deduction for mortgage insurance premiums.
Enhanced Charitable Deduction for Contributions of Food Inventory (Line 10)
ATRA extended a provision that allows individual taxpayers to claim an enhanced charitable deduction for donations of food inventory as if they were a C-corporation. That is, they can deduct twice their basis in the food or deduct their basis plus one-half of the unrealized profit – whichever is less.
For Minnesota purposes, this deduction is limited to taxpayer's basis in the contributed food. They must recalculate their allowable charitable deduction for such donations. They are not allowed a carryover of the excess federal deduction.
Enhanced Charitable Contributions of Real Property Made for Conservation Purposes (Line 10)
ATRA extended a provision that allows taxpayers to claim an enhanced deduction for a donation of interests in real property for conservation purposes. This provision allows the deduction up to 50 percent of AGI (rather than 20 percent or 30 percent); it also extends the carry-forward period for excess contributions.
For Minnesota purposes, a taxpayer’s deduction for the donation of this real property is limited to 20 percent or 30 percent of their Minnesota AGI, depending on the type of charity. Taxpayers are allowed a carryover, for up to 5 years, of the difference in their allowable state and federal deductions.
Itemized Deduction Phase-Out (Line 22)
ATRA permanently repealed the phase-out of itemized deductions for taxpayers whose AGI is:
$250,000 or less for single filers
$275,000 or less for heads of household
$300,000 or less for married joint filers
For Minnesota purposes, taxpayers must calculate the phase-out based on their Minnesota AGI. The state phase-out affects taxpayers whose Minnesota AGI exceeds $178,150, or $89,075 for married taxpayers who file separately.