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Last Updated: 8/23/2017

Tax Debt Relief for Deceased Active-duty Military

Minnesota provides tax relief to the family of any military member who dies during active service in the United States or United Nations armed forces. Under state law:

  • The service member’s income will not be taxed in the year of their death.
  • Any unpaid tax debts or penalties from prior years they were in active service will be abated (forgiven).
  • Their heirs may request a refund of income tax the member paid while in active service. Refund claims must be filed within seven years of when the member’s return was filed, or when the tax was paid or collected. (see example, below).

To claim a refund:

For more information, view the statute, M. S. 289A.39, subd. 6.

Example

John joined the U.S. Marines in 2013 and died while serving in Iraq in 2016. John filed returns and paid income tax to Minnesota for tax years 2013, 2014 and 2015. For 2016, John’s income won’t be taxed. John’s heir(s) can file amended returns for 2013, 2014 and 2015 to claim a refund of taxes that he paid.

Joint Filings

If the military member and his or her spouse filed a joint return for any year, follow these steps to calculate the amount of tax to be refunded (or tax debt to be abated):

  1. Determine how much income tax each spouse would have paid if they’d filed separate returns. (Use the “married filing separately” column in the tax tables for the appropriate year.)
  2. Add these two tax amounts.
  3. Divide the deceased person’s tax amount (step 1) by the total (step 2). The result is a percentage.
  4. Multiply the actual tax paid by this percentage (step 3) to determine the refund amount.