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 the return due date(see example, below).

To claim a refund:

• File Form M1X, Amended Minnesota Income Tax.
• Note on the form that the refund claim is for an armed forces member who died while in active service.
• Include a copy of the death certificate and Schedule M23, Claim for a Refund Due a Deceased Taxpayer.

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

Example

John joined the U.S. Marines in 2008 and died while serving in Iraq in 2011. John filed returns and paid income tax to Minnesota for tax years 2008, 2009 and 2010. For 2011, John’s income won’t be taxed. John’s heir(s) can file amended returns for 2008, 2009 and 2010 to claim a refund of taxes that he paid. (These returns must be filed by April 15, 2016; April 15, 2017; and April 15, 2018, respectively.)

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.