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Last Updated: 7/17/2018

FAQ: Information for Individuals

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For the 2018 Credit for Attaining Master’s Degree in Teacher’s Licensure Field (Schedule M1CMD), when does a qualifying teacher have to start their master’s degree program?

To qualify for the 2018 Credit for Attaining Master’s Degree in Teacher’s Licensure Field, a licensed teacher must have started the qualifying master’s degree program after June 30, 2017. If a teacher started their program after June 30, 2017, but completes it in a tax year after 2018, they may qualify for the credit in the tax year they complete it. If customers file 2018 Schedule M1CMD, the department may ask for documentation proving that they qualify for the credit. This includes documentation showing they started the program after June 30, 2017, and completed it before January 1, 2019.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Can taxpayers claim the refundable Credit for Tax Paid to Wisconsin if they paid alternative minimum tax (AMT) to Wisconsin?

Taxpayers may use the other state’s AMT to calculate their Minnesota credit for taxes they pay to that other state. The refundable portion of the Credit for Tax Paid to Wisconsin depends on the portion of taxpayers’ earned income taxable to Wisconsin and Minnesota.

10/5/2018
For the Credit for Tax Paid to Wisconsin, Schedule M1RCR, is an S corporation shareholder’s pass-through income considered earned income?

Business owners may be able to include some of their income as earned income.  For more information, see the instructions for line 9 of Schedule M1RCR.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Will federal tax law changes affect a taxpayer’s Minnesota residency status?

​No. Federal tax law changes will not impact a taxpayer’s residency status.

10/24/2018
If taxpayers receive federal Form 1098, how can they determine their deductible mortgage interest for Minnesota purposes?

For mortgages incurred after December 15, 2017, the federal deduction for mortgage interest is limited to interest paid on up to $750,000 of the debt that was used to purchase, build, or substantially improve the residence.  For Minnesota tax purposes, customers may deduct the interest on up to $1,000,000 of that debt. Customers may include, as mortgage interest, interest paid on up to $100,000 of home equity indebtedness for Minnesota tax purposes.  The deduction will be available to customers on Schedule M1SA, Minnesota Itemized Deductions, and there is a worksheet in the instructions for customers to calculate their deduction.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Will Minnesota taxpayers be able to deduct mortgage interest on a second home?

​Yes. Minnesota taxpayers may deduct mortgage interest on up to two residences.  The deduction is limited to interest paid on up to $1,000,000 in debt that was used to purchase, build, or substantially improve, and is secured by the residence. 

10/5/2018
Will taxpayers be able to deduct gambling losses on their Minnesota return?

​Yes. Minnesota law has not changed. Taxpayers may deduct gambling losses on line 25 of Schedule M1SA, Minnesota Itemized Deductions, to the extent of their gambling winnings reported on line 21 of the 2018 federal Schedule 1.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Will taxpayers be able to deduct investment interest on their Minnesota return?

Yes. Minnesota law has not changed. Taxpayers may deduct investment interest expenses on line 12 of Schedule M1SA, Minnesota Itemized Deductions. 

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Will Schedule M1SA, Minnesota Itemized Deductions, account for both the state and local income tax and the sales tax addition?

Yes. Line 27 of Schedule M1SA will account for state and local income and sales taxes.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
How will taxpayers handle hobby losses on the 2018 Minnesota return?

Taxpayers include in Federal Adjusted Gross Income (FAGI) any gross receipts from a business not engaged in with a profit motive. For Minnesota tax purposes, taxpayers may deduct the related expenses, up to their gross receipts, as a miscellaneous deduction on Schedule M1SA, Minnesota Itemized Deductions.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
If two taxpayers are married and file separate returns, and one spouse itemizes their Minnesota deductions, does the other spouse need to itemize for Minnesota?

Yes. If one spouse files a Minnesota income tax return and itemizes their Minnesota deductions, the other spouse must also itemize on their Minnesota income tax return. However, if one spouse qualifies for the head of household filing status, that spouse may choose the standard deduction even if the other spouse chooses to itemize. If only one spouse is required to file, that spouse may itemize their Minnesota deductions or claim the standard deduction on their Minnesota income tax return.

10/19/2018
How can taxpayers determine if they are withholding enough Minnesota income tax from their earnings?

A taxpayer may use the federal 2017 Form W-4 as a guide to determine whether they are having enough Minnesota tax withheld. If the number of allowances on the 2017 form is different from their federal 2018 form, they can complete Minnesota’s Form W-4MN to specify the amount of Minnesota withholding. Taxpayers may use allowances calculated on the 2017 Form W-4 as a guideline to complete the Form W-4MN.

Beginning in 2019, Minnesota Form W-4MN will allow individuals to calculate Minnesota withholding allowances separately from their federal Form W-4. Individuals can provide a completed Form W-4MN to their employer with their Minnesota allowances and any additional amount they want withheld per paycheck.

12/11/2018
How will Minnesota part-year and nonresidents file the 2018 Minnesota income tax return?

Minnesota part-year residents and nonresidents who must file a Minnesota income tax return will still file Schedule M1NR, Nonresidents/Part-Year Residents, with their return. If these taxpayers are required to complete Schedule M1NC, Federal Adjustments, they will need to include amounts from Schedule M1NC on lines 11 and 16 of Schedule M1NR.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Has the Internal Revenue Service provided further guidance to Minnesota regarding the deductibility of prepaid real estate property taxes?

​Yes. The IRS recently issued a letter that states the TCJA did not change Section 164 of the Internal Revenue Code.  The letter states that if the tax was not imposed by a state or local taxing jurisdiction when it was paid, it will not be deductible on a taxpayer’s federal income tax return.

8/3/2018
Can I use distributions from a 529 savings plan for K-12 education expenses?

Federally, distributions from a 529 education savings account may be used for up to $10,000 in K-12 expenses. Minnesota does not allow this use.  Because these are considered nonqualified distributions under Minnesota law, taxpayers must add back the earnings portions to their taxable income. This adjustment will be included on the Schedule M1NC. These distributions may also be subject to Minnesota’s Education Savings Account Recapture Tax if taxpayers claimed a 2017 Minnesota Education Savings Account Contribution or Subtraction.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
For tax year 2018, if taxpayers claim the standard deduction on their federal return will they be able to choose to itemize their deductions on the state return?

​For taxable year 2018, taxpayers may claim either the standard deduction or elect to itemize deductions on their 2018 Minnesota income tax return, regardless of the election made on their 2018 federal income tax return.

7/23/2018
How will taxpayers report itemized deductions allowable under Minnesota law?

The department has created a 2018 Form M1SA that will allow taxpayer to claim itemized deductions that are still allowed under Minnesota law.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
Should taxpayers retain records of itemized deductions, even if they anticipate claiming the standard deduction on their federal return?

​We encourage customers to save receipts, and other documentation, throughout the year showing their expenses and charitable contributions they may be able to deduct. This will ensure they have the information they need to reduce their liability or increase their refund as much as the law allows.

7/23/2018
Since the Internal Revenue Service (IRS) changed federal withholding tax tables and federal Form W-4 in February, should Minnesota withholding be different from federal withholding?

The Minnesota withholding tax tables and tax rates remain unchanged. If a taxpayer made changes to their federal withholding based on the IRS guidance, they should review their Minnesota withholding.

Beginning in 2019, Minnesota Form W-4MN will allow individuals to calculate Minnesota withholding allowances separately from their federal Form W-4. Individuals can provide a completed Form W-4MN to their employer with their Minnesota allowances and any additional amount they want withheld per paycheck.

12/11/2018
How can taxpayers determine if they should adjust their Minnesota estimated tax payments or begin paying Minnesota estimated tax?

​To determine the amount of Minnesota estimated tax payments, follow these steps:

  1. Use 2017 federal Form 1040-ES to calculate federal adjusted gross income, deductions, exemptions, and taxable income for the year.
  2. Enter the federal taxable income calculated in step 1 on line 1 of 2017 Form M1, Individual Income Tax.
  3. Complete 2017 Form M1 using the 2018 Minnesota income tax rates and appropriate filing status to estimate Minnesota tax liability.
  4. Divide the amount owed (from line 30 of 2017 Form M1) by four to get the appropriate amount for each Minnesota estimated tax payment. If these amounts differ from the estimated payments made so far, adjust the remaining estimated payments accordingly.
7/23/2018
Will taxpayers be subject to the underpayment penalty if they did not make enough estimated tax payments to Minnesota?

Yes, Minnesota law has not changed. The Underpayment of Estimated Income Tax penalty (Schedule M15) still applies. To avoid this penalty, the amount of any installment required to be paid must be 25% of the lesser of:

  • 90 percent of the tax liability for the current year or 90 percent of the tax  for the year if no return is filed, or;
  • 100 percent of the total tax liability for the previous year if the return showing a liability was filed for the previous year of 12 months (if the adjusted gross income for the previous year exceeds $150,000, then the installment payment is 25 percent of 110 percent of the total tax liability).

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
What steps should I take to correctly file Minnesota’s new and modified tax forms?

​The department strongly encourages individuals and businesses to electronically file tax returns. Electronically filing your return and choosing direct deposit for your refund is the most secure and convenient way to file your taxes and get your refund. Learn more about your electronic filing options and the benefits of choosing direct deposit.

7/17/2018
What will the standard deduction be for Minnesota?

The standard deduction for Minnesota is different from the federal standard deduction. For tax year 2018 the Minnesota standard deduction amounts will follow the amounts announced in Rev. Proc. 2017-58.

Married filing jointly and qualified widow(er)​ $13,000​
​Head of household ​$ 9,550
​Single and married filing separately ​$ 6,500

 

Taxpayers who are blind or born before January 2, 1954 are allowed an additional standard deduction in the amount of $1,300. The amount is increased to $1,600 if the taxpayer is also unmarried and not a widow(er). 

The standard deduction for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,050 or the dependent’s earned income plus $350.

7/17/2018
Will taxpayers who take the standard deduction still be able to subtract charitable contributions for 50% of the contributions over $500?

Yes, Minnesota law has not changed. Taxpayers who do not claim itemized deductions on their Minnesota income tax return will still be allowed a subtraction for charitable contributions for 50% of the contributions above $500.

7/17/2018
Will Minnesota still allow exemptions?

Yes, Minnesota law has not changed. Taxpayers will be allowed to claim a subtraction for personal and dependent exemptions on their Minnesota income tax return. This amount, communicated in Rev. Proc. 2017-58, will be $4,150 per exemption.

7/17/2018
If taxpayers claim Minnesota’s dependent exemption, will the department require them to list dependents’ Social Security numbers and names on the 2018 Form M1?

​No. Taxpayers enter dependents’ Social Security numbers on the current draft of the 2018 federal Form 1040. We may still request additional information if we need to verify dependent exemptions.

10/5/2018
Will Minnesota still allow a deduction for moving expenses?

Yes, Minnesota law has not changed. Taxpayers should maintain records of their moving expenses and reimbursements for moving expenses from their employer if they intend to deduct them on their 2018 Minnesota income tax return.

Beginning in 2018, taxpayers can use Schedule M1MOVE, Moving Expenses, to deduct moving expenses on their Minnesota return. For more information, see Schedule M1MOVE.

12/11/2018
How will taxpayers treat like-kind exchanges on their Minnesota return?

If a taxpayer’s exchange meets all the requirements of Internal Revenue Code, section 1031, as amended through December 16, 2016, they must treat the transaction as a like-kind exchange. A federal law change restricted the use of like-kind exchanges to real property. For Minnesota purposes, these restrictions do not apply. The department has created a new Minnesota schedule for like-kind exchanges: Schedule LK, Like-Kind Exchange. An individual, partnership, S corporation, C corporation, trust, or estate may file this schedule. Taxpayers who file this schedule must place an X in the box next to the type of taxpayer they are.

Check out the final 2018 individual income tax forms and instructions.

12/11/2018
How will Minnesota handle the federal 20 percent pass-through income deduction for businesses?

Minnesota law does not allow the Qualified Business Income (QBI) deduction when calculating Minnesota taxable income. The QBI deduction is allowable federally after the computation of Federal Adjusted Gross Income (FAGI). Because Form M1, Individual Income Tax, begins with FAGI, taxpayers claiming this deduction will not need to adjust their Minnesota return.

10/5/2018
Are the 2018 Minnesota income tax tables available?

Yes. For the 2018 Minnesota income tax rates, see Minnesota Income Tax Rates and Brackets.

12/11/2018
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