Basic C volunteer training Tax year 2014 Topic 13: Minnesota updates and other information 2014 updates in Minnesota Minnesota has accepted the federal standard deduction for married taxpayers New nonrefundable Reading Credit Minnesota has accepted federal legislation – Schedules M1SA, Itemized Deductions and M1NC, Federal Adjustments – are no longer needed MN and federal benefit programs MFIP DWP GA SSI RSDI GRH MSA “Household Income” Income not taxed on federal return used to calculate refundable MN credits TaxWise transfers nontaxable income from 1040 to Minnesota forms Other nontaxable income must be entered manually Do not list on Minnesota returns IRA rollovers Food stamp payments Life insurance payments Property tax refunds Child support Inheritances Gifts SSA or SSI benefits paid to a dependent Additional Income Worksheet for M1CD, M1ED, M1READ, M1PR Workers’ compensation Nontaxable contributions to a retirement plan Employer paid dependent care benefits Veteran’s benefits Nontaxable scholarship amounts Reduction in rent received for being a caretaker Nontaxable gain on the sale of a home HSA deduction For homeowners – amount of certain adults living in the home Topic 14: Minnesota Individual Income Tax Form M1, Individual Income Tax Federal information transferred to the Minnesota returns by TaxWise: – Filing status – Wages (line A) – IRA, pensions and annuities (line B) – Unemployment (line C) – Adjusted gross income (line D) – Federal taxable income (line 1) – State income tax refund (line 5) Form M1, line 3: other additions Schedule M1, lines 3 and 4 Form M1, line 6: Other subtractions Schedule M1M, line 17: K-12 education subtraction (enter directly on form) Must have qualifying expenses and qualifying child Max subtraction is $1,625 per child in grades K-6 Max subtraction is $2,500 per child in graded 7 - 12 Form M1, line 6: Other subtractions Schedule M1M, line 18: Charitable contributions over $500 for taxpayers not itemizing on their federal return (transfers from Schedule A) Form M1, line 6: Other subtractions Schedule M1M, line 22: Railroad retirement income taxed on the federal return Form M1, line 6: Other subtractions Schedule M1M, line 24: American Indians living and working on an Indian Reservation Schedule M1M, line 32: Post service education awards from AmeriCorps program (enter amount on form) Form M1, Line 12: Part-year residents and nonresidents Schedule M1NR Enter dates taxpayer lived in Minnesota on M1NR Enter income from all states in TaxWise Form M1, line 16: marriage credit Schedule M1MA is calculated by TaxWise Must file married filing jointly Must have taxable income on line 8, Form M1 Joint income at least $37,000 Lesser-earning spouse must have least $22,000 Form M1, Payments Line 22: Minnesota income tax withheld Line 23: estimated income tax payments and amount applied from 2013 return Topic 15: Minnesota Refundable Credits Form M-1, Line 24: Child & dependent care credit Schedule M1CD Household income $39,000 or less and has qualifying person MFS does not qualify Form M-1, Line 25: Working family credit Refundable credit is twin to EITC Eligibility is same as EITC Part-year residents and nonresidents may also be eligible Form M-1 Line 26: K-12 EDUCATION CREDIT Schedule M1ED Refundable credit of 75% of qualifying expenses CANNOT claim a subtraction for the 25% portion not allowed for the credit CANNOT claim both the credit and subtraction for the same expenses K-12 education credit & receipts Not required to bring receipts to appointment, but should have them at home No receipts – no credit Provide taxpayer with Minnesota Revenue K-12 education envelop to keep receipts for 2015 K-12 education credit rules Meet “household” income limits Qualifying child uses EITC definition Child must be in grades K-12 at a public, private or home school in MN, IA, ND, SD or WI Expenses must be to improve or expand knowledge and skills in core subjects SUBTRACTION INCOME CHILD No income limit a) Taxpayer’s child, adopted child, stepchild, grandchild or foster child b) Lived with the taxpayer in the U.S. for < ½ the year FILING STATUS Any filing status CREDIT Household income a) Same as EITC b) Lived with the taxpayer in the U.S. for < ½ the year Cannot be MFS $1,625/child (K-6) MAXIMUM $2,500/child (7-12) $1,000 per child K-12 credit & subtraction eligible expenses Page 164 lists qualifying expenses and instructor Private school tuition qualifies for subtraction only M1ED, line 14: eligible to use $200 max for each the subtraction and credit for computer software and hardware expenses totaling $400 + Form m1, line 27: READING CREDIT Refundable credit with no income limit Available for tax year 2014 only Maximum credit is $2,000 Eligibility requirements are multifaceted Topic 16: Minnesota direct deposit or amount owed Form m1, lines 30 & 31: tax refund 1. Option 1: Deposit into the same checking or savings account as federal 2. Option 2: Deposit into another financial account. 3. Option 3: Receive a paper check 4. Option 4: Apply all or a portion of the refund toward 2015 estimated taxes Form m1, line 32: amount owed Option 1: Direct debit from checking or savings Options 2: Pay electronically using Minnesota Revenue’s e-Services Option 3: Pay by phone Option 4: Pay by check or money order Option 5: Pay be credit or debit card 10 minute break Topic 17: Minnesota Homestead Credit and Renter’s Property Tax Refund Housing status - homeowner Owned or lived in their home on 1/2/15 2015 Needs Property Tax Payable in 2015 2014 2015 Housing status – renter & homeowner Rented during 2014 & lived in their home on 1/2/15 Complete both renter and homeowner sections Need CRP and Property Tax Statement Payable in 2015 Nursing home or adult foster care resident Received GAMC, Medicaid, SSI, MSA or GRH - use nursing home or adult foster care resident housing status Did not receive public benefits, use renter housing status Housing status – mobile homeowner Owned and lived in their mobile home on 1/2/15 Rented the property the mobile home was located Need CRP and Property Tax Statement Payable in 2015 Married for the entire year Lived with spouse entire year – file together Lived apart from spouse for all or part of the year – file separately or together; however income of the other spouse must be included for any time they lived together One spouse lived in nursing home and other spouse lived elsewhere – file separate returns Married couple Married during the year – each spouse can file separately or together; however if filing separately include both incomes for the period in 2014 they lived together Divorced or legally separated during the year – each spouse must file separately and include both incomes for the time they were married and lived together Homestead credit refund Max refund is $2,620 Household income <$107,150 Own and occupy the home on January 2, 2015 Property classified “Homestead” Does not owe delinquent property tax Taxpayer must have valid social security number (if married, at least one must have SSN) Special property tax refund Max refund is $1,000 Owned and lived in the home on 1/2/14 and 1/2/15 Property tax increased by more than 12% and the increase was $100 or more Complete Schedule 1, page 2 M1PR Co-owners Taxpayer and another person (not spouse) own and occupy home as co-owners – only 1 person can apply for refund and must include the income of the other owner 2+ people own the home, but not all live in the home – owner that lives in the home qualifies and not required to add the other owner’s income on return Special rules for people who own and live in a multi-family dwelling Homeowner situations Sells home in 2014 and rents for the rest of the year – files as renter Rents and then buys a home in 2014 and lives in the home on 1/2/15 – file as renter and homeowner Home is foreclosed in 2014 – does not qualify as homeowner Homeowner situations Part-year resident – enter total household income from all states Lives in co-op, considered a homeowner Someone other than a spouse lived with taxpayer – include income of the other person, unless the person was a boarder, renter, taxpayer’s dependents or their parents Mobile homeowner situations Owns a mobile home but rents the lot – file as mobile homeowner Rents a mobile home and rents the lot – file as renter Property tax statements generally mailed in June – Dakota County issues in March Give taxpayer the Homeowner + Renter Info handout Renter’s property tax refund Max refund is $2,030 Household income is less than $58,060 Is not a dependent of someone else Resided in a rental unit subject to real estate taxes Paid all or part of rent from his or her own funds Certificate of rent paid (crp) Landlords required by law to issue CRP by January 31 If landlord refuses, give the Homeowner + Renter Info handout for Rent Paid Affidavit information Minnesota Revenue will not issue Rent Paid Affidavit until after March 1 More than 1 renter, each renter receives a CRP regardless of actual amount paid by each renter Renter situations A parent and an adult dependent child live together, landlord issues 2 CRPs – parent can claim the amounts from both CRPs Taxpayer cannot claim rent for more than 12 months during the tax year, but they rented two units during 2014 – include the rent amount for the unit where they lived if overlapping months Part year residents – include household income received while living in Minnesota Renter alerts College dormitories and nonprofit nursing homes are exempt from property taxes so do not qualify for renter’s refund Cannot claim refund if (a) nonresident alien, (b) gross income <$3,950, and (c) received more than ½ their support from a relative Rent paid by a person or organization other than the taxpayer does not qualify if the money was paid directly to the landlord If parent pays for child’s off-campus rent to attend school and the child is a dependent, neither parent nor child qualify to claim the renter’s refund Schedule M1PR, page 1 Line 2: Nontaxable Social Security and Railroad Retirement Line 3: Payments to retirement plans deducted as an adjustment to income on Form 1040 is added back Line 4: nontaxable federal and state benefits Line 5: additional nontaxable income Form m1pr, page 1 Line 9: renters Line 11: homeowners Line 12: special property tax refund Form M1PR, page 1: e-file and direct deposit If filing an M1PR only, check this box Form M1PR, page 2 Schedule 1 – special homeowner refund Schedule 2 – subtractions to income 65 or older or disabled Dependents Retirement account Page 180, certificate of rent paid Page 181, property tax statement for taxes payable in 2015 Special situations for nursing home and adult foster care Contact Tri-CAP office Homework Complete Basic or Advanced certification test Consider viewing the health savings account training online at the P+P volunteer site and certifying at the HSA level View the online TaxWise training before attending Basic D to give you a head start