Every once in a while, Minnesota’s tax system moves to catch up to the feds’. It now appears the latest catch-up is going to create refunds from 2015 returns for some state taxpayers. Just as important, Minnesota Revenue promises NO additional taxes from the changes.
Here’s what has happened recently. In January, the Minnesota Legislature made its latest catch-up covering two tax years, 2015 and 2016. State authorities actually were able to build the changes into the latest tax forms, so 2016 returns were not affected. But the state does owe some taxpayers refunds from 2015 returns.
In general:
- If your 2015 Minnesota return included Schedule M1NC (called Federal Adjustments), you could well have a refund coming.
- If your 2015 return did not include a Schedule M1NC, you are not affected.
- Taxpayers who bought an out-of-box software package for their 2016 returns should check on any updates from the software company.
Minnesota Revenue recently said it began reviewing all 2015 returns with those “federal conformity adjustments” in mind. State taxpayers generally won’t have to take any action. In fact, Minnesota Revenue is so obliging that it will figure in any new deductions or exclusions automatically.
You’ll know if you have money coming. The tax agency will send an official letter and a refund. Some taxpayers might get a letter asking for more information on the way to a refund.
The agency says taxpayers will be required to amend their 2015 returns to get a refund only if Minnesota Revenue cannot complete the changes itself. If you need to amend, you’ll get a notice, the taxing agency announced.
Here’s the big picture on conformity. Minnesota’s policy generally is to “conform” – or coordinate – its income tax system with the federal tax codes. That’s why the Line 1 on your state tax return (Form M1) is “taxable income” from your federal return. Minnesota Revenue jumps off from that starting point to calculate your Minnesota income and then your state taxes. Periodically, the state Legislature updates state tax codes to reflect the federal ingredients in adjusted gross income, which leads to taxable income.
As you know from our Web site, EricJohn Ltd. can help with a closer look at your taxes from both current and prior years.
http://www.revenue.state.mn.us/individuals/individ_income/Pages/Federal-Conformity_15-16.aspx