Why The State Tax Bill Matters To Minnesotans
ST. PAUL, Minn. (WCCO) -- One of the biggest items facing a veto in the Minnesota Legislature is the state tax bill.
The bill lines up our taxes with the new Federal law so that at least 800,000 Minnesotans don't end up paying more. WCCO asked CPA Chris Wittich to give us examples for 2018 tax bills: One for a family of four that owns a home and makes $70,000 per year.
And another for a single homeowner who earns $45,000 per year. Under the new federal tax bill, our family of four will pay $1,700 less in federal taxes. But their Minnesota taxes will go up by $402.
Why? The family is losing four personal exemptions. Wittich said generally speaking, Minnesota families with kids will see the biggest boost in their Minnesota taxes.
Our single homeowner earning $45,000 per year does better. They will pay $800 less in federal taxes, and $113 less in Minnesota taxes.
"It's different in every situation, which makes it difficult to plan and when it's difficult to plan people miss out," Wittich said.
Another problem: The new federal tax law eliminates incentives to itemize deductions for items like charitable contributions and unreimbursed work expenses. But, if Minnesota doesn't pass a new tax bill, itemizing could still save you a lot of money on your state taxes.
And that means if you do your own taxes, you may leave out items that could lower your tax bill.
"You are going to need to recalculate your Minnesota return in a different way and that is going to lead to confusion, and that kind of confusion leads to people paying more," Wittich said.
The biggest tip from CPA Chris Wittich with all this confusion at the Legislature is that if you are itemizing items now, keep doing it. Even if you don't need if for your federal taxes anymore, it could still save you on your Minnesota taxes next year.
Bottom line, taxes will be a lot more complicated next year without a new Minnesota tax bill.