Tax Bill Matching Up Minnesota, Federal Code Steams Ahead
ST. PAUL, Minn. (AP) — Minnesota lawmakers moved Tuesday to set up swift approval of tax deductions and credits affecting thousands of people and business owners getting ready to file 2014 forms.
Tax committees in the House and Senate advanced legislation that lines Minnesota's code up with some recent federal changes. Final votes in each chamber could come later this week, sending the bill to a supportive Gov. Mark Dayton before personal income tax filing season begins next week.
Speed is of the essence because waiting could force some taxpayers to file amended returns or cause the Revenue Department to incur extra processing costs and hassles.
Tax preparer Todd Koch, a member of the Minnesota Society of Certified Public Accountants, said reducing complexity by matching up deductions claimed at the federal and state levels will save taxpayers money beyond the credits because they won't face as many fees from professionals like him.
"I'm a rare bird," Koch said. "I'm asking to get paid less, not more."
Select groups of taxpayers are affected, including teachers who can deduct up to $250 for classroom supplies they purchase on their own and college students for up to $4,000 for certain tuition and fee costs, depending on their income. Retirees could transfer money from their IRAs directly to charity without having it count against their adjusted gross income. Homeowners who face foreclosures or short sales wouldn't see forgiven debt held against them as much at tax time.
"We're seeing fewer distressed sales in the market — that's a good thing," said Paul Eger of the Minnesota Association of Realtors. "But there are still a number of distressed sales so this is needed."
There are also some changes to business depreciation allowances and deductions for racehorse owners, film production and energy efficiency upgrades to commercial buildings.
The bill comes with a $20 million price-tag to the treasury for this year, but would save the state $22 million next year. That's because of quirks in calculations for the provision dealing with the business-expense depreciation for entrepreneurs who file through their personal income tax.
The House bill differs slightly by also correcting a technical problem with a previously enacted Mayo Clinic expansion subsidy. Murky wording in the original proposal made it tougher for communities partnering in Mayo's giant Destination Medical Center venture to unlock state aid.
The House measure has another committee stop on Wednesday, but Tax Chairman Greg Davids said he hopes it will reach a floor vote as soon as Thursday. That would require suspending usual rules for quicker action.
"Hopefully all leadership corners will put this on the fast track so we can put it on warp speed," he said.
Revenue Commissioner Cynthia Bauerly said the Dayton administration is on board.
"It will provide Minnesotans with significant benefits if we act quickly," she said.
(© Copyright 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)