In addition to changes intended to align Minnesota tax with Federal calculations, the state also made several additional benefits available. If any of these may apply to you, please a tax professional for more in-depth information.
Dependent Care Credit
As part of the federal update legislation, the federal credit computation the Minnesota uses was updated to the current federal credit. This means the credit is calculated with qualifying expenses of up to $3,000 (vs $2,400 in 2013) for one qualifying child and $6,000 (vs. $4,800 in 2013) for two or more qualifying children in 2014. The percentage of qualifying expenses allowed as the credit was also increased to a maximum of 35% (vs. 30% in 2013).
Mass Transit Benefits
There is a new subtraction for employer provided mass transit benefits that are included in federal taxable income. The subtraction covers employer provided transportation in a qualified commuter highway vehicle and transit passes in excess of the federal monthly threshold of $130 for 2014. This subtraction is allowed in computing alternative minimum taxable income.
A 2014 law created a refundable credit for tax year 2014 only. The credit applies to a very narrow range of K-12 students who receive tutoring services for reading.
Greater Minnesota Internship Credit
The Minnesota Legislature created the Greater Minnesota Internship Credit which is available to employers beginning with tax year 2014. This applies to paid interns who also earn academic credit for their work.
Angel Investment Credit
The amount appropriated for this credit was increased from $12 million to $15 million for tax year 2014. The program was also extended through tax year 2016 with an annual appropriation of $15 million. The credit applies only to certain types of ventures. To claim this credit, investors must be certified by the Minnesota Department of Employment and Economic Development.
Keep in mind that a strategy that works well for one Minnesota taxpayer may have very different results for another. If you would like to discuss planning ideas for your specific tax situation, contact a Minnesota tax professional.