MN Tax Conformity Law

[Mike Mac]

I got the following message from my local rep.

I wanted to touch bases with you on the tax conformity issue. We will be passing a tax conformity bill off the House floor this morning. This bill is agreed up between the House, Senate, and Governor. As long as the bill is not amended resulting in a increased cost, we should be able to have the tax conformity bill signed into law very soon. The following link is information on the legislation

http://www.house.leg.state.mn.us/fiscal/files/09HF392fedconform.pdf

Mike

[JCH]

Have you heard anything else about this? I just prepared a return with the M1NC because of tuition and fees adjustment on federal, but don't want to file yet if this form is unnecessary and end up amending later. Thanks.

[Mike Mac]

Even if it passes..

You might as well file it with the Tuition and Fees federal deduction added back to MN income. That federal deduction is NOT part of the bill. That small $250 Educator deduction is part of the bill but that does not affect many clients and is rather small potatoes.

The bill itself has passed the House and was sent to the Senate a couple of days ago.

Mike

[JCH]

Thanks, Mike. I appreciate your quick response.

[mblatour]

Mike,

I just wanted to clarify the most recent update to the MN legislation. What is the current status of the MN Educator Expenses and Tuition & Fees Deduction?

I have several teachers of whom qualify for the Educator expenses of $250. I'm working on my second return involving the $4,000 T&F deduction. Are you saying the $250 one is going to pass for MN but the $2,000/$4000 one is not?

[Mike Mac]

Yup

Both the House bill (that already has passed) and the Senate version of the bill (that has not yet passed but I am told will soon) specifically state that the $2,000/$4,000 must be added back to reach MN Taxable Income.

Both of the bills allow the (up to) $250 Federal Educator deduction though, so that deduction would not have to be added back to figure out MN taxable income. When you look at the number of elected officials who are related to education and the amount of money that the teachers' lobby spends, it is not too hard to figure out why this one will get passed.

Mike

P.S. Any of you using Proseries to do MN taxes should be aware of a bug with the form (M1NC) used to calculate those changes that must be added back to form M1M. Proseries finally released M1NC around three weeks ago but it does not automatically move to the active form section of the program. If it is not an active form, the error checking routine does not catch the form has two errors in it due to the fact that we have to recalculate both the federal AGI and federal Taxable Income for any items that must be added back the MN return. As soon as you open the M1NC the form shows the two errors and moves to the active forms section.

[Snaggletooth]

Interesting State Tax Issue

Sounds like MN legislators have their own bizarre quirks just like TN.

Does anyone have clients who tell you they didn't spend $250 in educational/
classroom supplies or services?

From "Scenes We'd Like to See"© RVJordan

Preparer: "What about this special adjustment for educators?"
Taxpayer: "Oh, you mean that $250 all the teachers are talking about?"
Preparer: "Yeah. Didja spend it?"
Taxpayer: "No, I don't think so. I only spent $184.23."

[mblatour]

I've had some

who can only come up with receipts for $70 or $80, all the while knowing they spent way more than that.

I have husband and wife teacher clients who only turned in receipts totally about $250 between the two of them total.

[Uncle]

Sounds like MN legislators have their own bizarre quirks just like TN.

Does anyone have clients who tell you they didn't spend $250 in educational/
classroom supplies or services?

From "Scenes We'd Like to See"© RVJordan

Preparer: "What about this special adjustment for educators?"
Taxpayer: "Oh, you mean that $250 all the teachers are talking about?"
Preparer: "Yeah. Didja spend it?"
Taxpayer: "No, I don't think so. I only spent $184.23."

I ask the client to produce the receipts. I have never had any client produce less than $1000, usually closer to $2000. Such is the HI public education system.....

[mblatour]

Wow!

$1,000 to $2,000. That is insane! Our teacher's provide a lot of extra stuff here, but overall it's not too bad. The parents are required to buy things like glue, scissors, markers, pencils, disinfecting wipes, baby wipes, kleenex and such. You buy it once in the beginning of the year and then are asked to replenish the stock throughout the year at your discretion.

[Lion]

Teacher

My husband's a middle school teacher in a nearby city. He buys a couple of cases of tissues and one of paper towels at the beginning of the school year, several packages of pens and of pencils when Staples has their back-to-school sales for kids who forgot, folders for each chorus member's music (sixth, seventh, and eighth grade choruses) each year, Dunkin Donuts Munchkins for before school rehearsals for his ensemble to lure them to practice two mornings a week, new paper for the bulletin boards each year and new posters every couple of years (and is glad he's not an elementary teacher), sheet music that he can't get in the budget, trade publications and educational books for himself, continuing education, headsets and jacks for his keyboard classes as they break, a new fan for his room every couple of years, candy to reward his stage crew after performances, many miles traveled to other sites of chorus performances, his own food when on these chorus trips, help with expenses for students who can't afford the trips, CDs (he's been saving some money by downloading from iTunes instead of buying as many CDs) and videos (think he bought Madagascar a couple of times when the first got stuck in the bus's DVD player taking them to a performance!), union dues ($800 right there), and on and on. Now, only some of these are classroom supplies eligible for the front of 1040, but since we itemize and his 2106 is well over 2% AGI we get a benefit. Yes, $2,000+ per year easily.

[DTS]

Ca

...Yes, $2,000+ per year easily.

It is easy in CA, as well. I have several teachers and most, not all, can spend this for classes in their sleep.

D