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Capital IconMinnesota Legislature

HF 56

as introduced - 91st Legislature, 2020 2nd Special Session (2020 - 2020) Posted on 07/13/2020 12:21pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; individual income; modifying the K-12 education expense
credit and subtraction; amending Minnesota Statutes 2018, sections 290.0132,
subdivision 4; 290.0674, subdivision 2; Minnesota Statutes 2019 Supplement,
section 290.0674, subdivision 1; repealing Minnesota Statutes 2018, section
290.0674, subdivision 2a.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 290.0132, subdivision 4, is amended to read:


Subd. 4.

Education expenses.

(a) Subject to the limits in paragraph (b), the following
amounts paid to others for each qualifying child are a subtraction:

(1) education-related expenses; deleted text begin plusdeleted text end new text begin less
new text end

deleted text begin (2) tuition and fees paid to attend a school described in section 290.0674, subdivision
1
, clause (4), that are not included in education-related expenses; less
deleted text end

deleted text begin (3)deleted text end new text begin (2)new text end any amount used to claim the credit under section 290.0674.

(b) The maximum subtraction allowed under this subdivision is:

(1) $1,625 for each qualifying child in kindergarten through grade 6; and

(2) $2,500 for each qualifying child in grades 7 through 12.

(c) The definitions in section 290.0674, subdivision 1, apply to this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

Sec. 2.

Minnesota Statutes 2019 Supplement, section 290.0674, subdivision 1, is amended
to read:


Subdivision 1.

Credit allowed; definitions.

new text begin (a) new text end An individual is allowed a credit against
the tax imposed by this chapter in an amount equal to 75 percent of the amount paid for
education-related expenses for a qualifying child in kindergarten through grade 12.

new text begin (b) For purposes of this section, "qualified instructor" means an individual who is not a
lineal ancestor or sibling of the dependent and who is:
new text end

new text begin (1) an instructor under section 120A.22, subdivision 10, clause (1), (2), (3), (4), or (5);
or
new text end

new text begin (2) a member of the Minnesota Music Teachers Association.
new text end

new text begin (c) For the purposes of this section, "qualifying instructional fees or tuition" means:
new text end

new text begin (1) fees or tuition paid to attend a qualifying school; and
new text end

new text begin (2) fees or tuition for instruction by a qualified instructor outside the regular school day
or school year, and that does not include the teaching of religious tenets, doctrines, or
worship, the purpose of which is to instill such tenets, doctrines, or worship, including:
new text end

new text begin (i) tutoring;
new text end

new text begin (ii) driver's education offered as part of school curriculum, regardless of whether it is
taken from a public or private entity; or
new text end

new text begin (iii) summer camps in age-appropriate or grade-level-appropriate curricula that
supplement curricula and instruction available during the regular school year that assists a
dependent to improve knowledge of core curriculum areas or to expand knowledge and
skills under the required academic standards under section 120B.021, subdivision 1, and
the world languages standards under section 120B.022, subdivision 1.
new text end

new text begin (d) For the purposes of this section, "qualifying school" means an elementary or secondary
school situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which is not
operated for profit, and which adheres to the provisions of the Civil Rights Act of 1964 and
chapter 363A.
new text end

new text begin (e)new text end For purposes of this section, "education-related expenses" means:

(1) deleted text begin fees or tuition for instruction by an instructor under section 120A.22, subdivision
10
, clause (1), (2), (3), (4), or (5), or a member of the Minnesota Music Teachers Association,
and who is not a lineal ancestor or sibling of the dependent for instruction outside the regular
school day or school year, including tutoring, driver's education offered as part of school
curriculum, regardless of whether it is taken from a public or private entity or summer
camps, in grade or age appropriate curricula that supplement curricula and instruction
available during the regular school year, that assists a dependent to improve knowledge of
core curriculum areas or to expand knowledge and skills under the required academic
standards under section 120B.021, subdivision 1, and the world languages standards under
section 120B.022, subdivision 1, and that do not include the teaching of religious tenets,
doctrines, or worship, the purpose of which is to instill such tenets, doctrines, or worship
deleted text end new text begin
qualifying instructional fees or tuition
new text end ;

(2) expenses for textbooks, including books and other instructional materials and
equipment purchased or leased for use in elementary and secondary schools in teaching
only those subjects legally and commonly taught in public elementary and secondary schools
in this state. "Textbooks" does not include instructional books and materials used in the
teaching of religious tenets, doctrines, or worship, the purpose of which is to instill such
tenets, doctrines, or worship, nor does it include books or materials for extracurricular
activities including sporting events, musical or dramatic events, speech activities, driver's
education, or similar programs;

(3) a maximum expense of $200 per family for personal computer hardware, excluding
single purpose processors, and educational software that assists a dependent to improve
knowledge of core curriculum areas or to expand knowledge and skills under the required
academic standards under section 120B.021, subdivision 1, and the elective standard under
section 120B.022, subdivision 1, clause (2), purchased for use in the taxpayer's home and
not used in a trade or business regardless of whether the computer is required by the
dependent's school; and

(4) the amount paid to others for transportation of a qualifying child attending deleted text begin an
elementary or secondary school situated in Minnesota, North Dakota, South Dakota, Iowa,
or Wisconsin, wherein a resident of this state may legally fulfill the state's compulsory
attendance laws, which is not operated for profit, and which adheres to the provisions of
the Civil Rights Act of 1964 and chapter
deleted text end deleted text begin 363Adeleted text end new text begin a qualifying schoolnew text end . Amounts under this
clause exclude any expense the taxpayer incurred in using the taxpayer's or the qualifying
child's vehicle.

new text begin (f) new text end For purposes of this section, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

Sec. 3.

Minnesota Statutes 2018, section 290.0674, subdivision 2, is amended to read:


Subd. 2.

Limitations.

(a) For claimants with income not greater than deleted text begin $33,500deleted text end new text begin the income
eligibility guideline
new text end , the maximum credit allowed for a family is $1,000 multiplied by the
number of qualifying children in kindergarten through grade 12 in the family. The maximum
credit for families with one qualifying child in kindergarten through grade 12 is reduced by
$1 for each $4 of deleted text begin householddeleted text end income over deleted text begin $33,500deleted text end new text begin the income eligibility guidelinenew text end , and the
maximum credit for families with two or more qualifying children in kindergarten through
grade 12 is reduced by $2 for each $4 of deleted text begin householddeleted text end income over deleted text begin $33,500deleted text end new text begin the income
eligibility guideline
new text end , but in no case is the credit less than zero.new text begin For purposes of this
subdivision, "income" and "income eligibility guideline" mean the amounts determined
under United States Code, title 42, section 1758(b)(1), for reduced-price lunch as of July 1
of the taxable year.
new text end

(b) In the case of a married claimant, a credit is not allowed unless a joint income tax
return is filed.

(c) For a nonresident or part-year resident, the credit determined under subdivision 1
and the maximum credit amount in paragraph (a) must be allocated using the percentage
calculated in section 290.06, subdivision 2c, paragraph (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

Sec. 4. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, section 290.0674, subdivision 2a, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2019.
new text end

APPENDIX

Repealed Minnesota Statutes: 20-8910

290.0674 MINNESOTA EDUCATION CREDIT.

Subd. 2a.

Income.

(a) For purposes of this section, "income" means the sum of the following:

(1) federal adjusted gross income as defined in section 62 of the Internal Revenue Code; and

(2) the sum of the following amounts to the extent not included in clause (1):

(i) all nontaxable income;

(ii) the amount of a passive activity loss that is not disallowed as a result of section 469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity loss carryover allowed under section 469(b) of the Internal Revenue Code;

(iii) an amount equal to the total of any discharge of qualified farm indebtedness of a solvent individual excluded from gross income under section 108(g) of the Internal Revenue Code;

(iv) cash public assistance and relief;

(v) any pension or annuity (including railroad retirement benefits, all payments received under the federal Social Security Act, Supplemental Security Income, and veterans benefits), which was not exclusively funded by the claimant or spouse, or which was funded exclusively by the claimant or spouse and which funding payments were excluded from federal adjusted gross income in the years when the payments were made;

(vi) interest received from the federal or a state government or any instrumentality or political subdivision thereof;

(vii) workers' compensation;

(viii) nontaxable strike benefits;

(ix) the gross amounts of payments received in the nature of disability income or sick pay as a result of accident, sickness, or other disability, whether funded through insurance or otherwise;

(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of 1986, as amended through December 31, 1995;

(xi) contributions made by the claimant to an individual retirement account, including a qualified voluntary employee contribution; simplified employee pension plan; self-employed retirement plan; cash or deferred arrangement plan under section 401(k) of the Internal Revenue Code; or deferred compensation plan under section 457 of the Internal Revenue Code;

(xii) nontaxable scholarship or fellowship grants;

(xiii) the amount of deduction allowed under section 199 of the Internal Revenue Code;

(xiv) the amount of deduction allowed under section 220 or 223 of the Internal Revenue Code;

(xv) the amount deducted for tuition expenses under section 222 of the Internal Revenue Code; and

(xvi) the amount deducted for certain expenses of elementary and secondary school teachers under section 62(a)(2)(D) of the Internal Revenue Code.

In the case of an individual who files an income tax return on a fiscal year basis, the term "federal adjusted gross income" means federal adjusted gross income reflected in the fiscal year ending in the next calendar year. Federal adjusted gross income may not be reduced by the amount of a net operating loss carryback or carryforward or a capital loss carryback or carryforward allowed for the year.

(b) "Income" does not include:

(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;

(2) amounts of any pension or annuity that were exclusively funded by the claimant or spouse if the funding payments were not excluded from federal adjusted gross income in the years when the payments were made;

(3) surplus food or other relief in kind supplied by a governmental agency;

(4) relief granted under chapter 290A;

(5) child support payments received under a temporary or final decree of dissolution or legal separation; and

(6) restitution payments received by eligible individuals and excludable interest as defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16.