HF 136

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; individual income; providing
that the education expense credit and deduction apply
to certain expenditures for prekindergarten expenses
and museum memberships; amending Minnesota Statutes
2004, sections 290.01, subdivision 19b; 290.0674,
subdivision 1.

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

Section 1.

Minnesota Statutes 2004, section 290.01,
subdivision 19b, is amended to read:

Subd. 19b.

Subtractions from federal taxable income.

For
individuals, estates, and trusts, there shall be subtracted from
federal taxable income:

(1) interest income on obligations of any authority,
commission, or instrumentality of the United States to the
extent includable in taxable income for federal income tax
purposes but exempt from state income tax under the laws of the
United States;

(2) if included in federal taxable income, the amount of
any overpayment of income tax to Minnesota or to any other
state, for any previous taxable year, whether the amount is
received as a refund or as a credit to another taxable year's
income tax liability;

(3) the amount paid to others, less the amount used to
claim the credit allowed under section 290.0674 new text begin and amounts used
to claim the credit under section 290.067 new text end , not to exceed $1,625
for each qualifying child in deleted text begin grades deleted text end new text begin a prekindergarten
educational program or in new text end kindergarten deleted text begin to deleted text end new text begin through grade new text end 6 and
$2,500 for each qualifying child in grades 7 to 12, for tuition,
textbooks, and transportation of each qualifying child in
attending 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 begin , or for fees charged for enrollment in a
prekindergarten educational program new text end . For the purposes of this
clause, "tuition" includes fees or tuition as defined in section
290.0674, subdivision 1, clause (1). new text begin As used in this clause,
"prekindergarten educational program" means:
new text end

new text begin (i) prekindergarten programs established by a school
district under chapter 124D;
new text end

new text begin (ii) preschools, nursery schools, and early childhood
development programs licensed by the Department of Human
Services and accredited by the National Association for the
Education of Young Children or National Early Childhood Program
Accreditation;
new text end

new text begin (iii) Montessori programs affiliated with or accredited by
the American Montessori Society or American Montessori
International; and
new text end

new text begin (iv) child care programs provided by family day care
providers holding a current early childhood development
credential approved by the commissioner of human services. new text end As
used in this clause, "textbooks" includes 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. Equipment expenses qualifying
for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). new text begin Expenses described
in section 290.0674, subdivision 1, clause (5), qualify for the
deduction under this subdivision. new text end "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, or transportation to,
extracurricular activities including sporting events, musical or
dramatic events, speech activities, driver's education, or
similar programs. For purposes of the subtraction provided by
this clause, "qualifying child" has the meaning given in section
32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross
income, income realized on disposition of property exempt from
tax under section 290.491;

(6) to the extent included in federal taxable income,
postservice benefits for youth community service under section
124D.42 for volunteer service under United States Code, title
42, sections 12601 to 12604;

(7) to the extent not deducted in determining federal
taxable income by an individual who does not itemize deductions
for federal income tax purposes for the taxable year, an amount
equal to 50 percent of the excess of charitable contributions
allowable as a deduction for the taxable year under section
170(a) of the Internal Revenue Code over $500;

(8) for taxable years beginning before January 1, 2008, the
amount of the federal small ethanol producer credit allowed
under section 40(a)(3) of the Internal Revenue Code which is
included in gross income under section 87 of the Internal
Revenue Code;

(9) for individuals who are allowed a federal foreign tax
credit for taxes that do not qualify for a credit under section
290.06, subdivision 22, an amount equal to the carryover of
subnational foreign taxes for the taxable year, but not to
exceed the total subnational foreign taxes reported in claiming
the foreign tax credit. For purposes of this clause, "federal
foreign tax credit" means the credit allowed under section 27 of
the Internal Revenue Code, and "carryover of subnational foreign
taxes" equals the carryover allowed under section 904(c) of the
Internal Revenue Code minus national level foreign taxes to the
extent they exceed the federal foreign tax credit;

(10) in each of the five tax years immediately following
the tax year in which an addition is required under subdivision
19a, clause (7), an amount equal to one-fifth of the delayed
depreciation. For purposes of this clause, "delayed
depreciation" means the amount of the addition made by the
taxpayer under subdivision 19a, clause (7), minus the positive
value of any net operating loss under section 172 of the
Internal Revenue Code generated for the tax year of the
addition. The resulting delayed depreciation cannot be less
than zero; and

(11) job opportunity building zone income as provided under
section 469.316.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable
years beginning after December 31, 2004.
new text end

Sec. 2.

Minnesota Statutes 2004, section 290.0674,
subdivision 1, is amended to read:

Subdivision 1.

Credit allowed.

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 new text begin a prekindergarten educational
program or in new text end kindergarten through grade 12. For purposes of
this section, "education-related expenses" means:

(1) 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 graduation rule under section
120B.02, paragraph (e), clauses (1) to (7), (9), and (10), 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 new text begin , and fees for enrollment in a
prekindergarten educational program as defined in section
290.01, subdivision 19b, to the extent not used to claim the
credit under section 290.067 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 graduation rule under section 120B.02 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; deleted text begin and
deleted text end

(4) the amount paid to others for transportation of a
qualifying child attending 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 begin ; and
new text end

new text begin (5) the amount paid by a taxpayer who has a child age 18 or
younger in the household at the end of the taxable year for
membership in a museum, zoo, historical society, or similar
institution that offers educational programs for children 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, 2004.
new text end