HF 1974

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; individual income; modifying the 
  1.3             education credit and subtraction; allowing certain 
  1.4             credits to be assigned; providing duties and powers to 
  1.5             commissioner of revenue; amending Minnesota Statutes 
  1.6             2000, sections 290.01, subdivision 19b; 290.0674, 
  1.7             subdivisions 1, 2; proposing coding for new law in 
  1.8             Minnesota Statutes, chapter 290. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 290.01, 
  1.11  subdivision 19b, is amended to read: 
  1.12     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  1.13  individuals, estates, and trusts, there shall be subtracted from 
  1.14  federal taxable income: 
  1.15     (1) interest income on obligations of any authority, 
  1.16  commission, or instrumentality of the United States to the 
  1.17  extent includable in taxable income for federal income tax 
  1.18  purposes but exempt from state income tax under the laws of the 
  1.19  United States; 
  1.20     (2) if included in federal taxable income, the amount of 
  1.21  any overpayment of income tax to Minnesota or to any other 
  1.22  state, for any previous taxable year, whether the amount is 
  1.23  received as a refund or as a credit to another taxable year's 
  1.24  income tax liability; 
  1.25     (3) the amount paid to others, less the credit allowed 
  1.26  under section 290.0674, not to exceed $1,625 for each qualifying 
  1.27  child in grades kindergarten to 6 and $2,500 for each qualifying 
  2.1   child in grades 7 to 12, for tuition, textbooks, and 
  2.2   transportation of each qualifying child in, whether to and from 
  2.3   school during the normal school day or to and from a qualifying 
  2.4   academic activity outside of the normal school day, attending an 
  2.5   elementary or secondary school situated in Minnesota, North 
  2.6   Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  2.7   this state may legally fulfill the state's compulsory attendance 
  2.8   laws, which is not operated for profit, and which adheres to the 
  2.9   provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  2.10  the purposes of this clause, "tuition" includes fees or tuition 
  2.11  as defined in section 290.0674, subdivision 1, clause (1).  As 
  2.12  used in this clause, "textbooks" includes books and other 
  2.13  instructional materials, school uniforms, and other equipment 
  2.14  used in elementary and secondary schools in teaching only for 
  2.15  instruction, or for instruction as provided in section 290.0674, 
  2.16  subdivision 1, clause (1), whether during or outside of the 
  2.17  normal school day, in those subjects legally and commonly taught 
  2.18  in provided by public elementary and secondary schools in this 
  2.19  state.  Equipment expenses qualifying for deduction includes 
  2.20  expenses as defined and limited in section 290.0674, subdivision 
  2.21  1, clause (3).  "Textbooks" does not include instructional books 
  2.22  and materials used in the teaching of religious tenets, 
  2.23  doctrines, or worship, the purpose of which is to instill such 
  2.24  tenets, doctrines, or worship, nor does it include books or 
  2.25  materials for, or transportation to, extracurricular activities 
  2.26  including sporting events, musical or dramatic events, speech 
  2.27  activities, driver's education, or similar programs.  For 
  2.28  purposes of the subtraction provided by this clause, "qualifying 
  2.29  child" has the meaning given in section 32(c)(3) of the Internal 
  2.30  Revenue Code.  For taxable years beginning after December 31, 
  2.31  2001, the dollar amounts for the subtraction under this clause 
  2.32  shall be adjusted for inflation.  The commissioner shall adjust 
  2.33  the maximum subtraction amounts by the percentage determined 
  2.34  under section 290.06, subdivision 2d, for the taxable year; 
  2.35     (4) contributions made in taxable years beginning after 
  2.36  December 31, 1981, and before January 1, 1985, to a qualified 
  3.1   governmental pension plan, an individual retirement account, 
  3.2   simplified employee pension, or qualified plan covering a 
  3.3   self-employed person that were included in Minnesota gross 
  3.4   income in the taxable year for which the contributions were made 
  3.5   but were deducted or were not included in the computation of 
  3.6   federal adjusted gross income, less any amount allowed to be 
  3.7   subtracted as a distribution under this subdivision or a 
  3.8   predecessor provision in taxable years that began before January 
  3.9   1, 2000.  This subtraction applies only for taxable years 
  3.10  beginning after December 31, 1999, and before January 1, 2001.  
  3.11  If an individual's subtraction under this clause exceeds the 
  3.12  individual's taxable income, the excess may be carried forward 
  3.13  to taxable years beginning after December 31, 2000, and before 
  3.14  January 1, 2002; 
  3.15     (5) income as provided under section 290.0802; 
  3.16     (6) the amount of unrecovered accelerated cost recovery 
  3.17  system deductions allowed under subdivision 19g; 
  3.18     (7) to the extent included in federal adjusted gross 
  3.19  income, income realized on disposition of property exempt from 
  3.20  tax under section 290.491; 
  3.21     (8) to the extent not deducted in determining federal 
  3.22  taxable income or used to claim the long-term care insurance 
  3.23  credit under section 290.0672, the amount paid for health 
  3.24  insurance of self-employed individuals as determined under 
  3.25  section 162(l) of the Internal Revenue Code, except that the 
  3.26  percent limit does not apply.  If the individual deducted 
  3.27  insurance payments under section 213 of the Internal Revenue 
  3.28  Code of 1986, the subtraction under this clause must be reduced 
  3.29  by the lesser of: 
  3.30     (i) the total itemized deductions allowed under section 
  3.31  63(d) of the Internal Revenue Code, less state, local, and 
  3.32  foreign income taxes deductible under section 164 of the 
  3.33  Internal Revenue Code and the standard deduction under section 
  3.34  63(c) of the Internal Revenue Code; or 
  3.35     (ii) the lesser of (A) the amount of insurance qualifying 
  3.36  as "medical care" under section 213(d) of the Internal Revenue 
  4.1   Code to the extent not deducted under section 162(1) of the 
  4.2   Internal Revenue Code or excluded from income or (B) the total 
  4.3   amount deductible for medical care under section 213(a); 
  4.4      (9) the exemption amount allowed under Laws 1995, chapter 
  4.5   255, article 3, section 2, subdivision 3; 
  4.6      (10) to the extent included in federal taxable income, 
  4.7   postservice benefits for youth community service under section 
  4.8   124D.42 for volunteer service under United States Code, title 
  4.9   42, sections 12601 to 12604; 
  4.10     (11) to the extent not deducted in determining federal 
  4.11  taxable income by an individual who does not itemize deductions 
  4.12  for federal income tax purposes for the taxable year, an amount 
  4.13  equal to 50 percent of the excess of charitable contributions 
  4.14  allowable as a deduction for the taxable year under section 
  4.15  170(a) of the Internal Revenue Code over $500; 
  4.16     (12) to the extent included in federal taxable income, 
  4.17  holocaust victims' settlement payments for any injury incurred 
  4.18  as a result of the holocaust, if received by an individual who 
  4.19  was persecuted for racial or religious reasons by Nazi Germany 
  4.20  or any other Axis regime or an heir of such a person; and 
  4.21     (13) for taxable years beginning before January 1, 2008, 
  4.22  the amount of the federal small ethanol producer credit allowed 
  4.23  under section 40(a)(3) of the Internal Revenue Code which is 
  4.24  included in gross income under section 87 of the Internal 
  4.25  Revenue Code. 
  4.26     [EFFECTIVE DATE.] This section is effective for taxable 
  4.27  years beginning after December 31, 2000. 
  4.28     Sec. 2.  Minnesota Statutes 2000, section 290.0674, 
  4.29  subdivision 1, is amended to read: 
  4.30     Subdivision 1.  [CREDIT ALLOWED.] An individual is allowed 
  4.31  a credit against the tax imposed by this chapter in an amount 
  4.32  equal to the amount paid for education-related expenses for a 
  4.33  qualifying child in kindergarten through grade 12.  For purposes 
  4.34  of this section, "education-related expenses" means: 
  4.35     (1) fees or tuition for instruction by an instructor under 
  4.36  section 120A.22, subdivision 10, clause (1), (2), (3), (4), or 
  5.1   (5), or by a member of the Minnesota music teachers association, 
  5.2   for instruction outside the regular school day or school year, 
  5.3   including tutoring, driver's education offered as part of school 
  5.4   curriculum, regardless of whether it is taken from a public or 
  5.5   private entity or summer camps, in grade or age appropriate 
  5.6   curricula that supplement curricula and instruction available 
  5.7   during the regular school year, that assists a dependent to 
  5.8   improve knowledge of core curriculum areas or to expand 
  5.9   knowledge and skills under the graduation rule under section 
  5.10  120B.02 and that do not include the teaching of religious 
  5.11  tenets, doctrines, or worship, the purpose of which is to 
  5.12  instill such tenets, doctrines, or worship; 
  5.13     (2) expenses for textbooks, including books and other 
  5.14  instructional materials, school uniforms, and other equipment 
  5.15  used in elementary and secondary schools in teaching only for 
  5.16  instruction, or for instruction as provided in clause (1), 
  5.17  whether during or outside of the normal school day, in those 
  5.18  subjects legally and commonly taught in provided by public 
  5.19  elementary and secondary schools in this state.  "Textbooks" 
  5.20  does not include instructional books and materials used in the 
  5.21  teaching of religious tenets, doctrines, or worship, the purpose 
  5.22  of which is to instill such tenets, doctrines, or worship, nor 
  5.23  does it include books or materials for extracurricular 
  5.24  activities including sporting events, musical or dramatic 
  5.25  events, speech activities, driver's education, or similar 
  5.26  programs; 
  5.27     (3) a maximum expense of $200 per family expenses for 
  5.28  personal computer hardware, excluding single purpose processors, 
  5.29  and educational software that assists a dependent to improve 
  5.30  knowledge of core curriculum areas or to expand knowledge and 
  5.31  skills under the graduation rule under section 120B.02 purchased 
  5.32  for use in the taxpayer's home and not used in a trade or 
  5.33  business regardless of whether the computer is required by the 
  5.34  dependent's school; and 
  5.35     (4) the amount paid to others for transportation of a 
  5.36  qualifying child, whether to and from school during the normal 
  6.1   school day or to and from a qualifying academic activity outside 
  6.2   of the normal school day, attending an elementary or secondary 
  6.3   school situated in Minnesota, North Dakota, South Dakota, Iowa, 
  6.4   or Wisconsin, wherein a resident of this state may legally 
  6.5   fulfill the state's compulsory attendance laws, which is not 
  6.6   operated for profit, and which adheres to the provisions of the 
  6.7   Civil Rights Act of 1964 and chapter 363. 
  6.8      For purposes of this section, "qualifying child" has the 
  6.9   meaning given in section 32(c)(3) of the Internal Revenue Code. 
  6.10     Sec. 3.  Minnesota Statutes 2000, section 290.0674, 
  6.11  subdivision 2, is amended to read: 
  6.12     Subd. 2.  [LIMITATIONS.] (a) For claimants with income not 
  6.13  greater than $33,500 $35,000, the maximum credit allowed is 
  6.14  $1,000 per qualifying child and $2,000 per family.  No credit is 
  6.15  allowed for education-related expenses for claimants with income 
  6.16  greater than $37,500.  The maximum credit for each claimant is 
  6.17  $1,000 multiplied by the number of qualifying children for which 
  6.18  the individual claims the credit.  The maximum credit per child 
  6.19  for a claimant is reduced by $1 for each $4 $10 of household 
  6.20  income over $33,500 $35,000, and the maximum credit per family 
  6.21  is reduced by $2 for each $4 of household income over $33,500, 
  6.22  but in no case is the credit less than zero. 
  6.23     For purposes of this section "income" has the meaning given 
  6.24  in section 290.067, subdivision 2a means federal adjusted gross 
  6.25  income as defined in section 62 of the Internal Revenue Code.  
  6.26  In the case of a married claimant, a credit is not allowed 
  6.27  unless a joint income tax return is filed. 
  6.28     (b) For a nonresident or part-year resident, the credit 
  6.29  determined under subdivision 1 and the maximum credit amount in 
  6.30  paragraph (a) must be allocated using the percentage calculated 
  6.31  in section 290.06, subdivision 2c, paragraph (e). 
  6.32     (c) For taxable years beginning after December 31, 2001, 
  6.33  the dollar amount of the credit provided by this subdivision and 
  6.34  the dollar amount of the income threshold at which the maximum 
  6.35  credit begins to be reduced must be adjusted for inflation.  The 
  6.36  commissioner shall adjust the credit amount and the income 
  7.1   threshold by the percentage determined under section 290.06, 
  7.2   subdivision 2d, for the taxable year. 
  7.3      [EFFECTIVE DATE.] This section is effective for taxable 
  7.4   years beginning after December 31, 2000. 
  7.5      Sec. 4.  [290.0685] [ASSIGNMENT OF CREDIT.] 
  7.6      (a) A qualifying taxpayer may assign all or part of the 
  7.7   refundable portion of the credits provided in paragraph (b) to a 
  7.8   state or federally chartered bank, savings bank, savings 
  7.9   association, or credit union.  The commissioner shall provide by 
  7.10  rule procedures to allow a credit under this section to be 
  7.11  properly assigned and allocated. 
  7.12     (b) The following credits are assignable under this section:
  7.13     (1) the dependent care credit under section 290.067; 
  7.14     (2) the working family credit under section 290.0671; and 
  7.15     (3) the education credit under section 290.0674. 
  7.16     (c) For purposes of this section, a "qualifying taxpayer" 
  7.17  is a taxpayer that qualifies for one or more of the credits 
  7.18  provided in paragraph (b). 
  7.19     [EFFECTIVE DATE.] This section is effective for taxable 
  7.20  years beginning after December 31, 2000.