SF 3383

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; income taxes; providing a 
  1.3             subtraction and credit for higher education expenses; 
  1.4             amending Minnesota Statutes 1999 Supplement, section 
  1.5             290.01, subdivision 19b; proposing coding for new law 
  1.6             in Minnesota Statutes, chapter 290. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.9   290.01, subdivision 19b, is amended to read: 
  1.10     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  1.11  individuals, estates, and trusts, there shall be subtracted from 
  1.12  federal taxable income: 
  1.13     (1) interest income on obligations of any authority, 
  1.14  commission, or instrumentality of the United States to the 
  1.15  extent includable in taxable income for federal income tax 
  1.16  purposes but exempt from state income tax under the laws of the 
  1.17  United States; 
  1.18     (2) if included in federal taxable income, the amount of 
  1.19  any overpayment of income tax to Minnesota or to any other 
  1.20  state, for any previous taxable year, whether the amount is 
  1.21  received as a refund or as a credit to another taxable year's 
  1.22  income tax liability; 
  1.23     (3) the amount paid to others, less the credit allowed 
  1.24  under section 290.0674, not to exceed $1,625 for each qualifying 
  1.25  child in grades kindergarten to 6 and $2,500 for each qualifying 
  1.26  child in grades 7 to 12, for tuition, textbooks, and 
  2.1   transportation of each qualifying child in attending an 
  2.2   elementary or secondary school situated in Minnesota, North 
  2.3   Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  2.4   this state may legally fulfill the state's compulsory attendance 
  2.5   laws, which is not operated for profit, and which adheres to the 
  2.6   provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  2.7   the purposes of this clause, "tuition" includes fees or tuition 
  2.8   as defined in section 290.0674, subdivision 1, clause (1).  As 
  2.9   used in this clause, "textbooks" includes books and other 
  2.10  instructional materials and equipment used in elementary and 
  2.11  secondary schools in teaching only those subjects legally and 
  2.12  commonly taught in public elementary and secondary schools in 
  2.13  this state.  Equipment expenses qualifying for deduction 
  2.14  includes expenses as defined and limited in section 290.0674, 
  2.15  subdivision 1, clause (3).  "Textbooks" does not include 
  2.16  instructional books and materials used in the teaching of 
  2.17  religious tenets, doctrines, or worship, the purpose of which is 
  2.18  to instill such tenets, doctrines, or worship, nor does it 
  2.19  include books or materials for, or transportation to, 
  2.20  extracurricular activities including sporting events, musical or 
  2.21  dramatic events, speech activities, driver's education, or 
  2.22  similar programs.  For purposes of the subtraction provided by 
  2.23  this clause, "qualifying child" has the meaning given in section 
  2.24  32(c)(3) of the Internal Revenue Code; 
  2.25     (4) contributions made in taxable years beginning after 
  2.26  December 31, 1981, and before January 1, 1985, to a qualified 
  2.27  governmental pension plan, an individual retirement account, 
  2.28  simplified employee pension, or qualified plan covering a 
  2.29  self-employed person that were included in Minnesota gross 
  2.30  income in the taxable year for which the contributions were made 
  2.31  but were deducted or were not included in the computation of 
  2.32  federal adjusted gross income, less any amount allowed to be 
  2.33  subtracted as a distribution under this subdivision or a 
  2.34  predecessor provision in taxable years that began before January 
  2.35  1, 2000.  This subtraction applies only for taxable years 
  2.36  beginning after December 31, 1999, and before January 1, 2001; 
  3.1      (5) income as provided under section 290.0802; 
  3.2      (6) the amount of unrecovered accelerated cost recovery 
  3.3   system deductions allowed under subdivision 19g; 
  3.4      (7) to the extent included in federal adjusted gross 
  3.5   income, income realized on disposition of property exempt from 
  3.6   tax under section 290.491; 
  3.7      (8) to the extent not deducted in determining federal 
  3.8   taxable income, the amount paid for health insurance of 
  3.9   self-employed individuals as determined under section 162(l) of 
  3.10  the Internal Revenue Code, except that the percent limit does 
  3.11  not apply.  If the taxpayer deducted insurance payments under 
  3.12  section 213 of the Internal Revenue Code of 1986, the 
  3.13  subtraction under this clause must be reduced by the lesser of: 
  3.14     (i) the total itemized deductions allowed under section 
  3.15  63(d) of the Internal Revenue Code, less state, local, and 
  3.16  foreign income taxes deductible under section 164 of the 
  3.17  Internal Revenue Code and the standard deduction under section 
  3.18  63(c) of the Internal Revenue Code; or 
  3.19     (ii) the lesser of (A) the amount of insurance qualifying 
  3.20  as "medical care" under section 213(d) of the Internal Revenue 
  3.21  Code to the extent not deducted under section 162(1) of the 
  3.22  Internal Revenue Code or excluded from income or (B) the total 
  3.23  amount deductible for medical care under section 213(a); 
  3.24     (9) the exemption amount allowed under Laws 1995, chapter 
  3.25  255, article 3, section 2, subdivision 3; 
  3.26     (10) to the extent included in federal taxable income, 
  3.27  postservice benefits for youth community service under section 
  3.28  124D.42 for volunteer service under United States Code, title 
  3.29  42, section 5011(d), as amended; 
  3.30     (11) to the extent not deducted in determining federal 
  3.31  taxable income by an individual who does not itemize deductions 
  3.32  for federal income tax purposes for the taxable year, an amount 
  3.33  equal to 50 percent of the excess of charitable contributions 
  3.34  allowable as a deduction for the taxable year under section 
  3.35  170(a) of the Internal Revenue Code over $500; and 
  3.36     (12) to the extent included in federal taxable income, 
  4.1   holocaust victims' settlement payments for any injury incurred 
  4.2   as a result of the holocaust, if received by an individual who 
  4.3   was persecuted for racial or religious reasons by Nazi Germany 
  4.4   or any other Axis regime or an heir of such a person; and 
  4.5      (13) qualifying higher education expenses as defined in 
  4.6   section 290.0676, subdivision 1.  For married couples filing 
  4.7   joint returns, the maximum subtraction under this clause is 
  4.8   $5,000 for taxable years beginning after December 31, 1999, and 
  4.9   before January 1, 2001, and $10,000 for taxable years beginning 
  4.10  after December 31, 2000.  For married couples filing joint 
  4.11  returns, the maximum subtraction is reduced by five percent for 
  4.12  each $1,000 of income over a threshold.  For all other 
  4.13  taxpayers, the maximum subtraction under this clause is reduced 
  4.14  by ten percent for each $1,000 of income over a threshold.  For 
  4.15  married couples filing joint returns, the threshold is 
  4.16  $100,000.  For all other taxpayers, the threshold is $50,000.  
  4.17  In no case is the credit less than zero.  Taxpayers who claim 
  4.18  the credit in section 290.0676 may not claim the subtraction in 
  4.19  this clause. 
  4.20     Sec. 2.  [290.0676] [MINNESOTA COLLEGE OPPORTUNITY CREDIT.] 
  4.21     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  4.22  section, the following terms have the meanings given. 
  4.23     (a) "Qualifying higher education expenses" means tuition, 
  4.24  fees, and books of all eligible students enrolled in eligible 
  4.25  institutions net of (i) any refunds of tuition, fees, and books 
  4.26  received from the institution; (ii) employer reimbursement of 
  4.27  post-secondary tuition, grants, and scholarships; and (iii) any 
  4.28  federal HOPE scholarship and lifetime learning credits under 
  4.29  section 25A of the Internal Revenue Code claimed by the taxpayer.
  4.30     (b) "Eligible student" means the (i) taxpayer or spouse, if 
  4.31  not claimed as a dependent by another taxpayer; and (ii) a 
  4.32  person claimed as a dependent of the taxpayer under section 152 
  4.33  of the Internal Revenue Code.  An eligible student must also be 
  4.34  a Minnesota resident. 
  4.35     (c) "Eligible institution" means any of the following 
  4.36  post-secondary institutions located in Minnesota: 
  5.1      (1) a two-year public community college, technical college, 
  5.2   or consolidated community/technical college; 
  5.3      (2) a state university; 
  5.4      (3) the University of Minnesota; 
  5.5      (4) a private nonprofit, degree-granting, two-year or 
  5.6   four-year vocational technical or liberal arts school; or 
  5.7      (5) a degree-granting graduate or professional school. 
  5.8      (d) "Income" means federal adjusted gross income as defined 
  5.9   in section 62 of the Internal Revenue Code. 
  5.10     Subd. 2.  [CREDIT ALLOWED.] An individual is allowed a 
  5.11  credit against the tax imposed by this chapter equal to 7.25 
  5.12  percent of qualifying higher education expenses of all eligible 
  5.13  students.  The maximum qualifying expenses allowed to an 
  5.14  individual claiming the credit are $5,000 in tax years beginning 
  5.15  after December 31, 1999, and $10,000 of qualifying expenses in 
  5.16  tax years beginning after December 31, 2001.  An individual may 
  5.17  claim only one credit per year.  For married couples filing 
  5.18  joint returns, the maximum credit is reduced by five percent for 
  5.19  each $1,000 of income over a threshold.  For all other 
  5.20  taxpayers, the maximum credit is reduced by ten percent for each 
  5.21  $1,000 of income over a threshold.  For married couples filing 
  5.22  joint returns, the threshold is $100,000.  For all other 
  5.23  taxpayers, the threshold is $50,000.  In no case is the credit 
  5.24  less than zero. 
  5.25     For a nonresident or part-year resident, the credit 
  5.26  determined under this section must be allocated based on the 
  5.27  percentage calculated under section 290.06, subdivision 2c, 
  5.28  paragraph (e). 
  5.29     Subd. 3.  [CREDIT REFUNDABLE.] If the amount of credit 
  5.30  which the claimant is eligible to receive under this section 
  5.31  exceeds the claimant's tax liability under this chapter, the 
  5.32  commissioner shall refund the excess to the claimant. 
  5.33     Sec. 3.  [EFFECTIVE DATE.] 
  5.34     Sections 1 and 2 are effective for taxable years beginning 
  5.35  after December 31, 1999.