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290.0802 Subtraction for the elderly and disabled.

Subdivision 1. Definitions. For purposes of this section, the following terms have the meanings given.

(a) "Adjusted gross income" means federal adjusted gross income as used in section 22(d) of the Internal Revenue Code for the taxable year, plus a lump sum distribution as defined in section 402(e)(3) of the Internal Revenue Code, and less any pension, annuity, or disability benefits included in federal gross income but not subject to state taxation other than the subtraction allowed under section 290.01, subdivision 19b, clause (4).

(b) "Disability income" means disability income as defined in section 22(c)(2)(B)(iii) of the Internal Revenue Code.

(c) "Nontaxable retirement and disability benefits" means the amount of pension, annuity, or disability benefits that would be included in the reduction under section 22(c)(3) of the Internal Revenue Code and pension, annuity, or disability benefits included in federal gross income but not subject to state taxation other than the subtraction allowed under section 290.01, subdivision 19b, clause (4).

(d) "Qualified individual" means a qualified individual as defined in section 22(b) of the Internal Revenue Code.

(e) "Social security benefits above the second federal threshold" means the amount of social security benefits included in federal taxable income due to the provisions of section 13215 of the Omnibus Budget Reconciliation Act of 1993, Public Law Number 103-66.

Subd. 2. Subtraction. (a) A qualified individual is allowed a subtraction from federal taxable income for the greater of (1) the individual's subtraction base amount or (2) the minimum amount. The excess of the subtraction base amount over the taxable net income computed without regard to the subtraction for the elderly or disabled under section 290.01, subdivision 19b, clause (5), may be used to reduce the amount of a lump sum distribution subject to tax under section 290.032.

(b)(1) The initial subtraction base amount equals

(i) $12,000 for a married taxpayer filing a joint return if a spouse is a qualified individual,

(ii) $9,600 for a single taxpayer, and

(iii) $6,000 for a married taxpayer filing a separate federal return.

(2) The qualified individual's initial subtraction base amount, then, must be reduced by the sum of nontaxable retirement and disability benefits and one-half of the amount of adjusted gross income in excess of the following thresholds:

(i) $18,000 for a married taxpayer filing a joint return if both spouses are qualified individuals,

(ii) $14,500 for a single taxpayer or for a married couple filing a joint return if only one spouse is a qualified individual, and

(iii) $9,000 for a married taxpayer filing a separate federal return.

(3) In the case of a qualified individual who is under the age of 65, the maximum amount of the subtraction base may not exceed the taxpayer's disability income.

(4) The resulting amount is the subtraction base amount.

(c) Qualified individuals who must include social security benefits above the second federal threshold in federal taxable income may claim a minimum amount equal to the lesser of

(1) the amount of social security benefits above the second federal threshold included in federal taxable income; or

(2) a minimum amount subject to an income phase-out.

For taxable years beginning after December 31, 1993, and before January 1, 1995, the minimum amount equals

(i) $3,750 for married individuals filing a joint return if both spouses are qualified individuals,

(ii) $3,000 for a single taxpayer or for married individuals filing a joint return if one spouse is a qualified individual, and

(iii) $1,875 for a married individual filing a separate return.

For taxable years beginning after December 31, 1994, and before January 1, 1996, the minimum amount equals

(i) $2,250 for married individuals filing a joint return if both spouses are qualified individuals,

(ii) $1,800 for a single taxpayer or for married individuals filing a joint return if one spouse is a qualified individual, and

(iii) $1,125 for married individuals filing a separate return.

For taxable years beginning after December 31, 1995, and before January 1, 1997, the minimum amount equals

(i) $1,000 for married individuals filing a joint return if both spouses are qualified individuals,

(ii) $800 for a single taxpayer or for married individuals filing a joint return if one spouse is a qualified individual, and

(iii) $500 for married individuals filing a separate return.

For taxable years beginning after December 31, 1996, the minimum amount is zero.

The minimum amount is reduced by 20 percent for each $1,000 of adjusted gross income above an income threshold, but in no case may the minimum amount be reduced to less than zero. The income thresholds equal

(i) $75,000 for married individuals filing a joint return if both spouses are qualified individuals,

(ii) $60,000 for single taxpayers and for married individuals filing a joint return if only one spouse is a qualified individual, and

(iii) $37,500 for married individuals filing a separate return.

Subd. 3. Restrictions; married couples. Except in the case of a husband and wife who live apart at all times during the taxable year, if the taxpayer is married at the close of the taxable year, the subtraction under subdivision 2 is allowable only if the taxpayers file joint federal and state income tax returns for the taxable year.

HIST: 1988 c 719 art 1 s 10; 1989 c 28 s 13,14,25; 1Sp1989 c 1 art 10 s 19; 1990 c 604 art 2 s 16; 1991 c 291 art 6 s 28,46; 1992 c 511 art 6 s 19; 1994 c 587 art 1 s 15,16

Official Publication of the State of Minnesota
Revisor of Statutes