At Christianson, our experts are actively keeping on top of all of the changes that have occurred. The emphasis of this post today is going to be around education tax changes in Minnesota. There are several important credits and subtractions to be aware of this year that may impact you, as a student or as a parent of a student.
Master’s Degree in Teacher’s Licensure Field Credit
Who Qualifies
Taxpayers qualify to receive this credit if you enroll in a Master’s Degree program in Minnesota after June 30th, 2017. The program in which you are receiving your Master’s Degree must be English or Language Arts, Math, Science, Foreign Languages, Civics and Government, Arts, History, or Geography. This credit may not be claimed until the year you complete the program.
How Much is the Credit
The credit amount is the lesser of:
- The combined fee (less scholarships or reimbursements) for tuition, fees, books, and instruction material, OR
- $2,500
How do I Claim the Credit
Those who are eligible may claim their credit by completing Schedule M1CMD when filing your taxes. You can find the form here.
Student Loan Credit
Who Qualifies
This credit is available for 2017 taxes and after. Taxpayers qualify to receive this credit if they are a full-year or part-year Minnesota resident and make payments to qualifying student loans throughout the tax year.
How Much is the Credit
The credit amount is capped at $500 (or $1,000 if you are married, filing jointly, and are making payments towards qualified loans) and is equal to the least of:
- $500 OR
- Earned income for the year OR
- Interest paid during the year plus 10% of the original loan amounts OR
- Loan payments paid during the year minus 10% of AGI over $10,000
How do I Claim the Credit
Those eligible to claim the Student Loan Credit should fill out the form M1SLC which you can find here, and file it with your taxes.
Section 529 Plan Credit
Who Qualifies
This credit is available beginning in the 2017 tax year. Taxpayers qualify to receive this credit if you are a Minnesota resident (full or part-time) and you contribute to a qualified Section 529 college savings plan. This credit is subject to income guidelines. Please reach out to Christianson for more details on those income guidelines.
How Much is the Credit
The credit amount has a maximum payout of $500 or 50% of contributions made during the year, but has a phase-out for those taxpayers who have an Adjusted Gross Income (AGI) in excess of $75,000. Your filing status (individual or married, filing jointly) will have an impact on the credit amount you are eligible for based on your AGI. To learn more about the credit you may qualify for, reach out to Christianson.
How do I Claim the Credit
To claim the Section 529 credit, you must fill out the Schedule M1529, which you can find here, and file it with your taxes.
Section 529 Plan Subtraction
Who Qualifies
This subtraction is available for tax year 2017. Taxpayers eligible for the Section 529 Plan Subtraction must contribute to a Section 529 however you may not claim the subtraction if you anticipate claiming the credit listed directly above this section. For the 529 Subtraction, note that this is not exclusively for a Minnesota plan contribution as most states offer the Section 529 College Savings Plans.
How Much is the Subtraction
The subtraction amount is based on how you are filing.
- Filing single, head of household, or filing separately qualifies you for up to $1,500
- Married filing jointly may qualify you for up to $3,000
How do I Claim the Subtraction
Those eligible to claim the Student Loan subtraction should fill out the form M1SLC which you can find here, and file it with your taxes.
We understand that there are a lot of questions surrounding our clients, their eligibility in relation to some of these tax-laws, and the impact these laws will have on them. Our biggest piece of advice is to talk to your CPA to get the answers you need. If you have questions or are looking for guidance, contact our experts today!
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