The One Minnesota budget, signed into law by Governor Tim Walz, brought financial relief to over 2 million Minnesotans through tax rebate payments ranging from $260 to $1,300. However, as tax season approaches, recipients are faced with an unexpected twist: the federal taxman cometh.
While Minnesotans breathe a sigh of relief that their rebates remain untaxed within the state, the Internal Revenue Service (IRS) has a different perspective. According to Ryan Brown from the Minnesota Department of Revenue, these rebates are indeed subject to federal taxation, leaving recipients with potential liabilities ranging from $26 to $286, depending on their federal tax bracket.
Exploring the Taxable Quandary: Form 1099-MISC and Tax Responsibilities
In light of these developments, the Minnesota Department of Revenue plans to dispatch Form 1099-MISC to all rebate recipients. This form will help them to file federal individual income tax returns in 2024. Brown emphasizes the importance of integrating the information from this form into the 2023 income tax return. For those including the rebate in their federal adjusted gross income, a subtraction on line 33 of Schedule M1M on their Minnesota return is advised.
Governor Walz expressed deep disappointment during a recent press conference, condemning the federal taxation of the rebates. He voiced his dissatisfaction, going so far as to call it “bulls.” Walz has actively engaged with the IRS and White House Chief of Staff Jeff Zients, aiming to rectify what he perceives as unfair treatment by the federal government.
Walz points to the conclusion of the federal disaster declaration as the catalyst for this unexpected tax scenario. Allegedly, the Minnesota Legislature missed the deadline by approximately two weeks, resulting in the federal government’s insistence on collecting taxes on the rebates.
Rebate eligibility hinged on income, with individuals earning $75,000 or less qualifying for a $260 rebate. Couples with a combined income of $150,000 or below received $520, while parents in these income brackets garnered an additional $260 per child, applicable for up to three children. The maximum credit achievable under this structure amounted to $1,300. This income-based framework ensured that financial relief was targeted toward those in lower income brackets, aligning with the overarching objective of the One Minnesota budget.
Minnesota’s Preliminary Property Tax Levies for 2024
Annually, the Minnesota Department of Revenue unveils a roster of preliminary maximum property tax levies, encompassing local government reports and nods from school referenda on November 7, 2023. These preliminary figures serve as the basis for counties to calculate parcel-specific property tax estimates for 2024. Property owners receive these estimates in November through Truth-in-Taxation notices, which not only detail the financial outlook but also announce meeting times and locations for Truth-in-Taxation gatherings held between late November and late December.
These gatherings provide Minnesotans the platform to voice opinions on local levies and fiscal allocations. Cities with over 500 inhabitants, counties, school districts, regional library authorities, and metropolitan taxing districts are mandated to conduct these sessions.
Post-citizen input, local governments must finalize their 2024 property tax levies by December 28, 2023, with the flexibility to decrease but not increase from preliminary levies. The Department will unveil the conclusive property tax levy details in February. Projections indicate a statewide 7.3% increase, amounting to a maximum of $882.1 million for 2024, although last year witnessed a final levy increase 0.6% lower than preliminary figures.
Cities: The 2024 preliminary property tax levies for cities will total approximately $3.462 billion compared with a final levy of $3.194 billion in 2023, an 8.4% increase.
Counties: The 2024 preliminary property tax levies for counties will total approximately $3.981 billion compared with a final levy of $3.757 billion in 2023, a 6% increase.
Townships: The 2024 preliminary property tax levies for townships will total approximately $314 million compared with a final levy of $294 million in 2023, a 6.8% increase.
Schools: The 2024 preliminary property tax levies for schools will total approximately $4.036 billion compared with a final levy of $3.702 billion in 2023, a 9% increase.
Special Taxing Districts: The 2024 preliminary property tax levies for special taxing districts will total approximately $494 million compared with a final levy of $459 million in 2023, a 7.8% increase.
If you have any questions or doubts regarding your taxes, get in touch with the Minnesota Department of Revenue.