It’s tax season! And that means I’m getting some interesting tax questions to share with you all 🙂

Here’s one I got that wasn’t really framed as a question, but it definitely deserved to be addressed. Someone said “Something changed in my Minnesota taxes, we got a whole bunch more back this year!”

Yes, indeed, some people are noticing their Minnesota income tax submissions are resulting in a slight refund, vs their usual status of a slight amount owed each year.

The federal Tax Cuts and Jobs Act (TCJA) that passed in December 2017 wasn’t immediately adopted by the state of Minnesota (or most states). Instead states were still using their old tax law, a situation called “non-conformant”.  States tend to lag behind federal tax law changes, and don’t have to ever come into alignment (they can be perpetually non-conformant).

In May 2019, Minnesota passed a conformancy bill, so our Minnesota state tax law changed.

https://www.taxpolicycenter.org/taxvox/minnesotas-struggles-conform-tcja-made-its-cpas-happy-taxpayers-not-so-much at the very end of the article gives a little information, https://taxfoundation.org/minnesota-tax-conformity/ might be useful, and https://www.mncpa.org/resources/technical-resources/tax/minnesota-tax-law-changes/ has a link to a much more complicated state government document.

But one of the best places to learn basics about tax law changes is in the current year tax instructions. They have a section right at the beginning, called “What’s new for 2019?”

If you’re a parent, one of the tax lowering changes that affected many people was that starting this year we get both a standard deduction, and an exemption for dependents (generally that’s your young to young-ish kids).

The income tax rates also changed. Specifically they went down. You may have noticed a slight decrease in the Minnesota state income taxes withheld by your employer, mine was effective as of my October 22nd paycheck.

If you got a larger tax refund from Minnesota this year than you had received in the past due to a lower tax liability, make sure you’re talking with your tax preparer to determine if that lower tax liability is likely to continue in the future. If it was a one-off, then no change is necessary. But if it’s expected to be a longer term scenario, then it’s time to consider whether you want to adjust your state withholding.

Remember, taxes shouldn’t be scary, they should be informative – a good time to know what the current rules are, so you can apply them most advantageously to your situation.