06/29/2021
Minnesota Conforms
HUGE for MN and other States as well, is that AFTER the May 17th tax filing deadline, MN finally conformed to Federal for the $10,200 in unemployment compensation being tax free. MN also conformed to the PPP and EIDL loans debt forgiveness to NOT be TAXABLE. As of this newsletter, MN has not provided definitive guidance as to how taxpayers should get some of their State income tax refunded. For now, MN is telling tax pros to NOT AMEND tax returns as this would muddy up their "system". Returns that paid taxes on unemployment comp up to $10,200 will automatically have the taxes recalculated by MN and receive either a check in the mail or a credit to their bank account if a taxpayer did direct deposits or direct debit to their bank account.
In prior years, MN conformed to Federal, at times, as late as 2-3 years AFTER taxpayers filed their taxes. Thus taxpayers have been getting letters from MN and refunds for 2018, 2019 and now 2020. Tardy conformity is annoying to say the least. A modest amount of interest income may be added to a potential refund(s) however.
Earlier this year, for a small number of my clients, I forced the unemployment comp up to $10,200 to be non taxable to State because eventual conformity seemed to be on the horizon. Later State indicated we should not continue doing this and that they would calc any tax difference. If you were one of the those clients, then you already received your tax benefit.
