Bill Text: MN HF772 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Dependent care credit modified.
Sponsorship: Partisan Bill (Democrat 4)
Status: (Introduced - Dead) 2011-03-09 - Author added Knuth [HF772 Detail]
Download: Minnesota-2011-HF772-Introduced.html
1.2relating to taxation; individual income; modifying the dependent care credit;
1.3amending Minnesota Statutes 2010, sections 290.067, subdivision 2; 290.0674,
1.4subdivision 2, by adding a subdivision; repealing Minnesota Statutes 2010,
1.5section 290.067, subdivisions 2a, 2b.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2010, section 290.067, subdivision 2, is amended to read:
1.8 Subd. 2. Limitations. The credit for expenses incurred for the care of each
1.9dependent shall not exceed$720 in any taxable year, and the total credit for all dependents
1.10of a claimant shall not exceed $1,440 in a taxable year. The maximum total credit shall
1.11be reduced according to the amount of the income of the claimant and a spouse, if any,
1.12as follows:
1.13income up to $18,040, $720 maximum for one dependent, $1,440 for all dependents;
1.14income over $18,040, the maximum credit for one dependent shall be reduced by
1.15$18 for every $350 of additional income, $36 for all dependents.
1.16The commissioner shall construct and make available to taxpayers tables showing
1.17the amount of the credit at various levels of income and expenses. The tables shall follow
1.18the schedule contained in this subdivision, except that the commissioner may graduate the
1.19transitions between expenses and income brackets. the dependent care credit for which
1.20the taxpayer is eligible under the provisions of section 21 of the Internal Revenue Code,
1.21without regard to the limitations of section 26 of the Internal Revenue Code, minus the
1.22taxpayer's liability for federal income tax after deduction of the child tax credit. In the
1.23case of a taxpayer eligible for a credit under the provisions of subdivision 1, paragraph
1.24(b), or eligible for a credit as a result of income received as a Minnesota family investment
1.25program grant or allowance not being taken into account in determining if a child qualified
2.1as a dependent, as provided in subdivision 1, paragraph (a), the term "dependent care
2.2credit for which the taxpayer is eligible under the provisions of section 21 of the Internal
2.3Revenue Code" means the dependent care credit for which the taxpayer would be eligible
2.4if the taxpayer had paid the deemed expense amount as provided in subdivision 1,
2.5paragraph (b), or if income received as a Minnesota family investment program grant
2.6or allowance had not been taken into account in determining if a child qualified as a
2.7dependent, as provided in subdivision 1, paragraph (a). In no case may the credit under
2.8this section be less than zero.
2.9For purposes of this subdivision, "liability for federal income tax" means tax as
2.10determined under sections 1, 2, 3, and 55 of the Internal Revenue Code, "child tax credit"
2.11means the credit allowed under section 24 of the Internal Revenue Code, excluding the
2.12additional credit under section 24(d) of the Internal Revenue Code, and "Internal Revenue
2.13Code" means the Internal Revenue Code of 1986, as amended through December 17, 2010.
2.14EFFECTIVE DATE.This section is effective for taxable years beginning after
2.15December 31, 2010.
2.16 Sec. 2. Minnesota Statutes 2010, section 290.0674, subdivision 2, is amended to read:
2.17 Subd. 2. Limitations. (a) For claimants with income not greater than $33,500, the
2.18maximum credit allowed for a family is $1,000 multiplied by the number of qualifying
2.19children in kindergarten through grade 12 in the family. The maximum credit for families
2.20with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 of
2.21household income over $33,500, and the maximum credit for families with two or more
2.22qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of
2.23household income over $33,500, but in no case is the credit less than zero.
2.24For purposes of this section "income" has the meaning given in section
290.067,
2.25subdivision 2a
. In the case of a married claimant, a credit is not allowed unless a joint
2.26income tax return is filed.
2.27(b) For a nonresident or part-year resident, the credit determined under subdivision 1
2.28and the maximum credit amount in paragraph (a) must be allocated using the percentage
2.29calculated in section290.06, subdivision 2c , paragraph (e).
2.30EFFECTIVE DATE.This section is effective for taxable years beginning after
2.31December 31, 2010.
2.32 Sec. 3. Minnesota Statutes 2010, section 290.0674, is amended by adding a subdivision
2.33to read:
3.1 Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
3.2the following:
3.3(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
3.4Code; and
3.5(2) the sum of the following amounts to the extent not included in clause (1):
3.6(i) all nontaxable income;
3.7(ii) the amount of a passive activity loss that is not disallowed as a result of section
3.8469, paragraph (i) or (m), of the Internal Revenue Code and the amount of passive activity
3.9loss carryover allowed under section 469(b) of the Internal Revenue Code;
3.10(iii) an amount equal to the total of any discharge of qualified farm indebtedness
3.11of a solvent individual excluded from gross income under section 108(g) of the Internal
3.12Revenue Code;
3.13(iv) cash public assistance and relief;
3.14(v) any pension or annuity (including railroad retirement benefits, all payments
3.15received under the federal Social Security Act, supplemental security income, and veterans
3.16benefits), which was not exclusively funded by the claimant or spouse, or which was
3.17funded exclusively by the claimant or spouse and which funding payments were excluded
3.18from federal adjusted gross income in the years when the payments were made;
3.19(vi) interest received from the federal or a state government or any instrumentality
3.20or political subdivision thereof;
3.21(vii) workers' compensation;
3.22(viii) nontaxable strike benefits;
3.23(ix) the gross amounts of payments received in the nature of disability income or
3.24sick pay as a result of accident, sickness, or other disability, whether funded through
3.25insurance or otherwise;
3.26(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
3.271986, as amended through December 31, 1995;
3.28(xi) contributions made by the claimant to an individual retirement account,
3.29including a qualified voluntary employee contribution, simplified employee pension plan,
3.30self-employed retirement plan, cash or deferred arrangement plan under section 401(k)
3.31of the Internal Revenue Code, or deferred compensation plan under section 457 of the
3.32Internal Revenue Code;
3.33(xii) nontaxable scholarship or fellowship grants;
3.34(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
3.35Code;
4.1(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
4.2Revenue Code;
4.3(xv) the amount of tuition expenses required to be added to income under section
4.4290.01, subdivision 19a, clause (12);
4.5(xvi) the amount deducted for certain expenses of elementary and secondary school
4.6teachers under section 62(a)(2)(D) of the Internal Revenue Code; and
4.7(xvii) unemployment compensation.
4.8In the case of an individual who files an income tax return on a fiscal year basis, the
4.9term "federal adjusted gross income" means federal adjusted gross income reflected in the
4.10fiscal year ending in the next calendar year. Federal adjusted gross income may not be
4.11reduced by the amount of a net operating loss carryback or carryforward or a capital loss
4.12carryback or carryforward allowed for the year.
4.13(b) "Income" does not include:
4.14(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and
4.15102;
4.16(2) amounts of any pension or annuity that were exclusively funded by the claimant
4.17or spouse if the funding payments were not excluded from federal adjusted gross income
4.18in the years when the payments were made;
4.19(3) surplus food or other relief in kind supplied by a governmental agency;
4.20(4) relief granted under chapter 290A;
4.21(5) child support payments received under a temporary or final decree of dissolution
4.22or legal separation; and
4.23(6) restitution payments received by eligible individuals and excludable interest as
4.24defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
4.252001, Public Law 107-16.
4.26EFFECTIVE DATE.This section is effective for taxable years beginning after
4.27December 31, 2010.
4.28 Sec. 4. REVISOR'S INSTRUCTION.
4.29In subsequent editions of Minnesota Statutes, the revisor of statutes shall replace
4.30references to the income definition in 290.067, subdivision 2a, with references to the
4.31income definition in 290.0674, subdivision 2a.
4.32 Sec. 5. REPEALER.
4.33Minnesota Statutes 2010, section 290.067, subdivisions 2a and 2b, are repealed.
5.1EFFECTIVE DATE.This section is effective for taxable years beginning after
5.2December 31, 2010.
1.3amending Minnesota Statutes 2010, sections 290.067, subdivision 2; 290.0674,
1.4subdivision 2, by adding a subdivision; repealing Minnesota Statutes 2010,
1.5section 290.067, subdivisions 2a, 2b.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2010, section 290.067, subdivision 2, is amended to read:
1.8 Subd. 2. Limitations. The credit for expenses incurred for the care of each
1.9dependent shall not exceed
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20the taxpayer is eligible under the provisions of section 21 of the Internal Revenue Code,
1.21without regard to the limitations of section 26 of the Internal Revenue Code, minus the
1.22taxpayer's liability for federal income tax after deduction of the child tax credit. In the
1.23case of a taxpayer eligible for a credit under the provisions of subdivision 1, paragraph
1.24(b), or eligible for a credit as a result of income received as a Minnesota family investment
1.25program grant or allowance not being taken into account in determining if a child qualified
2.1as a dependent, as provided in subdivision 1, paragraph (a), the term "dependent care
2.2credit for which the taxpayer is eligible under the provisions of section 21 of the Internal
2.3Revenue Code" means the dependent care credit for which the taxpayer would be eligible
2.4if the taxpayer had paid the deemed expense amount as provided in subdivision 1,
2.5paragraph (b), or if income received as a Minnesota family investment program grant
2.6or allowance had not been taken into account in determining if a child qualified as a
2.7dependent, as provided in subdivision 1, paragraph (a). In no case may the credit under
2.8this section be less than zero.
2.9For purposes of this subdivision, "liability for federal income tax" means tax as
2.10determined under sections 1, 2, 3, and 55 of the Internal Revenue Code, "child tax credit"
2.11means the credit allowed under section 24 of the Internal Revenue Code, excluding the
2.12additional credit under section 24(d) of the Internal Revenue Code, and "Internal Revenue
2.13Code" means the Internal Revenue Code of 1986, as amended through December 17, 2010.
2.14EFFECTIVE DATE.This section is effective for taxable years beginning after
2.15December 31, 2010.
2.16 Sec. 2. Minnesota Statutes 2010, section 290.0674, subdivision 2, is amended to read:
2.17 Subd. 2. Limitations. (a) For claimants with income not greater than $33,500, the
2.18maximum credit allowed for a family is $1,000 multiplied by the number of qualifying
2.19children in kindergarten through grade 12 in the family. The maximum credit for families
2.20with one qualifying child in kindergarten through grade 12 is reduced by $1 for each $4 of
2.21household income over $33,500, and the maximum credit for families with two or more
2.22qualifying children in kindergarten through grade 12 is reduced by $2 for each $4 of
2.23household income over $33,500, but in no case is the credit less than zero.
2.24
2.25
2.26income tax return is filed.
2.27(b) For a nonresident or part-year resident, the credit determined under subdivision 1
2.28and the maximum credit amount in paragraph (a) must be allocated using the percentage
2.29calculated in section
2.30EFFECTIVE DATE.This section is effective for taxable years beginning after
2.31December 31, 2010.
2.32 Sec. 3. Minnesota Statutes 2010, section 290.0674, is amended by adding a subdivision
2.33to read:
3.1 Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
3.2the following:
3.3(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
3.4Code; and
3.5(2) the sum of the following amounts to the extent not included in clause (1):
3.6(i) all nontaxable income;
3.7(ii) the amount of a passive activity loss that is not disallowed as a result of section
3.8469, paragraph (i) or (m), of the Internal Revenue Code and the amount of passive activity
3.9loss carryover allowed under section 469(b) of the Internal Revenue Code;
3.10(iii) an amount equal to the total of any discharge of qualified farm indebtedness
3.11of a solvent individual excluded from gross income under section 108(g) of the Internal
3.12Revenue Code;
3.13(iv) cash public assistance and relief;
3.14(v) any pension or annuity (including railroad retirement benefits, all payments
3.15received under the federal Social Security Act, supplemental security income, and veterans
3.16benefits), which was not exclusively funded by the claimant or spouse, or which was
3.17funded exclusively by the claimant or spouse and which funding payments were excluded
3.18from federal adjusted gross income in the years when the payments were made;
3.19(vi) interest received from the federal or a state government or any instrumentality
3.20or political subdivision thereof;
3.21(vii) workers' compensation;
3.22(viii) nontaxable strike benefits;
3.23(ix) the gross amounts of payments received in the nature of disability income or
3.24sick pay as a result of accident, sickness, or other disability, whether funded through
3.25insurance or otherwise;
3.26(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
3.271986, as amended through December 31, 1995;
3.28(xi) contributions made by the claimant to an individual retirement account,
3.29including a qualified voluntary employee contribution, simplified employee pension plan,
3.30self-employed retirement plan, cash or deferred arrangement plan under section 401(k)
3.31of the Internal Revenue Code, or deferred compensation plan under section 457 of the
3.32Internal Revenue Code;
3.33(xii) nontaxable scholarship or fellowship grants;
3.34(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
3.35Code;
4.1(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
4.2Revenue Code;
4.3(xv) the amount of tuition expenses required to be added to income under section
4.4290.01, subdivision 19a, clause (12);
4.5(xvi) the amount deducted for certain expenses of elementary and secondary school
4.6teachers under section 62(a)(2)(D) of the Internal Revenue Code; and
4.7(xvii) unemployment compensation.
4.8In the case of an individual who files an income tax return on a fiscal year basis, the
4.9term "federal adjusted gross income" means federal adjusted gross income reflected in the
4.10fiscal year ending in the next calendar year. Federal adjusted gross income may not be
4.11reduced by the amount of a net operating loss carryback or carryforward or a capital loss
4.12carryback or carryforward allowed for the year.
4.13(b) "Income" does not include:
4.14(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and
4.15102;
4.16(2) amounts of any pension or annuity that were exclusively funded by the claimant
4.17or spouse if the funding payments were not excluded from federal adjusted gross income
4.18in the years when the payments were made;
4.19(3) surplus food or other relief in kind supplied by a governmental agency;
4.20(4) relief granted under chapter 290A;
4.21(5) child support payments received under a temporary or final decree of dissolution
4.22or legal separation; and
4.23(6) restitution payments received by eligible individuals and excludable interest as
4.24defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
4.252001, Public Law 107-16.
4.26EFFECTIVE DATE.This section is effective for taxable years beginning after
4.27December 31, 2010.
4.28 Sec. 4. REVISOR'S INSTRUCTION.
4.29In subsequent editions of Minnesota Statutes, the revisor of statutes shall replace
4.30references to the income definition in 290.067, subdivision 2a, with references to the
4.31income definition in 290.0674, subdivision 2a.
4.32 Sec. 5. REPEALER.
4.33Minnesota Statutes 2010, section 290.067, subdivisions 2a and 2b, are repealed.
5.1EFFECTIVE DATE.This section is effective for taxable years beginning after
5.2December 31, 2010.
