Minnesota Tax Tips
Credit for military service in a combat zone increased to $120 for each month of service in 2009 and 2010
Members of the military who served in a combat zone or hazardous duty area any time in 2009 and 2010 may now be eligible for a credit of $120 for each month of service.
Credit for military service in a combat zone for September 11, 2002 to December 31, 2007 expires soon!
The military service credit for months of service from September 11, 2001 to December 31, 2006 expires October 15, 2011.
Credit for past military service
A nonrefundable credit of up to $750 is available for veterans of the military, including the National Guard and Reserves, who have served in the military for at least 20 years or have a 100 percent service-related disability. Income limits apply. See Minnesota Department of Revenue Website for more detail.
Military subtraction expanded for National Guard and Reserves
Beginning with tax year 2009, members of the National Guard and Reserves can now subtract pay received for training and certain types of qualifying active service within Minnesota. Training includes annual training and drill weekends.
Minnesota residents
If you are a resident of Minnesota for the entire year and are required to file a federal income tax return, you must also file Minnesota Individual Income Tax Return.
However, if your gross income included on your federal return, minus any compensation received for federal active duty, is less than the minimum filing requirement for the year ($9,350 for 2009), you are not required to file a Minnesota return.
Subtractions
As a Minnesota resident, you must pay Minnesota tax on taxable income you received from all sources. However, you are allowed subtractions for the following compensation, if included in federal taxable income:
federal active duty under U.S. Code Title 10
state or federal active service (under U.S. Code Title 10 and Title 32) such as ADSW (ADOS), natural disaster emergency response and missing persons searches performed by members of the National Guard or Reserves
National Guard and Reserves duties
Reenlistment bonus
Active Guard Reserve (AGR) Program compensation and pay to civilian employees of the military or State Military employees are not allowed as a subtraction, regardless of whether the income was earned inside or outside Minnesota, unless the individual has been ordered to Federal Active Service (Title 10) duty.
Military subtraction – qualifying service
US/UN Military (Army, Navy, Air Force and Marines)
For 2009, all income earned from federal active service in the US/UN Military is allowed a subtraction. Federal active service includes service or duty under U.S. Code, title 10; as required by federal law, regulation or order; and travel to or from that service or duty. Federal active service also includes being on medical hold under active duty orders for community-based health care operations while recuperating from an injury. Federal active service excludes federally funded state active service.
National Guard and Reserves
For 2009, all income earned from service in the National Guard or Reserves is entitled to a subtraction. However, Active Guard Reserve (AGR) income and pay received for employment by the State of Minnesota Department of Military Affairs is not allowed a subtraction. Additionally, state active duty pay for National Guard members is allowed a subtraction.
See Schedule M1M, Income Additions and Subtractions, for details. If you had nonmilitary income taxed by another state while you were a Minnesota resident, you may qualify for a credit on taxes paid to another state Schedule M1CR, Credit for Income Tax Paid to Another State).
Credit for military service in a combat zone
If you served in a combat zone or hazardous duty area any time on or after January 1, 2007, you may be eligible for a credit based on the number of months served:
For service on or after Jan. 1, 2009, the credit is equal to $120 for each month (or partial month) served.
For service during 2007 and/or 2008, the credit is $59 for each month (or partial month) served.
The deadline for claiming a credit based on military service in a combat zone between Sept. 11, 2001 and Dec. 31, 2006 has passed.
How to claim the credit
To claim the credit, omplete Form M99, Credit for Military Service in a Combat Zone, for the year in which you served in a combat zone. You will need to include documentation with your form.
To file for the credit based on services provided in a combat zone during 2010, use the following 2010 forms:
2010 Form M99, Credit for Military Service in a Combat Zone (onscreen fill-in version)
2010 Form M99, Credit for Military Service in a Combat Zone (print-only version)
