Get Latest WorkWORLD

Minnesota Working Family Credit

In Minnesota, state Earned Income Credit is called Minnesota Working Family Credit. This program allows a credit against the state income tax for certain people with limited incomes.

Eligibility

To receive a credit, a taxpayer must be eligible for a Federal Earned Income Credit under section 32 of the Internal Revenue Code. If you qualify for the Federal credit, you automatically qualify for the State credit.

You may be eligible for these credits if, in 1998, you had:

·      one child at home and your job income was less than $26,473, or

·      two or more children at home and your job income was less than $30,095, or

·      no children, and you are age 25-64, and your job income was less than $10,030.

To claim the credits, file

·      Federal Form 1040 or 1040A, and Schedule EIC; and

·      Minnesota Form M-1 and Schedule M-1ED.

Benefits

An individual is allowed a credit against the Minnesota state income tax equal to a percentage of earned income, as follows:

For individuals with no qualifying children, the credit equals 1.1475 percent of the first $4,460 of earned income. The credit is reduced by 1.1475 percent of earned income or modified adjusted gross income, whichever is greater, in excess of $5,570, but in no case is the credit less than zero.

For individuals with one qualifying child, the credit equals 6.8 percent of the first $6,680 of earned income and 8.5 percent of earned income over $11,650 but less than $12,990. The credit is reduced by 4.77 percent of earned income or modified adjusted gross income, whichever is greater, in excess of $14,560, but in no case is the credit less than zero.

For individuals with two or more qualifying children, the credit equals eight percent of the first $9,390 of earned income and 20 percent of earned income over $14,350 but less than $16,230. The credit is reduced by 8.8 percent of earned income or modified adjusted gross income, whichever is greater, in excess of $17,280, but in no case is the credit less than zero.

Advance Earned Income Credit

If you earn less than $26,473 and have a child at home, you can choose to get part of next year's Earned Income Credit in advance on your paychecks this year. You may want to apply for Advance Earned Income Credit if you are the only wage earner in your household and if you don't expect major changes in your household's income during the year. If you want to apply, ask your employer for a Form W-5, fill it out, and return it to them.

WorkWORLD™ Help/Information System

   Share/Save: Click the button or link at left to select your favorite bookmark service and add this page.

This is one topic from the thousands available in the WorkWORLD™ software Help/Information System.
Complete information about the software is available at: http://www.WorkWORLD.org