New Minnesota tax credit pays up to $1,750 per child

DETROIT LAKES

— If you’re a Minnesota parent, make sure you file your state income tax this year, even if you don’t have to: The state is offering tax credits up to $1,750 per child in a move designed to cut its child poverty rate by a third.

“It’s a big deal, and we think there are nearly 300,000 Minnesota families who are eligible for this tax cut,”

Lieutenant Governor Peggy Flanagan

said at a news conference in Detroit Lakes on Monday, Feb. 26.

It was held at Mahube-Otwa Community Action, which offers free tax preparation for those with an adjusted gross income of $63,000 or less.

So far,

Flanagan

said, $240 million has been claimed through the new child tax credit, with the average credit being $1,291. About 191,000 children have benefited from the program so far, she said.

“So this is real money to families that can make a tremendous difference,” she said.

Filing taxes can be frustrating, tedious and mysterious,

Flanagan

said. That’s why people should take advantage of the free volunteer tax preparation available at 170 Volunteer Income Tax Assistance (VITA) sites across the state, including at Mahube-Otwa in Detroit Lakes and at White Earth. Volunteers at these sites help prepare federal and state income tax and property tax refund returns.

“Volunteers talk about how exciting it is when folks, especially folks on fixed incomes, qualify for tax credits,”

Flanagan

said. “If you’ve never filed taxes before, this is the year to start.”

The new tax credits could mean thousands of dollars a year, which can really make a difference for a family, she added. “If it’s that new pair of shoes, if it’s auto repairs, if it’s catching up on bills – it can really be life-changing for folks.”

White Earth has the only volunteer tribal tax site in the state, said White Earth Tribal Chairman Michael Fairbanks. “This (child tax program) isn’t a one-time event,” he added. “It should go on for many years – but you must file taxes to get the credit.”

Minnesota has made about $900 million available for the new child tax credit, which went into effect this year as part of a tax bill passed by the Democratic-controlled Legislature and

signed into law by Gov. Tim Walz last year.

Former State Rep. Paul Marquart of Dilworth, who is now the state tax commissioner, said the program could be a real game-changer for children in poverty.

“In my 23 years down here in state government, I have never seen such a single program that could have such a transformational, generational impact on our families and children as this one single program,” he said.

“What I’ve always appreciated about Mahube-Otwa is their focus on child poverty,” Marquart added. While Minnesota does better than many other states when it comes to child poverty, “it’s probably two or three times higher in this area than the state average.”

While the maximum income to qualify for the full credit is $35,000 a year for a couple with one child filing jointly, “it phases out relatively slowly,” he said. For instance, a couple with three children would receive partial credit up to a combined income of $82,000.

The maximum income levels for each credit are as follows:

• One child: $52,500.
• Two children: $67,000.
• Three children: $82,000.
• Four children: $96,000.

• One child: $47,000.
• Two children: $61,500.
• Three children: $76,000.
• Four children: $91,000.

There’s no limit on the number of children eligible in a family. Only children under age 18 qualify, but there is also a credit for families with qualifying children older than 17, starting at $925 for one qualifying child, using the same income formula for benefits.

Other state tax programs to pay attention to are the working family credit and the revamped renter’s credit,

Flanagan

said.

And Marquart pointed to an expanded K-12 education credit and the Social Security tax exemption, which now covers three-quarters of the state’s filers. “Now up to 76% of people who receive Social Security will not pay a dime on their Social Security taxes,” he said.

Mahube-Otwa offers free tax preparation at four sites — Detroit Lakes, Mahnomen, Park Rapids and Wadena, said Lisa Stroschein, who manages the four sites along with Kristina McGee.

There are seven volunteer tax preparers at Mahube-Otwa in Detroit Lakes, all of whom are certified by the IRS and certified through the VITA program, Stroschein said. It’s not necessary to have an accounting degree to work as a tax volunteer. “We will train you,” she said. “It’s a misconception that they need an accounting background.” For more information on tax help, check out

Mahube.org.