Dual status technicians may qualify for the military pay subtraction

 

If you have clients who are dual status military technicians, they may qualify for Minnesota’s military pay subtraction. Claiming this subtraction on their state income tax return may reduce the taxes owed or increase their refund.

What is the military pay subtraction?

If your client is a Minnesota resident and military member, they may subtract federally taxable active-duty military pay when determining their Minnesota tax.

Does my client qualify for the subtraction as a dual status technician?

They may qualify for this subtraction if both of the following are true:

• They are a member of the Minnesota National Guard or other reserve components of the U.S. military
• They received paid compensation for one of the following:
  • Service or duty under U.S. Code, title 32 (1983), and travel to or from that service or duty
  • State active service as defined in Minnesota Statute 190.05, subdivision 5a
  • Services performed under Minnesota Statute 190.08, subdivision 3
  • Services performed under the Active Guard Reserve (AGR) Program

How does my client claim the subtraction?

Complete Schedule M1M, Income Additions and Subtractions, and include it when you file your client’s Form M1, Individual Income Tax.

Can my client claim the subtraction for other years?

Yes. If they qualify, they can claim the subtraction for tax years 2015 through 2018. To claim the subtraction for previous years, they must complete and file an amended Minnesota income tax return (Form M1X). For details, see Amending an Income Tax Return.

Note: The deadline to file 2015 Form M1X is October 15, 2019.

Where can I find more information? 

See the Minnesota Department of Revenue’s Military Pay Subtraction page. For details on Minnesota’s other military tax benefits, see Military Service Members.