Tax Tip #9 for Tax Professionals - Understanding household income used to calculate the Property Tax Refund

Household income affects your clients’ eligibility for the Homestead Credit Refund (for Homeowners) and Renter’s Property Tax Refund (Form M1PR).

Household income includes adjusted gross income and certain nontaxable income received during the year. Schedule M1PR-AI, Additions to Income must be used to report types and amounts of income included on line 5 of Form M1PR.

Here are some examples of nontaxable income to include on Form M1PR:

• Alimony received, to the extent not included in adjusted gross income
• Contributions to deferred compensation plans
• Contributions to dependent care accounts and medical expense accounts
• Public Safety Officer medical insurance exclusion
• Rent reduction for caretaking responsibilities
• Distributions from a ROTH or traditional IRA not included on line 1, including distributions made to a charity

For more examples of common items to include and exclude from household income, see pages 8 and 9 of the 2020 Form M1PR instructions.

Minnesota also uses household income to calculate other tax benefits, including the K-12 Education Credit.