Tax day is just a week away, and many Minnesotans are scrambling to get their income tax returns prepared and filed in advance of the April 15 deadline. Like most people, their goal is to minimize the amount of taxes they have to pay - or, even better, to get a substantial income tax refund.
If you read our blog last week, we had a post that shared Minnesota Gov. Mark Dayton's proposal to rely more on sales tax than on income tax. The plan in Minnesota involves a combination of income tax and a broadened sales tax base. This has created some controversy.
Taxes are certainly not something that is set in stone although it might feel like it to the taxpayers. The kinds of taxes, the structure, set thresholds for certain deductions or taxes are constantly changing. In fact, Gov. Mark Dayton has discussed the idea of shifting Minnesota's tax structure to one that depends in part on increasing the sales tax.
There has been a buildup of debate, concern and even fear over the resolution to the federal budget issue. First, there was the pending fiscal cliff, then there was the talk of sequester. Federal lawmakers were able to avoid the fiscal cliff, but it appears as though the $85 billion of federal spending cuts will go into effect.
People in Minnesota or elsewhere who work for themselves know paying income taxes falls solely on the filer and can often result in owing the federal government taxes every year. Even if you owe taxes and are unable to pay them in full it is important to still file on time as the penalties for not filing can make matters far worse. Failing to file a tax return can result in the IRS filing its own substitute return which may result in a higher tax debt than had you filed it yourself.
Lawmakers were not able to pass a bill preventing us from going over the "fiscal cliff" before midnight on Dec. 1, but they were able to reach an agreement on New Year's Day. The deal will prevent most people in Minnesota and the rest of the country from paying more in income taxes.