Effective for taxable years beginning after Dec. 31, 2009, unless otherwise noted.- UPDATE 3/21/11 -- Federal changes adopted by Minnesota
- Factor percentages have changed
- Credit for increasing research activities has expanded
- Credit for historic structure rehabilitation
- The filing due date is the same as for filing the federal return
- Electronic payments
UPDATE 3/21/11 — Federal changes adopted by Minnesota
Legislation enacted March 21, 2011, adopts all of the federal tax provisions enacted between March 18 and December 31, 2010, that affect federal taxable income for tax year 2010, with the following exceptions:
- The 50 percent/100 percent federal bonus depreciation and the increased federal section 179 expensing have been adopted, but these provisions are subject to an addback of 80 percent in the first year and a five-year recovery, as under current state law.
As a result, the new law eliminates the need for corporations to recompute federal taxable income for Minnesota tax purposes for tax year 2010. The law also eliminates the need to add back the federal enhanced charitable contribution deduction for donated computers or to make adjustments for subpart F income.
If you have not yet filed your 2010 Form M4, see the updated Form M4I, Schedule DIV and the Corporation Franchise Tax Return (Form M4) instructions that were revised 3/11.If you have already filed your 2010 Form M4, the department will review filed returns that reported an amount on Form M4I, line 2j, 2p, 2r, 5m and/or 5q to determine if adjustments are required. When possible, the department will make needed adjustments, notify taxpayers of changes and send any additional refunds due.
Taxpayers will be notified if further action is required by them.
Factor percentages have changed
The property and payroll factors on Schedule M4A have changed from 8 percent to 6.5 percent each, and the sales factor has changed from 84 percent to 87 percent. Effective for tax year 2010.
Credit for increasing research activities has expanded
The following changes were made to the Minnesota research and development credit, beginning with tax year 2010:
- The amount of the credit for the first $2 million of qualified expenses has increased from 5 percent to 10 percent of the qualifying expenses, and the remains at 2.5 percent of expenses over $2 million.
- The credit is refundable.
- The credit is now available to individual partners of partnerships and shareholders of S corporations against their individual income tax.
To determine your credit, complete Schedule RD, Credit for Increasing Research Activities. The 2010 refundable credit is reported on Form M4, line 6. Any carryover credit from tax years prior to 2010 continues to be nonrefundable and is reported on Form M4T, line 17.
Credit for historic structure rehabilitation
A refundable credit is available to taxpayers who are eligible for the Federal Historic Rehabilitation Credit for improving a certified historic structure located in Minnesota. The credit may be assigned to others.
The project must have been approved by the State Historic Preservation Office (SHPO) of the Minnesota Historical Society, completed and placed into service before the credit can be claimed. Once the approved project has been completed and placed into service, the SHPO will issue a credit certificate.
To claim the credit on your Form M4, you must have received a credit certificate from SHPO.
For eligibility requirements and information on how to apply for approval, go to the SHPO website at www.mnhs.org/shpo.
Filing due date is the same as for filing the federal return.
The returns, including short-year returns, must be filed by the due date for filing your federal income tax return.
Electronic payments
Effective immediately, when paying electronically using our e-File Minnesota system (both the Internet and phone methods), you must use an account that is not assciated with any foreign banks.
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