Thousands of Minnesotans having to pay more in state taxes due to calculation error

Tens of thousands of Minnesotans will need to pay more in state taxes due to an error made on a sheet that calculates a new limitation for the state’s standard deduction.

According to the Minnesota Department of Revenue, a new limitation for the standard deduction went into law during the 2019 legislative session. The agency says while they updated forms and instructions for that upcoming tax season to reflect any law changes, the worksheet used for calculating the limitation wasn’t formulated correctly.

The agency goes on to say the calculation should have reduced the deduction by 80%, but instead was lowered by 20%. According to the Department of Revenue, roughly $38.4 million wasn’t collected because of the error.

After the department was notified of the error, state officials say they let roughly 45,000 tax preparers know about the issue during the fall of 2021, and said corrections to affected returns were made early in 2022.

The taxpayers who were affected had a federal adjusted gross income that exceeded the following threshold, according to the state:

Filing StatusTax Year 2019Tax Year 2020
Married Filing Jointly$357,334$363,200
Qualifying Widow(er)$357,334$363,200
Married Filing Separately$178,675$181,609
Head of Household$317,000$322,200

Taxpayers who were affected should have received a letter saying they will need to adjust their return to reflect the new calculation, and the state says any additional money owed, or an appeal to the department or the state’s tax court, needs to be made within 60 days of receiving the notice.

Anyone who receives a letter and isn’t able to pay the amount needed in full within the 60-day window is asked to contact the Department of Revenue.