Minnesota Rebate Checks – Taxation and Reporting Guidelines for Returns!

The IRS has decided and confirmed that they will tax the Minnesota rebate checks that were sent last year to Minnesota residents. So, Minnesota taxpayers, it’s time to know what you should include in your income for your federal tax returns.

Minnesota Rebate Checks

Minnesota Rebate checks or “Walz Checks” received last year will be taxed by the IRS this year. Under the $3 billion One Minnesota Budget signed by Bov. Tim Walz, the Minnesotan residents have received tax rebate payments of around $260 to $1300 in some cases.

The taxpayers of Minnesota who have received and cashed this rebate will owe the tax on these rebates to federal tax. Many people are questioning the Stimulus check they received from the state. 

About them, the IRS stated if the taxpayers in 2023 have received special state funds like rebates, one-time funds, or any other relief payments, they don’t have to include that rebate or that payment in the income while filing for federal tax returns.

This is for those taxpayers who took the standard deduction on their federal returns.

Federal tax on Rebate payments

The Minnesota government has made it clear that the rebates will not be taxed by the Minnesota government, but the recipients have to include these rebates in their federal tax returns. 

According to the reports, the tax on rebates for Minnesota residents will range from $26 to $286, it will vary depending on the rebate amount they received last year and the federal marginal bracket. See the table below for a clear picture of tax on rebates:

(2023) Federal MArginal Bracket  10% 12% 22%
Rebate Amount
$260 $26 $31 $57
$520 $52 $62 $114
$780 $78 $94 $172
$1040 $104 $125 $229
$1300 $130 $156 $286

The tax amount depends on the rebate you received and your household income. According to the IRS, the tax amount will be deducted when:

Minnesota Rebate Checks

  • $260 is the initial rebate for individual
  • The eligible household received a rebate that amounted to $1300 for spouses or couples with at least three dependents.

Minnesota Department of Revenue Plan on federal tax on rebates

Though Tim Walz is disappointed with the federal tax on rebates, the Minnesota Department of Revenue is planning to send Form 1099-MISC to recipients of Minnesota rebates for federal tax returns. 

The MISC in 1099-MISC form tax is for reporting miscellaneous income and through this form, the Minnesota DOR is including the rebate amount in the miscellaneous income. 

However, the DOR has suggested taxpayers if have already included the rebate in federal adjusted gross income, then on their state return they should subtract it from their Minnesota taxable income from line 33 of schedule M1M.

What happens if you haven’t cashed or claimed your rebate checks?

According to the Minnesota Department of Revenue, many rebate receivers haven’t claimed or cashed their rebate checks for 2023. So, in Nov 2023, the DOR has announced that they will reissue the rebates. 

According to the Minnesota DOR, they have re-issued 150,000 one-time Minnesota tax rebate checks. 

The rebate checks are paper checks that were mailed to you in a plain white envelope from Submittable Holdings from Montana and have the signature of Revenue Commissioner Paul Marquart.

Still, if the taxpayers have not received the rebate checks they can find their unclaimed rebate checks from the Minnesota Department of Commerce’s Unclaimed Property Division.

The DOR stated they would not reissue the checks if the taxpayers have not claimed the rebate checks till January 2024 to escape double payment that’s why the unclaimed checks are gone to the Minnesota Department of Commerce’s Unclaimed Property Division.

The one-time rebate includes payments up to $1300 for eligible households of Minnesota taxpayers. 

According to the Minnesota DOR, the rebate includes:

  • $260 for every individual with a gross income of $75,00 or less than that;
  • Married couples who have filed joined tax returns with a household income of $150,000 or less would receive $520;
  • $260 per person for dependents (up to three children) claimed on taxpayers’ returns.

The Minnesota DOR usually sends the rebate to your bank account if you have opted for direct deposit or they would have mailed it to your address on your previous year’s tax return. Hence, if you ever change your address, notify the authorities and get your address updated on the tax system.

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