The Minnesota Working Family credit is a refundable credit for working individuals whose income is below a certain level. This credit can reduce what you owe and could result in a refund. You must be a full year or part year Minnesota resident and not prohibited from claiming the IRS Earned Income Tax Credit. The credit amount depends on your income, filing status, and number of qualifying children.
You may claim the Earned Income Tax Credit for a child if you meet the rules outlined on the IRS webpage about qualifying child rules. At a bare minimum, a qualifying child must 1) have a valid social security number, 2) meet the 4 tests for a qualifying child (found online at the above link), and 3) not be claimed by more than one person as a qualifying child.
You will not be eligible if any of the following apply: 1) you were a full-year non-resident, 2) you file your taxes with an Individual Taxpayer Identification Number, 3) you do not meet the state income requirements based on your filing status or number of qualifying children, 4) someone claims you as a dependent on their taxes, and 5) the IRS has prohibited you from claiming the Earned Income Tax Credit.
Why would this be important to you? Sometimes in a bankruptcy, our clients are not entitled to keep their tax refunds. This is certainly a case-by-case basis and we absolutely implore you to ask your attorney about the status of your refunds. Even if you are unable to keep a portion of your refund, the Minnesota Working Family Credit and the Earned Income Tax Credit can potentially offer you a small refund if you meet the qualifications laid out by the IRS and MNDOR.
Although we are not tax experts, Kain & Scott will always do our best to explain how your taxes are related and dealt with in your bankruptcy. Visit www.kainscott.com to schedule a free strategy session for your best future! We always want you to be informed and prepared.