Minnesota doesn’t use charitable giving to help determine residency for state tax purposes.
Minnesota is fortunate to have a robust and reliable source of charitable donations supporting many of our nonprofits. These organizations serve the community through diverse roles — meeting human needs, arts and culture, education, and more. They count on financial support from voluntary donors. One way the state encourages charitable giving is by allowing donors to deduct contributions from taxable income on their state tax returns.
Some wonder what happens if a person makes charitable contributions in Minnesota but seeks to establish residency in another state.
All Minnesota residents who file a federal income tax return were required to file a state return on April 15; nonresidents who earned more than $10,000 in Minnesota in 2013 were also required to do so. But if your residency (or “domicile”) was in another state, nothing in your income tax return limits your ongoing ability to make charitable contributions in Minnesota.
The Minnesota Department of Revenue reviews domicile cases to determine whether Minnesota or another state should be considered a taxpayer’s primary residence for income tax purposes. Typically, this is easily determined by taking account of 26 considerations, such as where people have their drivers’ license, how much time they spend in the state each year, where their vehicles are registered, where they own property and where they vote.
Not among the considerations is where a person makes charitable contributions. Minnesota’s exclusion of charitable contributions from the assessment of domicile is intended to facilitate the state’s robust charitable giving and is consistent with several other northern states from which people might flee for warmer climates, such as Vermont, Connecticut and New York.
Minnesotans are well-known for their charitable giving, from the business leaders who established some of our iconic nonprofit institutions more than a century ago to the large and small donors who sustain our nonprofits today.
All donors are welcome and much appreciated. Many, we hope, will continue to contribute to the Minnesota institutions they believe in even if they reside elsewhere part of the year.
Myron Frans and Jon Pratt are, respectively, commissioner of the Minnesota Department of Revenue and executive director of the Minnesota Council of Nonprofits.
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