The Minnesota Department of Revenue is reminding Minnesota service members to use the refundable tax credit before it expires. The Credit for Military Service in a Combat Zone for service in 2012 will expire for most qualifying service members on Oct. 15.
The 2012 credit is $120 per month or partial month served.
The department recently sent letters explaining how to claim the credit to more than 2,400 service members who may qualify.
Service members have already claimed more than $2.4 million in refunds for the 2012 credit, with an average refund of $600.
"The expiring credit could be worth hundreds of dollars to Minnesota service members and their families, and we want to remind them to claim the credit before the mid-October deadline," Revenue Commissioner Cynthia Bauerly said in a news release.
The credit started in 2006 and is available to any member of the military who served in a designated combat zone or hazardous duty area since Sept. 11, 2001.
In 2006, it was retroactive to 2001. Since then, there's been a window to claim the credit for previous years.
To date, there have been more than 39,000 claims for the credit resulting in more than $20 million in refunds.
To qualify for the credit, service members must have:
• Served in a combat zone or qualified hazardous-duty area anytime on or after Jan. 1, 2012.
• Been a Minnesota resident during the time of service.
• Received combat pay, which is exempt from federal and Minnesota income tax.
To receive the credit, service members must:
• File Form M99, Credit for Military Service in a Combat Zone.
• Attach corresponding Form DD-214 for each period of qualifying service.
• If still on active duty, attach Leave and Earnings Statements for each month of qualifying service.
The form and more information on the military tax credit can be found at www.revenue.state.mn.us. Applications must be postmarked by Oct. 15.
Tax credits for service in a combat zone are also available for 2013, 2014 and 2015.
For more information, visit the Members of the Military page on the department's website and sign up for e-mail updates on military credits, application deadlines, and tax law changes.
For information on combat zone locations that qualify for the tax credit, visit the IRS website at www.irs.gov.
The tax credit is one of several breaks offered to veterans and members of the military in Minnesota that include such things as exemptions for some veterans from paying motor vehicle registration taxes.
In a big new move, beginning in tax year 2016, taxpayers who receive certain types of military retirement pay (including pensions) may subtract that pay from their taxable income. The tax exemption on military retirement pay is effective after Dec. 31, 2015.
Veterans qualify for this subtraction if their military retirement pay is taxable on the federal return and computed under U.S. Code, Title 10, sections 1401 to 1414, 1447 to 1455, and 12733.
Taxpayers who claim this subtraction may not claim the nonrefundable credit for past military service.
For tax years 2015 and earlier, military retirement pay (including pensions) is taxable.
A link to the Minnesota Department of Revenue's veteran/military tax relief items can be found at: www.revenue.state.mn.us/individuals/individ_income/Pages/Members_of_the_Military.aspx.