Like a redheaded stepchild, the M1PR is a misunderstood and too-often neglected return. The whole thing is just weird and MN is the only state I know of that makes you file a separate return to get a property tax refund. Why MN didn’t just blend it into the regular Form M1 (like many of the other states that have property tax credits or deductions) I have no idea; you would have to ask them.
The M1PR has actually been one of my favorite forms to complete. Maybe it’s the orange instruction booklet that they issue every year, or the fact that it’s only a refund – you can never owe any tax. Taxpayers can’t be upset that they owe money since it’s not even a possibility on the M1PR. Errr, on second thought, it’s probably the orange instruction booklet.
The M1PR can be filed either by renters, homeowners, mobile homeowners, or nursing home residents. The amount of the refund depends on the amount of rent or property taxes you pay, and also on your income. If your income is too high in comparison to your rent/property tax, you do not get a refund.
A business owner that makes over $100k is never going to qualify for the M1PR. However if that business loses money in a certain year and the taxpayers income is negative (creating an NOL), they might qualify for the M1PR. It can be a real surprise for taxpayers that have never qualified when they get a $2,300 refund on their M1PR. The key is remembering to check every year to see if you qualify.
The form itself is simple enough; it starts with your federal adjusted gross income and then adds a few sources of nontaxable income like nontaxable scholarships, nontaxable Social Security and retirement plan contributions. Then it gives you a deduction for each dependent and a deduction if you are over 65 or disabled. There can be a few tricky items, but if you know what you are doing it shouldn’t be a problem plus the orange instruction booklet is easy to follow.
So why is the form due August 15th? A fine question indeed and easily the most commonly asked from clients. The instructions and the MN website including their FAQ section don’t specify, but I think that it is for budgeting reasons. By making the form due August 15th, they don’t issue any refunds until August and September so those payments end up in their next fiscal year. It’s just their way of hanging onto the money for a few extra months. They might say it is so that you get your refund in time to make your October property tax payment, but that’s a flimsy explanation.
The refunds do come faster if you e-file your return before June 15th. They promise to have those refunds issued by August 15th, otherwise they only promise 60 days after filing. Another quirk of the M1PR is that the customary 3-year statute of limitations does not apply. The original deadline for filing a 2011 M1PR is 8-15-2012, but the drop dead date when they stop accepting returns is only one year later on 8-15-2013. This means you can still file 2010 and 2011 returns as of today, but nothing older than that. I have never heard an explanation for that; it’s easily the shortest window of time to file old returns I have ever run across. If I ever find out the answer to that or the other mysteries of the M1PR you can look for them here on the blog.