Minnesota household income has been consolidated into a single article. For current household income information, please click on this “Household income for income tax credits” link.Household income refers to the kinds of income used to calculate the Child and Dependent Care Credit. It includes federal adjusted gross income plus nontaxable income sources such as welfare benefits, employee contributions to an IRA or 401k, and the excluded gain on the sale of a home.Examples of household income Common examples of nontaxable income to include:- Charitable contributions made directly from an IRA distribution that is tax exempt because of the contribution (started in 2006).
- Compensated Work Therapy (CWT) payments from the Department of Veterans Affairs (VA) that are not taxable (2007 Federal Court Case made these payments not taxable going back to 2004)
- Contributions made to a deferred compensation plan or to a cash or deferred arrangement (CODA) under a 401(k) plan
- Contributions (the amount shown on your W-2 form) made to a dependent care and/or medical health expense account ( also known as a cafeteria plan, pre-taxed plan, flexible spending account, Sec 125 plan, etc)
- Emergency assistance payments
- Employer-paid education or adoption expenses
- Federal adjustments to income for contributions to IRA, Keogh, SEP or SIMPLE plan
- Federal adjustments to income for contributions to Archer medical savings account (MSA) or Health savings accounts (HSA)
- Foreign earned income
- Forgiveness of debt income (generally bankruptcy situations), for insolvent individuals, that is federally excluded (generally forgiveness of debt is federally taxable and included in gross income).
- Foster care payments (only if foster child is claimed as a dependent)
- Gain on the sale of your home excluded from federal income
- Income excluded by a tax treaty
- Interest and mutual fund dividends not included in federal taxable income
- Military nontaxable earned income, e.g., combat zone pay
- Military or clergy housing allowance
- Nontaxable pension and annuity payments (including all lump-sum distributions received from a pension and all disability and long-term disability payments)
- Nontaxable scholarships, fellowships and grants for education, including those from foreign sources
- Nontaxable Social Security/Railroad Retirement Board Benefits (do not include dependent benefits)
- Rent reduction received for being a caretaker
- Strike benefits
- Sick pay
- Veterans benefits (including disability payments, education benefits and agent orange payments)
- Welfare benefits (do not include non-cash benefits)
- Workers’ compensation benefits
Also – to the extent they reduce your federal adjusted gross income – include the following losses and deductions:- Capital loss carryover (current year’s allowable federal capital loss is not added back - add back worksheet).
- Current year passive activity losses in excess of current year passive activity income
- Medical savings account deduction amount claimed on federal Form 1040
- Net operating loss carryforward/carryback
- Prior year passive activity loss carryforward claimed during the year for federal purposes
Household income does not include:- Any state income tax refunds not included in federal adjusted gross income
- Bonus depreciation additions or subtractions
- Child support payments
- Dependent’s income, including Social Security income
- Distributions from a Roth IRA
- Dollar value of food, clothing, food stamps, and medical supplies received from government agencies
- Employee’s mandatory contributions to a retirement plan (including PERA, TRA or MSRS)
- Federal adjustments to income; educator expense, student loan interest, tuition and fees, moving expenses, penalty on early withdrawals, half of self employment tax, self-employment insurance and paid alimony or separate maintenance payments
- FEMA emergency grants for disaster victims
- Fuel assistance payments
- Gifts and inheritances
- IRA rollovers
- Life insurance benefits (including benefits received for the death of dependent children)
- Minnesota property tax refund
- Nontaxable Holocaust settlement payments
- Payments by someone else for your care by a nurse, nursing home, or hospital
- Payments from life insurance policies
See household income sorted by line number for the Child and Dependent Care Credit..Back to Child and Dependent Care Credit.Back to top
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Contents
education_credits_subtractions Table of Contents
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Filing requirements for individuals - Related_Links
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