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Minnesota ends tax reciprocity with Wisconsin

The termination will come into effect January 2010.

MinnesotaâÄôs decision to terminate its tax reciprocity program with Wisconsin will require Minnesota residents who work in Wisconsin âÄî and vice versa âÄî to file taxes in both states. Minnesota residents will not pay more in Minnesota taxes, but an estimated 8,000 Minnesotans who work in Wisconsin will pay about $340 more. Currently each stateâÄôs residents file a tax return in their own state. Under the reciprocity program Wisconsin usually reimburses Minnesota for the income tax it collects because 33,500 Wisconsin residents work in Minnesota âÄî more than double the number of Minnesotan workers in Wisconsin. Under the reciprocity program Minnesota usually waits 17 months for its reimbursement from Wisconsin. The termination resulted because the two states havenâÄôt been able to reach an agreement on Governor Tim PawlentyâÄôs proposed plan to receive more timely reimbursements. The decision is expected to generate $131 million in estimated revenue over the next two years. Kit Borgman of the Minnesota Department of Revenue said the termination will impact full-time workers who meet the minimum filing requirement of $9,350 for single taxpayers. âÄúFor most students this wonâÄôt be a problem. ItâÄôll just be a hassle more than anything to file [taxes] twice,âÄù she said. However, it will affect those who meet the requirement and have a job in both states, especially those from Wisconsin, according to Wisconsin Revenue Department auditor Kim Jensen . Some Wisconsin residents may not receive full credit for the net income tax paid to Minnesota that is taxed by both states, because MinnesotaâÄôs tax rates are slightly higher, Jensen said. Generally, however, the credit for income tax paid to Minnesota will offset the Wisconsin income tax on the Minnesota wages. Sarah Murawski is a genetics junior working as a teacherâÄôs assistant at the University of Minnesota. The Wisconsin resident is planning on having a second job in her home state later this year. She thinks filing more than one tax return will make it easier to make more mistakes. âÄúItâÄôs going to be complicated and a lot more work. I donâÄôt have time to file taxes twice,âÄù she said. Heather Mueller is a marketing and entrepreneurial management senior. The Wisconsin resident worked in Minnesota last summer but requested her tax returns be sent to Wisconsin, so she was taxed in both states, she said. Mueller was later reimbursed in her tax return. âÄúI have complete trust in the system and I think itâÄôll even out,âÄù she said. âÄúBut itâÄôs always a little painful when moneyâÄôs coming out of your paycheck.âÄù

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