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  • General question about a state return

    This might be a hard one to get help on but figured I'd try:

    I'm filing in Minnesota and on one of the schedules for the state return there is an item for "expenses deducted on your federal return attributable to income not taxed by Minnesota," and I have a rental property in Texas. On the federal Schedule E, I listed the expenses for the rental and subtracted them from rents received to figure out my total rental income/loss.

    Am I correct in thinking that these rental expenses from Schedule E fit the above criteria and should be listed under this item?

  • #2
    The instructions for the MN Income Tax Fact Sheet 1 state the following: "Minnesota residents must pay Minnesota tax on taxable income received from all sources, regardless of where it’s earned." Therefore, your TX rental income would be taxable in MN and the expenses would not fit the criteria and should not be listed, which would exclude them from being used on your return.

    btw, if your rental property happened to be located in a state imposing income tax (TX doesn't), you would receive a credit for those taxes on page 2, line 17.
    Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thanks, Johanna. I'm struggling to find where I document the rental income. On M1, it would go under line 3, but that's supposed to be based off of filling out M1M, and on that I cannot find where I would list income not taxed in another state. Attached is M1M. Thoughts?

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      • #4
        It's already included in line 1 of your M1.
        Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          Yep, just saw that after I posted since it's already part of the 1040 that gets imported onto line 1 of M1. Duh, my bad.  

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          • #6
            No problem. Most state returns start with federal AGI and then adjust other factors in and out. Good luck!
            Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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