I am amending a 2021 New Mexico Tax Return where I am a resident. In 2021, I sold property in Montana and paid Montana the income taxes that were due (as a result of capital gains).
The purpose of the amended return for New Mexico was due to an amended 2021 return for Iowa which had farm income. I did a 1031 exchange for most of the Montana property sale money. I bought farmland in Iowa. The money that was leftover from the 1031exchange was the capital gain.
When I run Turbo Tax 2021 it calculates a credit for taxes paid to Montana (capital gains) and Iowa (farm income). Someone from the New Mexico Taxation department said they don't give credit for capital gains taxes paid to another state. Has anyone had a problem for tax credit specific to capital gains?
New Mexico allows a credit for income taxes paid to another state to the extent the same income is also taxed to New Mexico, but not more that the tax paid in New Mexico. So the issue is whether the tax on the capital gain income in Montana is equal to or less than the tax on that same income in New Mexico. I suggest you review the New Mexico return and see how the capital gain income is being taxed to verify that the credit for taxes paid to Montana is correct.
Thank you for your response. I am awaiting the Taxation's department review. An interesting note to my 2021 tax issues, the New Mexico Taxation instructions for completing line 11 for the PIT-B form are wrong for 2021 and 2022. By following the instructions for 2021, my tax liability is zero. If I follow the 2023 instructions for my 2021 amended return, my tax liability is $2225. I wonder how the New Mexico Taxation and Turbo Tax handles this problem.....