This issue is Not an Its Deductible issue, or import issue.
Entering in the items individually doesn't change anything. I tried that, but good thought. Turns out it has nothing to do with the program its deductible, it is about my total deductions exceeding the federal standard deduction and MN applying different rules to standard vs itemized.
Looks like this is a turbo tax issue. Turbo Tax could fix this if they allowed me to use the MN standard deduction even though I itemized my federal, and allow me to use form M1M instead of M1SA for MN state. In MN we are allowed to use the standard deduction on MN, and yet itemize on the federal, but Turbo Tax doesn't give me that option, at least that I can find. And you wouldn't think that would matter, but it does. I will have to do my MN taxes manually I assume.
In MN, we have our own standard deduction, so MN starts with line 9 of your federal taxes (total income), rather than using line 15 (federal taxable income). In MN, our standard deduction is $29,150. But, when your income starts to rise, the standard deduction is phased out (and the phased out deduction is taxed at the highest rate which can be 9.85% max).
And when you itemize federal, it takes the itemized federal number and applies the MN formula and results in a reduced MN itemized deduction. So, when I used my itemized deduction total from my Federal, my new MN itemized deduction increased by $300 over the MN standard deduction But now that I itemized my MN taxes (and it is automatic in TurboTax), MN no longer lists the charitable contributions on line 11 of the schedule M1M which is also listed on line 7 of the MN taxes. So, my MN income is higher and my taxes are higher, of course at the highest rate.
My actual my example to help me understand, I adjusted my charitable deduction for one donation from $440 to $445. At $440 I was at just below standard federal deduction of 29,200, and state tax owed was $6223, but when I increased that donation by $5 so I was above the $29200, my state tax owed is now $7044.
I talked with MN dept of Revenue, and they confirmed this.
