You are correct. Minnesota does require you to file a joint resident return if you file a joint federal return. For the credit for taxes paid to another state, Minnesota only considers state taxes. They do not give a credit for the local taxes. Here is a link to the MN tax credit form: http://www.revenue.state.mn.us/Forms_and_Instructions/m1cr_16.pdf, On page 2 of the document, you will see that the local taxes are not included. It likely wouldn't affect the result, however, as Minnesota will give a credit up to the amount of tax that they would assess on the same income. So if the PA tax rate is higher, your PA state tax liability will leave no additional tax on that income to Minnesota.
Prepare the PA return in TurboTax first so that you can apply the credit correctly on the Minnesota return.
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