I replied to you in the other post. I pointed out that the instructions are much more complex on line 2 of the M1NC than what appears in the main instruction book. You must read the instructions that are on the M1NC (at the bottom of the form), and complete the worksheet for line 33 - IRA Deduction, to truly understand if you qualify for the IRA deduction in Minnesota.
I you complete that worksheet and still think that TurboTax did it wrong, then come back and give me your values on each line of that worksheet, and we'll walk through it.
I have been in communication with the MN Department of Revenue Income Tax and Withholding Division, and they confirmed that if either spouse if over 70 1/2 than the IRA deduction on the federal return may be allowed in Minnesota, subject to conditions.
They pointed me to the full instructions for line 2 on MN form M1NC. Look to the bottom of the form, where the instructions are.
Their email said in part: "
Scenario 3:
If your filing status is married filing jointly and you OR your spouse are OVER age 70 1/2 at the beginning of 2021:
- Enter the full amount of the deduction claimed on line 20 of Schedule 1 on line 2 of Schedule M1NC.
- When you have completed any other required adjustments on Schedule M1NC, complete Worksheet for line 33 - Minnesota IRA Deduction.
- Enter 0 on step 20 of that worksheet when you are asked to enter your federal IRA deduction from line 20 of federal Schedule 1.
"
This is your scenario, so I leave out the other ones that don't apply to you.
On page 7 of the form M1NC (which includes the instructions), there is a lengthy worksheet called the "Line 33 — IRA Deduction". TurboTax completes this worksheet (see the form called "IRA Deduction" in your Forms), but the net effect is this: you start on form M1NC with the amount of the federal IRA deduction, then you complete the Line 33 worksheet to see if anything is to be removed from this adjustment. In the vanilla case, the entire IRA number is set to negative, so it offsets the deduction on line 2 (M1NC), and there is no change to federal adjusted gross income on the M1 (which means that you get to keep the IRA deduction).
HOWEVER, the Line 33 - IRA Deduction worksheet includes a lot of variables, such as whether or not you or your spouse is covered by a retirement plan at work, whether or not you or your spouse received Social Security, and a number of other items.
In one test, when I indicated that the working spouse was not covered by a retirement plan at work and also that neither spouse was receiving Social Security, then the last line on the worksheet was a -6,000 (the IRA contribution was 6,000), which negated the 6,000 contribution on the M1NC, which meant that the IRA contribution was NOT added back to state income.
HOWEVER, when I indicated that the working spouse was covered by a retirement plan at work and that the other spouse received 15,000 in Social Security, then the -6,000 went to zero as a result of the line 33 - IRA Deduction Worksheet, so the 6,000 on form M1NC was not zeroed out, and the entire 6,000 was added back to state income, making the IRA contribution taxable in Minnesota.
In short, the IRA deduction may or may not be added back to state income if either spouse if over 70 1/2, based on a number of factors. I encourage you to find the IRA Deduction worksheet and form M1NC and work out whether or not you are actually eligible to deduct the federal IRA deduction in Minnesota.
@tstuma3
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
