tax withheld does not reduce your distribution.
you pay state tax on that even though it goes straight to Uncle Sam.
I have the same issue. MN Department of Revenue acknowledges they have an error on their MN1NC, but not sure if Turbo Tax is following up. I posted a similar question to yours last week but have had no response.
Can you clarify what is happening so we can assist you?
Is your state return adding back into income IRA contributions you have made during the year?
Please comment with what specifically is happening and we will assist you accordingly.
The MN DOR had erroneous instructions for their form M1NC. It had TT adding back the federal IRA contribution deduction to MN income. I had several conversations with them via email and they did correct the form instructions on their website. In addition, if you need it, I can forward an email from them to me showing the error and the correction.
Thank you
The same thing happened on my 2020 return. MN added back my IRA contributions .
Can I file an amended return
Yes, you can file an Amended State Return.
Click this link for info on How to Amend a Prior Year Return.
This link has details for Minnesota Retirement Contributions.
Again in 2021 software, TT is adding back to MN income the Federally deducted IRA contribution. How can we get TT to get this corrected?
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:
"
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.
Line 2 says to enter the deducted IRA contribution for the spouse over 70 1/2 - not for the spouse under 70 1/2. If you follow this instruction, then the M1NC in no longer needed.
The line 33 worksheet is intended only for those who have a retirement plan at work and whose deduction may be limited because of income phase outs. This is not our situation.
I have also communicated with the MN DOR and they agree that this is an error needing correction.
If you read this and agree, how would I go about getting this changed?
Would you please send me your sanitized return? A "sanitized" return is one in which your personally identifiable information has been redacted. You can do this by following the steps below.
And the end of your response, please add "@" and "BillM223" without the space in between so that I will be notified.
To send us a token, please do the following:
TurboTax Online:
Click Tax Tools in the menu to the left.
Click Tools, and then
Click Share my file with Agent.
A pop-up message will appear. Click OK to send the sanitized diagnostic copy to us.
Provide the token number that is generated onto this thread.
TurboTax Desktop:
Select Online menu if the customer is using Windows. Select “Help” if using a Mac.
Select Send Tax File to Agent.
A pop-up message will appear, and the customer will select, Send. If using Mac "Send Tax File to TurboTax Agent"
Note: Desktop will save a file to your computer unless you uncheck the box.
Another message will appear. Provide the token number that is generated onto this thread.
...
[Edited 4/14/2022 06:26 pm PST - post was removed because it was for the wrong thread]
I believe you posted your response to the wrong person. @BillM223
I am still working on the MN IRA add back. The federal deduction should not appear on line 2 of the M1NC. When TT does this, it brings up the need for the worksheet. Still not sure TT is going to correct this. @BillM223
Yes, but my spouse is under 70 1/2 and and she is the one with the IRA.
Make sure that when you entered her 1099R, that you entered it's her 1099R and not yours.
MN DOR has released new instructions to correct this issue on March 7th. When will TT update their software?
There is a little over a month left for TT to update their MN software with the updated M1NC (as of March 7) before the filing deadline. Are we to wait for TT to do this? How can we find out?
The forms availability list shows the form as being available for TurboTax online. If you are using another version of TurboTax check forms availability below.
Select your situation to locate your 2021 form.
Keep in mind:
The TT issue is not that the form is not available, it is that TT is not using the current version. The current version was published on March 7. TT is using one published January 28. The difference results in a significant tax savings for me.
The TT issue is not that the form is not available, it is that TT is not using the current version. The current version was published on March 7. TT is using one published January 28. The difference results in a significant tax savings for me. @Cynthiad66
Understood. This is being worked on and I have referred this issue to a Product Support group. However, there is no mechanism in place to notify you of a fix. You will have to check back to see if it has been corrected.