Should Discret. Incent Award pd in '22 (full yr FL resident) be taxed in MN? Is Employer correct w/holding MN tax by stating it was "earned" in 2021 while a MN resident.

Forum|Forum|3 years ago
January 18, 2023
1 reply
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Due to system conversion YE 2021, my employer could not update my work address to FL so MN tax for salary and incentive pay was w/held on my 1st 3 payslips (including incentive pay+salary) for one of the payslips. They will issue a W-2c for the salary portion only. They will still report my incentive pay (less my 401k deduction) as MN income stating it was "earned" in 2021. Stipulation is I had to be employed on the day it was paid in 2022 or it would be forfeited. I also was not told of the amt until 2 weeks prior to payment in Feb 2022.

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Hal_Al

Level 15

Q. Should Discret. Incent Award pd in '22 (full yr FL resident) be taxed in MN?

A. Yes. "They will still report my incentive pay (less my 401k deduction) as MN income stating it was earned in 2021" is a correct and universal (not just MN) interpretation.

KerryYAuthor

Level 2

Sorry for the delay. I originally sent an email to the MN Dept of Revenue. I finally got a response back from the and the answer they gave was that MN tax would apply in the year it was received. Since I received it in 2022 and was not a MN resident, I should get the withheld money back from MN. They sent me a Non-Resident Form to accomplish this. I read the statutes and found them confusing. I think for this year, I will not complete my own Tax Return. From what I am reading, my employer is on an accrual basis and I am on a cash basis as an individual filer.