How to fix Turbotax showing income in old state (MN) matching federal income, although all earned in new state(FL), Because MN withholds 12mos; will get refund?

[jnltaylor]

TT gets correct answer for refund from non-residence; but don't like optics of showing income as MN income.

[MarilynG1]

Was all of your 2024 income from a Minnesota source?  If so, you would report it all there as a Non-Resident, as you mentioned.

Here's more info from the Minnesota Dept. of Revenue. 

[jnltaylor]

Actually none of my income was from a Minnesota source.  MN Tax Law requires an additional withholding even for non-residents based on the prior year being a Minnesota source for 12 months.  Income source is a multi-state employer.

TT does show all to be refunded which is what is expected by MN -- to claim it all back the following year.  However, this situation gives an aggressive high tax state like MN Revenue to have the upper-hand as they have the money in possession.   

My question is specific to TT entry that Ln9 Minnesota Taxable Income defaults to match (less standard deduction) Federal Adjusted Gross Income, when the reality is that $0 was earned in Minnesota. 

TT never asks the question appropriately to address this specific situation.

Not sure where to override TT.     

[KeshaH · Accepted solution]

Minnesota requires that taxable income and tax liability be calculated this way for part-year residents and nonresidents. There's no need to make any changes.

The state starts with total federal income and calculates tax liability based on that income. Then an income tax percentage is applied to prorate the tax liability. The income tax percentage is calculated as MN income/total income. In your case, your income tax percentage is 0%. Therefore, you don't have a tax liability and instead will be refunded all of your withheld tax. 

[jnltaylor]

Thank you.  I'll move forward with this approach.