I got a rebate check from the Minnesota EV Rebate program and entered it as other income in the Federal Tax section. The rebate is not subject to state tax. How do I remove it from my income in the Minnesota Tax section?
The rebate check is typically no longer considered income for your tax return. Instead, it reduces your basis in the asset. The IRS has changed several laws around energy efficiency. If you received a 1099-MISC for the rebate, then it would be taxable income.
MN is still updating, see Form availability. If you have taxable income, you should be able to remove it once the program is complete.
I clicked on the link and it looks like the MN forms are ready but I still can't find where I can subtract the amount I entered in the Federal section for the EV rebate. I'm using the online version.
Thanks,
Dan
It depends. According to this Turbo Tax link, most, if not all these forms, are not ready until Jan 30. Please, check back after that time for an update.
According to the link, MN form M1M is ready, yet I still do not see any options to enter the amount I received for the MN EV Rebate Program in 2024.
You are correct the MN Form M1M is ready but there is no EV rebate mentioned.
[Edited 02/17/25|10:20 am PST]
Thanks for the suggestion! For some reason I am only able to enter $1300 max on this screen. I received 2 rebate checks for $2500 each, so I need to enter $5000. Is there another way to enter a number higher than $1300?
The Minnesota Department of Revenue neglected to allow for the subtraction of the $2,500 EV rebate from Minnesota Taxable Income.
This is also the best answer I came up with after asking the MN individual income tax help line. They more or less said if there isn't a subtraction for it on the M1M, it will flow through from your federal return as adjusted gross income and will be reported on line one of the 2024 Form M1. When I asked if the EV rebate will eventually be added to the M1M at a later date, I just got a repeat of the message above.
After further research, it seems the intent of the MN EV rebate was to be a dealer rebate. In that case, it's not taxable. If you only received the checks and no 1099-MISC form you don't have to report it.
If you received a 1099-MISC form then enter the 1099-Misc as received and then also put in a corresponding negative amount in "Less common>miscellaneous income" and describe as MN EV Rebate" Here are the steps.
Interesting. How were you able to learn this if you don't mind me asking? I have yet to find anyone in the state offices who knows anything about it. I did receive a 1099-MISC. Are you saying it isn't taxable at both the federal and MN state level?
Yes, this is correct. In fact the IRS states that cash rebates are not taxable. Minnesota law, although not specifically addressed, conforms with federal law. Please read this IRS source regarding taxable and non-taxable income and cash rebates is listed here as non-taxable income.
Now since you received a 1099 MISC, you should report it and then back out of the income as I suggested earlier so that the IRS has a record of your 1099 MISC and that it has been reported. You do not need to make an adjustment in your Minnesota return because an adjustment has already been made in your federal return and reflected in your Minnesota AGI amount.
[Edited 02/19/25|6:53 am PST]
Thanks for the explanation!
I think my only other question would be how am able to classify this as a dealer rebate when the check came directly from the state? Per the link you sent:
"Cash rebates from a dealer or manufacturer for an item you buy"
Just trying to make sure I have a leg to stand on if I were to get audited 🙂
Thanks,
Dan
Thanks. I was searching endlessly for an opinion on this EV rebate situation and finally found your post. The IRS and Minnesota Department of Revenue are both frustratingly unhelpful in giving a clear answer to whether or not the EV rebate is taxable. I agree that when you look at the original Minnesota bill, the intent was to give the EV buyer a rebate through the dealer:
Subd. 6. Program administration. Specifies rebates shall be awarded on a first
come, first-served basis. Requires the commissioner of commerce to coordinate
with dealers and other state agencies to develop a procedure whereby rebates
can be made at the point of sale.
However, the rebates were sent to us as well the 1099-MISC which implies that the rebate could be taxable.
If you recall, many states gave rebates to people during the COVID pandemic, and these rebates were not taxable. However, the State of Minnesota approved these rebates 2 weeks AFTER the federal government decreed that the COVID pandemic had passed. As a result, unlike people in many states, we Minnesotans had to pay taxes on the rebates we received. Never underestimate the ability of tax collectors to screw things up!
I believe there is no telling whether or not the IRS will decide that the EV rebate is taxable and eventually send a tax bill if the rebate was not reported as income. Having said that, I intend to use your strategy on this issue and treat my rebate as untaxable. If it is deemed taxable, I may have to pay a penalty, but that's a chance I'm willing to take.
If you are sure, you erroneously received the 1099-MISC: then adding the 1099-MISC income and then subtracting it back out is the best method. As for the words, write whatever you want for the description. It needs to be simple and clear like-EV dealer rebate.
According to both the Minnesota Department of Revenue and the AARP Tax Foundation Tax experts, the 1099 MISC received by taxpayers in the amount of $2500 from the State of MN, the $2500 IS taxable for both Federal and State. There is no line item on the M1M because there is no subtraction for the EV rebate.
There is a way to do the workaround (as explained) to remove the $2500 as taxable income, but the rebate is taxable.
Thanks for the reply. Now I’m back at square one. I still can’t find guidance about this on the State of Minnesota website although you evidently have. The only statement I can find from the state is on the Commerce page: “Commerce cannot provide tax advice and rebate recipients should direct any questions about the potential taxability of their rebate to their tax advisor.” Well, if the rebate is unequivocally taxable, why doesn’t the Commerce department just say that? I couldn’t find the AARP Tax Foundation opinion you referenced. However, the experts on the thread we are on have a different opinion than the AARP experts. As far as I know, neither the Inuit nor the AARP experts are employed by the IRS, so whom do we believe? (Rhetorical question.)
I know this is not the answer you wanted, nor did I. But I trust the IRS Certified Tax preparers that volunteer at AARP Tax Aide. My source there assured me that the EV check rebate is indeed taxable for both Federal and State. The person I spoke with this morning at the MN Department of Revenue took a long time investigating my question. There is no guidance because there is nothing to explain on how to remove amount from the MN State return; because it is taxable.
Should the State of MN decide at some point to amend their position and change tax law retroactively for 2024 so that the rebate is not taxable, then an M1X can be filed to correct the 2024 filing already submitted.
I know many have offered their opinions but I am confident that this EV cash rebate is MN taxable.
Sorry for the bad news.
To clarify and end further debate, this is the final word on if the Minnesota EV Tax rebate received in 2024 that should resolve the question "Is the MN EV taxable for MN income taxes?"
A 1099-Misc was issued by the State of MN - Management and Budget office.
An update from the Minnesota Department of Revenue was issued last month FOR Tax Instructors. It addressed several tax items including the MN EV Rebate. Following is the information presented.
MN EV Rebate
MN issues a 1099-MISC to taxpayers who received an EV Rebate in 2024. This amount is taxable income for both Federal and MN income taxes.
----
There is a lot of confusion and misinformation about the 2024 MN EV Rebate. The Minnesota Department of Revenue has clarified taxability regarding the 2024 rebate.
Per the MN Instructor Digest dated Feb 2, 2025 issued by MNDOR, this is the guidance.
MN issues a 1099-MISC to taxpayers who received an EV Rebate in 2024. This amount is taxable income for both Federal and MN income taxes.
Thanks Vern. That settles it. I appreciate your sharing this.
You are welcome.
This is a confusing issue and it may well be that the Minnesota Department of Revenue is in error.
Their (MNDOR) position is in direct conflict with the IRS Publication 525 as page 33 discusses rebates and state the rebate IS NOT taxable. I suspect that the MNDOR may have a position change and when and if that occurs, an amended State Return (M1X) would need to be filed.
The State of Minnesota has clarifed the 1099-Misc EV Tax Rebate is indeed taxable. The earlier posts and assertions that the rebate is NOT taxable is erroneous. While IRS Publication 525 (page 33) talks about rebates, it is not applicable to State issued EV rebates. The is the direct replay I received from the Minnesota Department of Revenue:
"You are correct, there is no subtraction for the EV Rebate, and the rebate amount is taxable by the State of Minnesota. If you have questions about the IRS Publication, we advise that you contact the IRS directly. However, we will point out, that the aforementioned publication specifies, "a cash rebate you receive from a dealer or manufacturer." This rebate was not issued by a dealer or manufacturer, but from the State of Minnesota.
Vern99,
I am part of AARP Minnesota TaxAide. Can you please give me a link or direct me to the MnDOR Instructor Digest Feb 2, 2025? We are not familiar with this and would like to know about additional resources. We have several requests for information on the EV rebate.
From the MN Dept of Revenue - If you received a rebate from the Electric Vehicle (EV) Rebate Program, you will also receive a 2024 Form 1099-MISC. You must include this income in your Federal Adjusted Gross Income when you file your 2024 federal Form 1040 and state Form M1. See Form 1040 instructions for more information. @phystra