I got a rebate check from the Minnesota EV Rebate program and entered it as other income in the federal section. The rebate is not subject to MN tax. How do I remove it

[vern99]

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.

[Wrbcks]

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.)

[vern99]

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.

[vern99]

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.

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[vern99]

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.

[Wrbcks]

Thanks Vern. That settles it. I appreciate your sharing this. 

[vern99]

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.

[vern99]

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.

[phystra]

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.

[DawnC]

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 

[vern99]

The EV rebate is discussed as the last issue on this informational release.

MN Instructor Digest 2-20-2025

To:  Minnesota Instructors

CC:  DCs

From:  MN3 TRS Team

Contents:

•          TaxSlayer Enhancement for QCD (Qualified Charitable Distribution)
  ·         MN Advance Child Tax Credit Helpful Tool
  ·         MN Renter’s Credit Reminder for MFJ Taxpayers
  ·         MN Renter’s Credit Missing ECN
  ·         MN EV Rebate

________________________________________________________________________

TaxSlayer Enhancement for QCD

TaxSlayer simplified entry for 1099-R’s with QCD amounts.  Follow these instructions:

1.       Click on link below Box 2a, “Click here for options”
   2.      Select “Qualified Charitable Distribution” menu
   3.      Enter QCD amounta.      QCD indicator will automatically carry to Form 1040 (very bottom of the first page)
   b.     QCD checkbox will automatically be marked in the Nontaxable Distributions menu (located in TaxSlayer Income>Form 1099-R, RRB, SSA>Nontaxable Distributions)
2.       Remember to manually reduce 1099-R Box 2a by the QCD amount (a future update to automatically adjust the taxable amount in Box 2a is planned)

________________________________________________________________________

MN Advance Child Tax Credit Helpful Tool

The Minnesota TaxAide Website’s “Discussing the MN Child Tax Credit Advance Payments Option” now includes a link to the MN Department of Children, Youth, and Families Advance CTC/SNAP Estimator.  Because the Advance Child Tax Credit can affect a taxpayer’s monthly SNAP benefit, it is recommended that taxpayers use this estimator to help them decide whether to enroll in the CTC Advance Payments Option.  The estimator requires taxpayer’s 2024 AGI, household’s tax filing status, number of qualifying children 16 or under as of the end of 2024, detailed SNAP Case information.

________________________________________________________________________

MN Renter’s Credit for Married Couple Filing MFJ

Most married couples who live together in a rental property will receive two CRPs from the landlord.  In such cases, add the rent amounts together and put them on one CRP using the ECN from the primary taxpayer’s CRP.

________________________________________________________________________

MN Renter’s Credit Missing ECN

We have seen a number of CRPs with missing ECNs.  Current guidance from MNDOR is to file the return without the ECN.

________________________________________________________________________

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.