Is the MN 2023 Rebate Payment taxable for Federal Income?

[SharonD007]

Yes, your MN tax rebate is taxable on your federal tax return but not on your MN tax return.  Follow the steps below to enter your 1099-MISC for your MN tax rebate:

1. Launch TurboTax and select Wages and Income
2. Scroll down to Other Common Income and select Start by 1099-MISC
3. Enter your 1099-MISC and select Continue
4. Enter MN Rebate for the description and Continue
5. On the Does one of these uncommon situations apply? screen, select None of these apply
6. On the Did this involve work that's like your main job? screen, select No, it didn't involve work like my main job
7. On the How often did you get this income? screen, select I got it in 2023 and Continue
8. On the next screen, select No, it didn’t involve an intent to earn money and Continue
9. On the next screen, select No, if you don’t have any more forms to enter and Continue

You will see the income on line 8z with a description of Other Income (which will flow line 8 of your 1040). When you pay for TurboTax, you will be able to view your forms.

Follow the steps below to deduct your MN tax rebate from your income so you won’t pay state tax on it: 

1. Select Prepare State from menu on left side and select Start
2. Select MN and select Continue
3. Scroll through the screens and when you get to Tell Us About Other Income Adjustments, select Received a one-time tax rebate for tax year 2023 from the State of Minnesota and select Continue
4. Enter the Rebate Payment Amount

You will see the subtraction of your MN rebate from your income on line 7 of your MN M1 form since your rebate is not taxable in MN.