MN State Income Using Fed AGI Even Though Some Income Was Earned in Another State

[cripp71]

My wife and I live in Wisconsin and file as Married Filing Jointly.  I work in Minnesota while she works in Wisconsin.  When filing MN state taxes, Turbotax starts by using our federal taxable income which includes our joint income from both states but it never subtracts out the portion of our total earnings that was earned in Wisconsin.  Is this correct?  It seems questionable that our (my) Minnesota Taxable Income is greater than the gross amount of money earned in Minnesota?

[MaryK4 · Accepted solution]

No, only certain income received by nonresidents is taxed by Minnesota. For more information, see Minnesota Statute 290.17.

Minnesota uses your total income to determine the tax rate, then applies it to the Wisconsin income.  You may want to go through the Minnesota part again to make sure the income is correctly allocated.

[cripp71]

Thank you. I see now that it's determining our tax rate and amount due based on our total income but then multiplies that value by the percentage of my MN income to our total to reduce the amount of MN state tax due.  Makes sense, just not how I expected it to be handled.