Husband works in MN we live in WI. I am retired and get a pension. He also gets a pension from previous employer. MN is including our pensions in taxable income . also included as taxable income in WI. why are we getting taxed for WI income by MN and how do we correct this in turbo tax?
For nonresidents, Minnesota calculates your state tax using your full-year income as if you'd earned it all in Minnesota - so it will include your pensions and any other income you made during the year. Then, you'll calculate an income allocation percentage to prorate the tax liability. The income allocation is calculated as Minnesota income divided by your overall income. This rate is applied to your tentative Minnesota tax to find your prorated Minnesota tax.
So, although you will see all of your income included in your Minnesota taxable income, your actual tax is based only on your Minnesota income.
Per your response ..." although you will see all of your income included in your Minnesota taxable income, your actual tax is based only on your Minnesota income."
Can the calculation for "actual tax" be found on any forms in turbo tax so we can verify the adjustment has been made??
The Minnesota Schedule M1NR shows the income allocation percentage and the calculation of your actual tax liability. Line 30 is the income allocation percentage and line 31 is your tentative tax based on your full year income. Line 32 multiplies lines 30 and 31 to get to your prorated MN tax.