Other Income from State I worked in but did not receive grants from

[JustaAverageJoe]

My first post was a bit messy, apologies for that, but I think I figured it out. I attended community NM college in 2022 and 23. I live in NM. I worked in CO. Now I got grant money to attend school the years I was at college. When filing for my taxes, I am being told to report "other income" from CO, and the Federal amount indicated is the exact amount left over from the grant I received last year after paying for tuition. Why is Turbotax saying I need to report other income for CO when the grant was from NM, I attended school in NM and I live in NM. All of my work-related W-2s from CO I already filed and had no issues with... and yet it keeps telling me I have other income in CO that equates to the NM grant. Explain to me why that is? When I filed in 2022 I did not have this problem. That is where all my confusion is stemming from. 

[DaveF1006]

When you begin your state taxes, prepare your Colorado state non-resident return first. Then prepare your NM resident return last. As you prepare your Colorado return,  There will be an income allocation screen for your wages and the grant money. You would allocate your entire wage income to Colorado but none of your grant money.  You would indicate this by putting a 0. 

After both states are complete, you should receive a credit in your NM return for the taxes paid to Colorado. Here is what the Colorado allocation screens should look like.

[JustaAverageJoe]

I tried that. No dice. I think I might have found the mistake I made back in the Federal side, so I am going to try something to see if it works. Before I do that, answer me this: would the leftover grant from NM be put under New Mexico Modified Gross Income?

[JustaAverageJoe]

Oh and another thing, what about "credit for taxes paid to other states"? I could put Colorado there, because did I not pay taxes for two states, ergo NM and CO, when I got my income from CO? Thoughts?

[DaveF1006]

Yes, the leftover grant would be considered NM income.  I assume you received a 1098 T and your grant was was reported on Box 5 was more than reported in Box 1. Respond back to us if this was not the case if the grant money was reported to you in any other manner.

If you reported your W2 and 1098 T in your federal return, the only thing you need to do is first prepare your Colorado non-resident state return then your NM state return.  As you prepare your Colorado return, there should be allocation screens for both your wages and grant money. For your W2 income, you would allocate the entire amount to Colorado and for the grant money left over, you would put a 0 or leave that portion blank. 

NM will tax for all your income but will give you credit for the taxes paid to the state of Colorado as a result of the income earned in that state. This amount is listed in line 20 in your NM PIT-1 return.

[JustaAverageJoe]

Yes, box 5 is more than box 1. 

Everything you are saying makes sense. I am filing the state returns now. I am on a page called "summary of taxes paid to other states". Which I believe is what I missed the first time. The state I should add is Colorado, yes? If I do that, then the page goes to "other state information - colorado". The blank spaces are "Double-Taxed Income While a Resident of New Mexico", "Taxable Income from Colorado", & "Tax Paid to Colorado". Now to reiterate, I worked in CO (NOT in NM) so my W-2s are from CO, only the grant is for NM. I see in boxes 15, 16 and 17 on both W-2s the wages represented in both states (which is the same number) and what state income tax is for which state. So for the page on Turbotax, I just enter the information from boxes 15, 16, and 17? 

[DaveF1006]

Yes, that is correct. You would enter the state information for both states in that section so that you will receive credit for the withholdings. 

Remember you work in Colorado but you are a non-resident of that state for tax purposes. you need to file a NM state return because you are a resident of NM. Be sure to prepare your Colorado return first to receive credit for the taxes paid in Colorado in your New Mexico return.

@JustaAverageJoe