One-Time Rebate Payment for MN

[baonhumolina]

After putting in my one-time rebate payment for MN by adding information from the 1099-MISC form, during the "Smart Check" steps, it asks to put complete the Schedule C (Form 1040) for Profit or Loss from Business for the One-Time Tax Rebate Payment.

There are no instructions on how to complete this. The State 1099-MISC form does not have any details to reference for this entry.

It is a one-time payment so why is this counted as a business income? Until this Schedule C is completed for the 1099-MISC income that I reported, I cannot move forward to the final step to submit. 

I would like more instructions on how to complete this for this "One-Time Tax Payment" from the State of Minnesota. 

[TomD8 · Accepted solution]

Delete the 1099-MISC you already entered.

Start over and answer NO to the question about it involving work like your main job and NO to the question about it involving an intent to earn money.  Answer the "how often" question with only 2023.

That should prevent the program from generating a Schedule C.

[baonhumolina]

Also, the 1099-MISC for the One Tine Tax Rebate is for both my husband and I but it only give an option to select either my name or my husband, there is no option for both. Will I need to enter it twice and select our name individually or either name is acceptable?

Thanks!

[TomD8 · Accepted solution]

Enter it under whoever's social security number is shown on the 1099-MISC in the box labeled "Recipient's TIN".   Do NOT enter the form twice.

[baonhumolina]

For the question asking "Any State or Local Income Tax Refunds?" Would I answer yes of I am receiving the One Time Tax Rebate? It appears that this would generate the 1099-G, which I dont have.

[TomD8]

If you did not receive a 1099-G for a calendar year 2023 refund, answer NO.

[TomD8]

@baonhumolina --

Note that although the 1099-MISC is taxable on your federal return, it is not taxed by MN.  The Minnesota DOR says to subtract it from Minnesota taxable income on line 33 of Schedule M1M on your state return. 

https://www.revenue.state.mn.us/sites/default/files/2023-12/m1m-23.pdf

[Karen B52]

The answer given by TomD8 didn't work for me. Turbo Tax is saying I owe Self Employment tax on the MN rebate, but I should not have to pay Self Employment Tax on this income.  I'm required to report it on my federal return, otherwise I can't deduct it on my state return. I tried including the $520 state rebate as income from a state tax refund.  That isn't right, because when Turbo Tax checks my state tax return, it says I can't deduct the $520 on my state tax return unless I report the income from Form 1099 MISC. I'm in a catch 22! I don't want to pay SE tax on the rebate, but how do I report it as income on Schedule C without paying SE tax on the federal return?  Thank you for any help you can provide. 

[LeticiaF1]

Delete the 1099-MISC  that you already entered.  To properly enter the rebate in TurboTax:

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 to 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.

@Karen B52