Unearned Income Allocation From 2 States

[BBandz22]

I have kind of a unique situation, my residence is in Florida for 7 months of the year and Minnesota the other 5 months. I am also a member of a Tribe and receive tribal income. I also have a trust fund that I received disbursements from and I am given a 1099-MISC for that income. On the trust fund 1099-MISC, the trust company had Minnesota tax the income even though I was in Florida at the time. My question is when filing my taxes for the year, it asks me to allocate which part of my income is for MN. So because MN collected taxes on that income, do I have to allocate that to MN even though I was in FL at the time I received that money ? It was really an error on the trust companies part for having my other address in MN listed on my account. If I don’t allocate that to MN, will I get in trouble for that or will that cause the IRS/MN dept of revenue to reject my return and say I misreported the MN income ?

[DianeW777]

It depends. If you did not live in Minnesota (MN) when the trust income was received and if the trust is not situated in MN, then none of the income is required to be taxed to MN. Watch your state screens to subtract this income for your nonresidency period. You should receive a full refund of any tax withheld if this is your situation.

MN Filing requirements for nonresidents and part year residence can be see here: MN Tax Instructions

• Check the part year resident section (page 7)

[BBandz22]

It was $53,603 & The trust company is not located in MN, but I was told since MN taxes it i’d have to claim it as MN income that’s why I wanted to clarify. They did withhold state tax from that amount. I earned $12,727 while living in MN from a job. On the 1099-MISC they sent me, it has my other MN address on it so would that make a difference ?

[IsabellaG]

According to Minnesota, if you are a part-year resident, you are taxed by the state on :

• Your income from Minnesota sources
• Your non-Minnesota sources, if received while a Minnesota resident.

DianeW777 is correct that the incorrect withholding will be refunded to you, unless some part of it is applied to the other income you earned in MN. Id doesn't matter what address is on your 1099-MISC, what matters is where you were living when the income was received. You may at some point have to verify where you were living at the time, but the tax law of MN is clear on this. 

[BBandz22]

Ok thank you ! I just didn’t want to do it wrong and then I get in trouble. I appreciate the help.