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ml-es350
New Member

Why isn't unemployement income adjusted on Minnesota return?

The income was automatically deducted on my federal return but not my state.
5 Replies
xmasbaby0
Level 15

Why isn't unemployement income adjusted on Minnesota return?

Quite a few states have followed the federal government in exempting some unemployment from taxes---but not all states have done so.  MN is still taxing your unemployment.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
DoninGA
Level 15

Why isn't unemployement income adjusted on Minnesota return?

See this TurboTax support FAQ for states taxing unemployment - https://ttlc.intuit.com/community/internal-revenue-service/help/how-is-my-state-taxing-unemployment-...

Minnesota (MN)

TurboTax calculations are correct and up-to-date for your state. You can go ahead and finish and file your state return.

wfilbra
Level 3

Why isn't unemployement income adjusted on Minnesota return?

The Minnesota tax update, is incorrect. I filed my Federal and State Return prior to the Unemployment Exclusion from the Federal return. My Unemployment compensation was $7501.00 as was reported on my Federal return.

Prior to the Federal Unemployment update, My adjusted Gross income was $41,283 and taxable Income was $13883.00.  My refund amount was $506.00. After the update, my Federal AGI is $33,782.00 , My taxable income is $6,382.00 and my refund is $1,256.00. This makes sense for the $7,501.00 exclusion. Here are my Minnesota numbers prior to the Federal Unemployment exclusion: My adjusted Gross Income was $41,283.00, my Minnesota taxable Income was $3.648.00 and my Refund amount was $448.00.  Now, after the Federal and State updates my State AGI is $33,782.00, My MN taxable Income is $10,024.00 and my refund amount is $105.00. How can my refund decrease by $343.00. How can my taxable income increase by $6,376.00 since the update. MN did not adopt the change, so why has my taxable income increased when I had already filed prior to the Exclusion. The numbers for MN should not have changed from my original filing.  I have look at additions and they have added back in my Unemployment Exclusion and recalculated my Social Security Benefit exclusion which has increased. None of the MN numbers should have changed from my Original pre-unemployment Filing. This needs to be fixed because tons of MN filers are being told they can go ahead and file unless someone can tell me how my MN Income increased after the Federal and State updates.

AmyC
Expert Alumni

Why isn't unemployement income adjusted on Minnesota return?

If your MN included all of the unemployment when filed, it was correct. The federal will adjust and send you a refund this summer. You always want to make a copy of your return when you file. 

 

Are you trying to amend that you are back inside your return? You should not need to amend. The program calculates based on current rules and you have opened a completed return using a different set of rules. Anybody who has not filed, will have the correct set of rules operating in the federal to flow to the state.

 

This is from the MN DOR website: 

 

Does Minnesota match the federal provision for excluding up to $10,200 in unemployment compensation from adjusted gross income?


No. Under current law, you must include any unemployment compensation benefits received in 2020 in Minnesota adjusted gross income. We will update our guidance if state law is changed.
If you excluded any unemployment compensation on your federal return, you must add it back on your Minnesota return:

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wfilbra
Level 3

Why isn't unemployement income adjusted on Minnesota return?

@AmyCYou apparently didn't understand my statement. I filed both Federal and State prior to the Unemployment exclusion being updated on Turbo Tax. I have received both Federal and State refunds. I reviewed my returns on March 26th to see how the unemployment exclusion affected my returns. My Federal refund increased by $750.00 as a result of my $7105.00 Unemployment exclusion. My state refund amount decreased by $363.00 to a new refund of $105.00. I have received the $468.00 from the state of MN. Knowing that something was wrong with my State return, because I would've owed them $368.00 I contacted TurboTax. No, I did not and will not refile at this time. I spoke with both a very nice Turbo Tax Customer Service person and a Turbo Tax CPA on 4-6-21. They looked into it. This morning (4-8-21) I went back into my desktop TurboTax program and Minnesota State was updated again. My State refund is now back to $468.00. From what I could discern, when the exclusion was applied on March 26th, Turbo Tax recalculated my Social Security exclusion amount and it in fact raised my MN AGI to Approx. $47,000. (wrong) This did not impact me because I have taken no steps to file an amended while I wait to find out if MN is going to comply with the Federal Exclusion. My concern is that if people received Unemployment and were also getting Social Security benefits that their return could be incorrect with MN if they filed between March 26th and Today April 8th. Basically, has Turbo Tax sent letters to MN filers within this date range notifying them of the potential error.

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