Wisconsin/Minnesota college student residency

[waukula]

Hi, We are Wisconsin residents and my daughter goes to the University of Minnesota Twin Cities. She is still considered domiciled in Wisconsin according to what the state of Wisconsin says. I would have thought she would be considered a non-resident of Minnesota for Minnesota tax purposes, but in helping with her taxes, we discovered the 183 day rule along with living in an apartment (not a dorm), that make her also a Minnesota resident. So for 2019 she filed resident tax forms for both WI and MN through TurboTax. She made a little over $5,000 last year.  So she ended up getting back what she paid MN in taxes.

She has an internship this summer and may continue to work into the fall, so she will make significantly more next year. It looks like TurboTax WI did not give her credit for tax paid to MN. Is this because she is residents of both states for tax purposes? She didn't owe WI this year, but next year she will earn much more than the WI standard deduction. So will she have to pay income tax to both states? I'm very confused, can anyone help?

[SteamTrain]

Sorry you didn't ask about that when you were preparing your taxes.

For an undergraduate student, who is a dependent of parents , but going to college and earning money on the side in a state different from the parents....the student would file a nonresident tax return for college state (MN in your case) and a resident tax return for the whole year in your resident state (WI in your case).    Then the tax credit in WI for taxes paid to MN does apply.   

This is SOP for dependent/undergraduate students in all states,  except when the two states involved have a reciprocal tax agreement.  ( WI and MN do not have one...used to many years ago, but no longer). 

Non-dependent graduate students,  age 24 or older, might not follow the same procedures...but it sometimes isn't clear for them.

The 183 day rule usually apples only to independent adults...not to dependents who are undergraduate students in a state different from their parents.  

Amending her MN (if it was a part year MN tax return?) , and WI tax returns for this situation might be appropriate.....kind of hard to tell since she might have received all the MN withholding back anyhow....and if she still does get a full refund with an amended MN tax return, then there still would be no WI credit for taxes paid to MN, since the credit for WI only applies for the $$ MN keeps.    IF that is the case, then a WI amended tax return would not be needed as long as she filed WI as a full-year resident.