M1NC Federal Adjustments

[ANB]

In M1NC instructions under Provisions that may require an adjustment: Section 129 states Energy Efficient Homes Credit

Does this include exterior windows or is this talking about other Home Credits?

[KathrynG3]

Schedule M1NC Federal Adjustments:

Regarding Line 3:

"Section 129. Energy Efficient Homes Credit
If you claimed the Energy Efficient Homes Credit on your federal return, adjust the property’s basis without regard to the basis reduction required under 2019 IRC. Include any adjustments to FTI as a result of this Minnesota change in basis."

The Residential Energy Credit allows for qualified energy-efficient  improvements, if they meet certain energy efficiency requirements, which include:

• exterior windows and skylights (must meet or exceed version 6.0 Energy Star Program Requirements)
• exterior doors
• some qualifying roofs

IRS 2019 Form 5695 Instructions bottom of page 2, top of page 3

[ANB]

You are correct that under the Federal form using Form 5696 you can calculate a window credit.  However this was talking about a  Minnesota state form, the M1NC form.  On M1NC, line 3 Section 129 in the instructions, Energy Efficiency Homes Credit, was NOT referencing this window credit.  The Energy Efficiency Homes Credit was something else.  Therefore, what was reported on form 5696 for windows does not have to be reported on M1NC, it is referencing something else according to the information received from the Minnesota Department of Revenue Individual Income Tax help line on February 6, 2020.

[KathrynG3]

No. The 2019 Schedule M1NC Instructions page 2 regarding Who Must File Schedule M1NC: 

"If any of the following provisions affect your federal taxable income, you must complete and include Schedule M1NC to make the necessary adjustments when you file Form M1....Claimed any of the following federal credits:....Energy Efficient Home Credit" This is not related to individuals claiming a credit for installing qualifying windows.

The Residential Energy Credit is for qualified energy-efficient  improvements, if they meet certain energy efficiency requirements,  including:

• exterior windows and skylights (must meet or exceed version 6.0 Energy Star Program Requirements)
• exterior doors
• some qualifying roofs

IRS 2019 Form 5695 Instructions bottom of page 2, top of page 3

[ANB]

Federal Form 8908 is called Energy Efficient Home Credit and is the credit being referenced in Line 3 Schedule 129 of the M1NC instructions, as I understand the information provided by the Minnesota Department of Revenue.  It was explained as a credit used by home builders.