1099-NEC and 1099-MISC for MN Tax Rebate showing zero

[mark14]

I have a 1099-MISC for the MN Tax Rebate program.  It only shows $520 in box 3.  This amount combined with a small side business I have goes to the 1040 on line 8 from the Schedule 1 - Schedule C.

In the MN income taxes, there is a spot to enter the MN Tax Rebate Payment.  When I enter an amount, I get a warning "Tax rebate payment should not be entered.  To qualify for subtraction in Minnesota, this payment must be reported as 1099-MISC income on the federal return."

In the income summary, both the MN Tax Rebate 1099-MISC and the other 1099-NEC that I filled out and show as zero even though they show correctly on Schedule 1.

Can I safely enter the number since it is not supposed to be taxed in MN state taxes?

[JamesG1 · Accepted solution]

I am confused as to where the Minnesota Tax Rebate Payment has been reported.

It sounds like the Minnesota state tax return is not able to find the payment reported in the Federal 1040 tax return.

Which 'income summary' is reporting the payment and Schedule C income as zero?

Are you saying that the Minnesota Tax Rebate Payment is reported on Schedule 1 line 3 or Schedule 1 line 8?  If line 8, which line 8?

If the Minnesota Tax Rebate Payment is listed under your self-employment income, the Minnesota state income tax return may not be able to find the income and give you the reversal on the Minnesota state income tax return.

The Minnesota payments are taxable income on the Federal 1040 tax return but not subject to self-employment income.

Information on the Minnesota Direct Tax Rebate Payments may be found here.

The payment is not taxable income on the Minnesota state income tax return.  Follow these steps to report the payment reported on IRS form 1099-MISC.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click Show more to the right of Less Common Income.
• Select Miscellaneous Income, 1099-A.
• Select Other reportable Income.
• As a description enter MN Direct Tax Rebate Payment.

In the Minnesota tax return, remove the income at the screen Minnesota Tax Rebate Payment.

[mark14]

Entering it as other income seems to have done the trick.  It originally was on line 3 of schedule 1 along with my other business income.  It is now on line 8z as other income.  I was then able to add the MN adjustment without errors.  Thanks for the help.