Unemployment from a different state

[Saramize]

I lived in IA for all of 2020, but was furloughed due to COVID in March and had to file and collect unemployment in MN since I lived and worked there for most of 2019.  Do I have to pay MN state tax on the unemployment?

[JotikaT2]

It depends.

If you received any unemployment income in 2020 from Minnesota, then yes, you potentially will need to pay taxes on the unemployment income as Minnesota does tax unemployment income.  

Assuming you received unemployment from Minnesota in 2020 while you were a nonresident of the state, you would only need to file a tax return if your gross income was at least $12,400. 

Please see the following link for more information to help you determine if you would have been considered a resident or nonresident of Minnesota.

MN Nonresident filing requirement

You will be able to claim a credit on your Iowa tax return for any taxes paid in MN on the unemployment income.  Just be sure to complete your nonresident state tax return (MN) first and then proceed with your resident (IA) state tax return to ensure all of the credits are calculated correctly.

If you are asking about your 2019 income tax return, it sounds like you lived and worked in Minnesota for the entire year.  If this is the case, you would still need to file your MN income tax return and report any unemployment income earned in 2019 in MN.  You would not have any filing requirements in Iowa if you did not reside there during 2019.

[theelledge]

I have a similar question.  I received unemployment from CA, where I last worked and did not have taxes withheld.  I lived in ID the entire time I was still receiving the UE benefits.  How should I proceed

[ThomasM125]

California does not tax unemployment benefits, so you don't need to file a California return to report your unemployment compensation earned there.

[Claude4]

Idaho does tax unemployment benefits, so you should report the unemployment benefits received on your ID state return for the year you were a full year resident of Idaho.   

[theelledge]

Thank you so much for the response.  I have two 1099G forms from CA, one from the EDD, stating my earnings, and one from the Franchise Tax board, report of income tax refund.  Do I need to put these anywhere in my ID incomes taxes?

[theelledge]

So I need to report the unemployment benefits I received from CA on my ID return?

[Claude4]

Put any and all 1099-G forms you received from CA (or anywhere else) into TurboTax when you are preparing your federal tax return.  Turbotax will then determine your taxable income.  Idaho will use what you entered for your federal tax return when computing your state taxes.  You do not have to (and should not) re-input your unemployment compensation on your ID return.  The CA state income tax refund you received in 2021 means that your overpaid CA income taxes for 2020, so that should be a closed book.    

[theelledge]

Ok, I purchased the CA state tax return as well, I'm going through it right now and it has not asked for any 1099G or mentioned unemployment at all.  Am I missing something?

[ErnieS0]

Unemployment is not taxable in California @theelledge. Because it is taxable on federal, TurboTax will subtract that amount from your California form. You don't need to make any entries.

See Unemployment

[theelledge]

Thank you all for the help.  I understand it is taxable on the federal level, but when I enter the information in the federal part of the return, the amount I owe to ID changes.  I just don't understand how I can owe ID money from the benefits I received from CA.

[Claude4]

This is a common situation where a person is a resident of one state and earns income from another state (or states).   The state in which you are a resident is the state that determines the state tax on income you earned while a resident of that state.   

[ThomasM125]

Idaho, like most states, taxes all income earned. They will give a credit for taxes paid to another state from income taxed in Idaho, but since you didn't pay any tax on the unemployment in California, you won't be entitled to the credit. So your California unemployment income is taxable in Idaho.