Minnesota Nonconformity: How to recalculate your 2015 federal return
In December of 2015, the President signed the Protecting Americans From Tax Hikes Act of 2015 which extended various deductions and credits on federal tax returns. Minnesota is not conforming to those changes.
Some taxpayers are not allowed certain deductions on their Minnesota return that they have on their federal tax return. The most common of those deductions are:
- Educator expenses
- Tuition and fees deduction
- Home mortgage debt cancellation exclusion
- IRA distribution excluded from federal income because it was made to a charity
- Modified depreciation for leasehold improvements
Certain TurboTax customers, who don't get the above deduction(s) on their Minnesota return, may also have to calculate adjustments to their federal tax return to complete their state tax return. Minnesota wants a recalculation of your federal return as if it didn't conform to the new laws.
Those customers will see an interview screen titled "Federal Adjustments for Minnesota Tax Purposes" because they have amount(s) on any of the following on their federal return:
Form 1040, page 1
- Social security income (line 20a)
- Student Loan interest deduction line 33)
- IRA contribution deduction (line 32)
- Rental real estate losses (line 10)
Schedule C and/or Schedule E
- With assets listed as leasehold improvements.
- Medical expenses (line 4)
- Casualty and theft losses (line 20)
- Job expenses and certain miscellaneous deductions (line 27)
- Limited charitable contributions ( word "limited" next to line 19)
The taxable or deductible amounts on the above items is based on the federal adjusted gross income (Form 1040, line 37). Again, Minnesota wants these amounts to be recalculated as if the federal return didn't conform to the new laws.
Then the difference between the amounts on the current federal return and the "recalculated" federal return will be entered in TurboTax interview screens to complete the state tax return.
And we're here to help you. This link will guide you through a "save as" of your current federal return, entering the new amounts in your "recalculated" federal return and figuring out the difference(s) to be entered in TurboTax.