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Category: Minnesota

Minnesota Additions to Income

Interest From Municipal Bonds of Another State or its Governmental Units

Of the amount included or should have included on line 8b of federal Form 1040 or Form 1040A, add the interest you received from municipal bonds issued by:

  • a state other than Minnesota, and
  • a local government (such as a county or city) in a state other than Minnesota.

Federally Tax-Exempt Dividends from Mutual Funds Investing in Bonds of Another State

If you included or should have included an amount in line 8b of federal Form 1040 or Form 1040A for federally tax-exempt interest dividends from a mutual fund, you may have to include some or all of these dividends in your Minnesota State return. To determine the amount to include, follow the below instructions:

  1. If 95% or more of a federally tax-exempt dividend from a mutual fund came from bonds issued by Minnesota, only the portion of the dividend generated by non-Minnesota bonds must be included.
  2. If less than 95% of the federally tax-exempt interest dividend from a mutual fund came from bonds issued by Minnesota, all of the federally tax-exempt interest dividend from that fund must be included.

Expenses Relating to Income Not Taxed by Minnesota, Other Than From U.S. Bond Obligations

If you deducted expenses on Schedule A of Form 1040 that are attributable to income not taxed by Minnesota (income reported on lines 24 through 29 of Schedule M1M), you must add those expenses to your taxable income.

Do not include expenses that are attributable to interest or mutual fund dividends from U.S. bonds.

Elected Section 179 Expensing

If, during the year, your total investment in qualifying property was more than $200,000, or if you elected more than $25,000 in section 179 expensing, you must add back on your state return 80% of the difference between the expensing allowed for federal and for state tax purposes. You may subtract the amount of the addition in equal parts over the next five (5) years.

Fines, Fees and Penalties Deducted on Your Federal Return

You must add fines, fees and penalties that were deducted as business expenses paid to a government entity or nongovernment regulatory body as a result of a violation of law, or the investigation of any potential violation of law. Do not include amounts identified in a court order or settlement agreement as restitution or as an amount paid to come into compliance with the law.

Suspended Loss From Bonus Depreciation

If you are claiming a suspended loss from 2001 through 2005, 2008, 2009, 2010, 2011, or 2012 on your federal return that was generated by bonus depreciation, and you did not add back 80% of the bonus depreciation in those years, please refer to Worksheet for line 13.

Net Operating Loss (NOL) Carryover Adjustment

The Minnesota Legislature did not adopt the provisions of the Worker, Homeownership, and Business Assistance Act of 2009 (WHBA). Under this Act, taxpayers are allowed to carryback 3, 4, or 5 years an NOL generated in 2008 or 2009. For federal purposes, any remaining NOL that was not fully absorbed in the carryback years can be carried forward for up to 20 years, beginning in 2010. If you claimed the deduction in 2013, you must add back the federal NOL amount as a positive.