Minnesota requires the following items be added back to the return to arrive at Minnesota taxable income.
Interest from Municipal Bonds of Another State
Interest from municipal bond reported from federal return, line 2a, for a state or local government other than Minnesota.
Federally Tax-Exempt Dividends from Mutual Funds Investing in Bonds of Another State
If 95% or greater of federally tax-exempt dividends are from a mutual fund and are bonds issued in Minnesota, include the portion of the dividend only generated by non-Minnesota bonds. If less than 95% of the federally tax-exempt interest dividend from a mutual fund is from bonds issued by Minnesota, include all the tax-exempt interest dividend claimed on the federal return.
Expenses Relating to Income not Taxed by Minnesota, Other Than from U.S. Bond Obligations
Expenses deducted on your federal tax return that are associated with income that is not taxed by Minnesota (such as items reported on lines 22-27 of Schedule M1M).
Federal Bonus Depreciation Addition
If special depreciation was claimed on the federal return, complete the Worksheet for Line 11a on Schedule M1NC (Federal Adjustments) and use the results to complete Worksheet for line 3 - Bonus Depreciation Modification.
Federal Section 179 Expensing
To calculate line 4, complete Worksheet for Line 12a on Schedule M1NC (Federal Adjustments) then use the result to complete Worksheet for Line 4 – Section 179 Expensing Modification. If you completed federal Form 4562 to claim the section 179 expensing for federal tax purposes, you must complete lines 1 through 12 on a separate federal Form 4562, (referred to as Minnesota Form 4562 on the worksheet for line 4). Complete the Worksheet for Line 4 - Section 179 Expensing Modification to determine the amount.
Fines, Fees and Penalties Deducted on Your Federal Return
Fines, fees and penalties that were deducted as business expenses on your federal return paid to any government entity or non-government regulatory body due to an investigation or violation of law.
Suspended Loss from Bonus Depreciation
If you did not add back 80% of the bonus depreciation for years 2001- 2005 or 2008-2017 and are claiming a suspended loss because of bonus depreciation, complete the Worksheet for Line 8.
Net Operating Loss (NOL) Carryover Adjustment
The Minnesota Legislature didn't adopt the provisions of the 2009 (WHBA), Worker, Homeownership, and Business Assistance Act. Under this Act, taxpayers can carryback 3, 4, or 5 years an Net Operating Loss generated for 2008 or 2009. Any remaining NOL, for federal purposes, that wasn't fully absorbed in carryback years may be carried forward, for up to 20 years and began in 2010. If you claimed the deduction in 2018 on your federal return, you must add back the federal NOL amount as a positive.
First-Time Homebuyer Savings Account Addition
Taking a nonqualified withdrawal from your first-time homebuyer account may require the amount to be included as taxable income. Use Schedule M1Home to determine the amount to be included.
Federal Adjustments not adopted by Minnesota
Reported on Form M1NC. Includes charitable deductions/contributions, adjustments to itemized deductions, adjustments to income/adjustments, adjustments to bonus depreciation and Minnesota depreciation.
For additional information, see: