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).
Foreign Derived Intangible Income Deduction
You must add back the amount of foreign derived intangible income you deducted from net income under section 250 of the Internal Revenue Code for the current taxable year.
Federal Bonus Depreciation Addition
If special depreciation was claimed on the federal return, view/print your Federal form 4562 use the results to complete Worksheet for line 3 - Bonus Depreciation Modification.
Capital Gain Portion of a Lump-Sum Distribution from a Qualified Retirement Plan
If you received a qualifying lump-sum distribution in 2020 and chose the capital gain election on form 4972, add back the gain from line 6 of form 4972.
Suspended Loss from Bonus Depreciation
If you did not add back 80% of the bonus depreciation for years 2001- 2005 or 2008-2020 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 claim the deduction on your 2020 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.
Accelerated Recognition of Nonresident Installment Sales
If you are required to report accelerated gains from an installment sale in 2020, complete form M1AR.
Higher Education Savings Account use for K-12 Tuition
If you used your distribution from a higher education savings account to pay K-12 tuition, include the lesser of the total distribution from the account used to pay the K-12 tuition or the total earning reported on form 1099-Q.
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: