How Minnesota Taxes Nonresident Income

Minnesota taxes certain income that nonresidents receive. Nonresidents are subject to Minnesota income tax on income earned from Minnesota sources, such as wages for work performed in the state, or income from property or businesses in Minnesota.

Business Income vs. Nonbusiness Income

• Business income comes from trade or business activities, including rents, farming, sales or services.
• Nonbusiness income includes earning that do not come from business activities, such as wages.

If you own a business, or a share of a business through a partnership, S corporation, estate, or trust the classification of income as business or nonbusiness is determined at the entity level.

• Business income is subject to apportionment across states.
• Nonbusiness income is subject to assignment to specific states.

The combination of these amounts determines the income allocated to Minnesota. This applies to nonresident individuals.

You will receive one of the following schedules to help complete your Minnesota Individual Income Tax return:

• Schedule KPI, Partner's Share of Income, Credits and Modifications (KPI)
• Schedule KS, Shareholder's Share of Income, Credits and Modifications (KS)
• Schedule KF, Beneficiary's Share of Minnesota Taxable Income (KF)

Allocating Income to Minnesota

Use this information to determine if your income should be allocated to Minnesota.