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Taxes Paid to Another State Credit
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Minnesota residents pay state tax on income earned inside and outside of Minnesota. If you paid income tax to both Minnesota and another state on the same income, you may qualify for a credit for the tax paid to the other state.
Note: Do not claim this credit if you are a Minnesota resident who paid income tax to both Minnesota and Wisconsin on the same income. Instead, complete Schedule M1RCR, Credit for Tax Paid to Wisconsin.
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You may qualify for the Credit for Income Tax Paid to Another State if all of these apply:
- You were domiciled in Minnesota for all or part of the year
- You paid income tax to Minnesota and to another state on the same income (a Canadian province or territory and the District of Colombia are considered states for this credit)
- You were a Minnesota resident when you received the income taxed by both states
- You filed a tax return with the other state
You may not claim this credit for taxes paid to any of these:
- A local unit of government (such as a city, county, or school district)
- A national government, including a U.S. possession, or the national government of Canada
- A Canadian province or territory, if you used the taxes to claim a federal foreign tax credit
Complete Schedule M1CR, Credit for Income Tax Paid to Another State. If you paid tax to multiple states on the same income, complete a separate Schedule M1CR for each state (or Schedule M1RCR for Wisconsin). See the instructions for how to report the amounts from each schedule.
Michigan or North Dakota Taxed My Income
Do not complete Schedule M1CR if you had Michigan or North Dakota income tax withheld from personal service income. Personal service income includes wages, salaries, tips, commissions, and bonuses. File that state’s income tax return to get a refund of the tax withheld.
You may complete Schedule M1CR if you paid tax to both Minnesota and one of these states on income not earned from personal services. This type of income may include:
- Rent and royalty income
- Gambling winnings
- Lottery winnings
- Nonqualified plans (such as stock options)
- Farm income
- Installment sales
- Business income from a sole proprietorship, partnership, or S corporation
- Capital gains from the sale of tangible assets not used in a trade or business
