Minnesota M1M is doubling my interest from municpal bonds

Forum|Forum|2 years ago
February 28, 2024
3 replies
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Line 1 of form M1M asks for the "Interest from municipal bonds of another state or its governmental units included on line 2a of Federal Form 1040".

My Federal 1040 line 2a shows $551, but Turbotax is doubling this value on the M1M form, and it shows $1102.

How can I diagnose this? I believe it's adding back too much income to my state return.

fxfAuthor

I played with some numbers in Turbotax. The municipal bond interest comes from a schedule K-1 (from a trust).

In addition to the K-1, I was also issued a Minnesota schedule KF. The municpal bond interest appears on line 1 of the schedule KF. (Line 1 is "State and municipal bond interest from outside Minnesota". )

If I change the value on line 1 of my schedule KF to zero, the value on line 1 of my form M1M shows $551.

So it appears as if line1 of schedule M1M is including both the municipal bond interest from my 1040, and also the municipal bond interest from my schedule KF. But these are both reporting the same fact -- that I received $551 of municipal bond interest.

Is this possibly a bug? Or am I doing something wrong with the schedule K-1 and/or schedule KF?

CatinaT1

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fxfAuthor

Yes, I'm still experiencing the problem. Right now I have overridden the erroneous amount calculated on Schedule M1M, line 1.

If I accept the automatic calculations, Turbotax is still double-counting my municipal bond income. I installed all the updates just this morning.

Beachcomber1

Having the exact same issue. Just posted a similar question under @Beachcomber1 but can't find my own post:).

Doubles the value from K-1.

Beachcomber1

found my post 😀:

burto006

It appears to be a slightly more complex bug than that: TurboTax's Minnesota (MN) M1M Line 1 since 2023 has apparently been WRONGLY SUMMING 1040 Line 2a (Total Federal Tax-Exempt Interest) WITH MN KF Line 1 (MN-Taxable Other-State Federal Tax-Exempt Interest) to give a FALSELY HIGH M1M Line 1 Minnesota income addition, instead of RIGHTLY SUMMING MN KF Line 1 WITH Other States' K-1 Box 14A (Federal Tax-Exempt Interest) to give the TRUE M1M Line 1 MN income addition, which would be an M1M Line 1 value = to the 1040 Line 2a value MINUS only MN-tax-exempt federal tax-exempt interest).

Consequently, upon TurboTax MN State M1 & M1M E-filing, the submitted M1M Line 1 total (which if calculated correctly represents everything in 1040 Line 2a's Federal Tax-Exempt Interest EXCEPT its small values for MN in-state Tax-Exempt Interest) is then automatically "error checked" by the MN Dept of Revenue to ensure that "M1M Line 1 ≤ 1040 Line 2a" -- and thus the e-filed TurboTax MN tax return is rejected, because it's rightly flagged as showing "M1M line 1 > 1040 Line 2a" for having twice-submitted (thereby doubling MN state income taxes on) any MN KF Line 1 value entered.