My employer withheld taxes for MN, but I am a Wisconsin resident. How do I get a refund from MN

Forum|Forum|4 years ago
May 18, 2021
1 reply
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How do I get my MN taxes fully refunded so I can pay wisconsin (state of residency)?

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ErnieS0

The reciprocal income tax agreement between Wisconsin and Minnesota expired in 2009.

A WI resident working in MN must file a nonresident MN income tax return and pay tax to MN.

You will also have to file a WI resident return. You can claim a tax credit on the WI return for tax paid to MN.

Withholding and Tax Filing Information Related to Wisconsin-Minnesota Income Tax Reciprocity Termination

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Dwroblew

The previous questioner is partially correct. The point of law relates to where the service was physically provided by the employee or consultant:

https://www.revisor.mn.gov/statutes/cite/290.17

https://www.revenue.state.mn.us/nonresidents-income-tax-fact-sheet-3

In my case, I work from home in Wisconsin, but for a Minnesota-based company with a business address in Minnesota and my client is in Minnesota. Since the service I provided was not performed within Minnesota, and I was not physically present at any time during the year, I am considered a Wisconsin resident and even though I was providing a service to and an employee of Minnesota business entities, Minnesota and Wisconsin both consider me a Wisconsin resident.

If you are a Wisconsin resident and perform your services partly in both states, i.e. physically present, then it gets tricky.

In my case, my employer withheld Wisconsin taxes (correctly).

There is a 183 day rule per the URL provided here in relation to which state you owe taxes to. If you spend time in both states then you may need the advise of an accountant or tax attorney.

In talking to both Wisconsin DOR and Minnesota DOR and providing a detalled explanation of my work situation, they were consistent in my situation about owing taxes to Wisconsin; since never physically present in Minnesota.

From Turbotax perspective if your W2 is from a Minnesota company, they will force you to buy a 2nd state tax form to cover both states and then when you file, you will have to indicate you have to mail your form in to Minnesota rather than E-file and not do it) . They are unable to make the distinction as to which state you owe tax to. I even went so far as to talk to Intuit tech support and they said I owed state tax to Minnesota. There is no provision in Turbotax to sort out the 183 day rule for where physically present. So in this case you cannot rely on Turbotax or Turbotax tech support to provide a correct answer.

This of course means you have to record your hours per day in each state if you work in both states, physically.