Minnesota Credit for Income Tax Paid to Another State

Credit for Income Tax Paid to Another State
2023 M1CR, Credit for Income Tax Paid to Another State
*231321*

2023 Schedule M1CR, Credit for Income Tax Paid to Another State
Your First Name and Initial

Last Name

Social Security Number

State or Canadian Province or Territory That Taxed Income Also Taxed By Minnesota

You must complete a separate Schedule M1CR for each state or province to which you paid taxes. To report tax paid to Wisconsin, use
Schedule M1RCR, Credit for Tax Paid to Wisconsin.
To be eligible for this credit, all of these must apply:
• You were a full- or part-year Minnesota resident in 2023
• You paid 2023 state income tax to both Minnesota and another state or Canadian province on the same income
• You were a Minnesota resident when both states taxed the same income

Check	this	box	if	you	are	claiming	a	credit	for	taxes	paid	by	a	pass-through	entity	in	another	state (see instructions).

Full-Year Residents and Part-Year Residents

1 Amount of adjusted gross income you received while
a Minnesota resident that was taxed by the other state (see instructions)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 1
2 Your adjusted gross income adjusted by U .S . bond interest and
bonds of another state (determine from instructions).
Part-year residents: See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 2
3 Divide line 1 by line 2 . Enter the result as a decimal (carry to
five decimal places; if line 1 is more than line 2, enter 1.00000)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 3
4	 		Complete	the	lines	below	to	determine	your	Minnesota	tax	after	credits.
a Tax from line 13 of Form M1 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 4 a

Round amounts to the
nearest whole dollar.

.

b Add lines 1-2 and 4-9 of Schedule M1C  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 4 b
Subtract line 4b from line 4a . If the result is zero or less, STOP HERE . You do not qualify for this credit  .  .  .  .  .  .  .  .  .  . 4
5 	 Multiply	line	4	by	line	3	  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5
6 From the other state’s income tax return, enter the tax amount before
you	subtract	any	tax	withheld	or	estimated	tax	payments	(see instructions).
If	you	paid	taxes	to	a	Canadian	province	or	territory,	see	instructions	  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 6

Full-Year Residents
7

Amount from line 5 or line 6, whichever is less . Enter here and include on line 3 of Schedule M1C  .  .  .  .  .  .  .  .  .  .  .  .  . 7

Part-Year Residents
8

From the other state’s income tax return, enter the amount of income
	 taxed	by	that	state	before	subtracting	itemized	or	standard	deductions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 8
9 Divide line 1 by line 8 . Enter the result as a decimal (carry to
five decimal places; if line 1 is more than line 8, enter 1.00000)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 9

10	 Multiply	line	6	by	line	9	  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 1 0
11

Amount from line 5 or line 10, whichever is less . Enter here and include on line 3 of Schedule M1C .  .  .  .  .  .  .  .  .  .  . 1 1

You must include this schedule with your Form M1.

9995

.

2023 Schedule M1CR Instructions
Am I eligible?

You may be eligible for the credit for income tax paid to another state if all of these are true:
• You were domiciled in Minnesota for all or part of 2023
• You paid 2023 income tax to Minnesota and to another state on the same income
• You filed an income tax return with the other state. This may include a corporate entity paying taxes on your behalf. If an entity paid taxes
on your behalf, include the entity level return showing the other state’s tax liability
• You were a Minnesota resident when you received the income taxed by the other state
A Canadian province or territory and the District of Columbia are considered states for purposes of this credit.
Include: Any income taxes paid to another state by an S corporation or a partnership that you included on line 2 of Schedule M1MB, Business Income Additions and Subtractions.
Do not include: Taxes paid to:
• Wisconsin (file Schedule M1RCR, Credit for Tax Paid to Wisconsin)
• A local unit of government (such as a city, county, or school district)
• A national government, including Canada or a possession of the United States
• A Canadian province or territory if you used the tax to claim a federal foreign tax credit (see the line 6 instructions for details)

Part-Year Residents

To be eligible, you must have been a Minnesota resident when you received the income taxed by both states. You must also file an income
tax return with the other state.
Exception: You may be eligible for this credit if all of these are true:
• You were a permanent resident of another state
• You are required to file a Minnesota income tax return as a resident under the 183-day rule
• You paid 2023 state income tax on the same income to Minnesota and your state of permanent residence
You must get a statement from the other state’s tax department stating you are not eligible to receive a credit on that state’s return for income
tax paid to Minnesota. Include the statement and Schedule M1CR with your Form M1, Individual Income Tax.

Minnesota Residents Paying Income Tax to Wisconsin

Do not use Schedule M1CR. Use Schedule M1RCR to determine whether you qualify for a nonrefundable credit.

Minnesota Residents Working in Michigan or North Dakota
Do not use Schedule M1CR if both of these apply:

• You received personal service income (wages, salaries, tips, commissions, and bonuses) from working in Michigan or North Dakota
• You had 2023 Michigan or North Dakota income tax withheld from that income
To get a refund of the tax withheld while you were a Minnesota resident, file an income tax return with the appropriate state.
If you paid 2023 income tax to one of those states on income other than from personal service income—such as income from rental property—you may be eligible for this credit. Complete Schedule M1CR.

What if I paid income taxes to more than one other state?
1.
2.
3.

Complete a separate Schedule M1CR for each state
Add the amounts from line 7 or line 11, whichever applies, from each Schedule M1CR and Schedule M1RCR
Enter the result from step 2 on line 3 of Schedule M1C

Is there a penalty for fraudulently claiming a credit?

Yes. If you file a return that fraudulently claims a credit that results in a refund, we will assess a penalty equal to 50% of the portion of the refund attributable to fraud. If a fraudulently claimed credit reduced your tax liability, we will also assess a penalty equal to 50% of the unpaid
tax.
Continued

Line Instructions

Round amounts to the nearest whole dollar.
If you are claiming a credit for taxes paid to another state for an entity level tax, check the box at the top of the form. If you were not required
to file an individual income tax return in the other state, you must provide the entity level return and show your portion of the income and
taxes paid on your behalf by the entity. Do not check the box if a composite income tax return was filed on your behalf in the other state.

Line 1

To determine the amount to enter on line 1, follow these steps:
1. Find your adjusted gross income on line 1 of Form M1
2. Determine the amount of adjusted gross income you received in 2023 while a Minnesota resident
3. Determine the amount from Step 2 that was also taxed by the other state
4. Enter the amount from Step 3 on line 1
Include any non-Minnesota municipal bonds taxed by the other state. Do not include any income you received from a lump-sum distribution
from a qualified retirement plan and listed as income on your Schedule M1LS, Tax on Lump-Sum Distribution.

Line 2
Full-Year Residents: Complete the Worksheet for Line 2 below.
Part-Year Residents: From Schedule M1NR, Nonresidents/Part-Year Residents, add these lines together:
• Line 22, column B
• Line 23, column B
• Line 24, column B
• Line 26 column B
• Line 28
From that total, subtract the amounts from lines 10 through 14 (column B) of Schedule M1NR. Enter the result on line 2 of Schedule M1CR.

Worksheet for Line 2 (for Full-Year Residents Only)
1
2
3
4
5

Add lines 1 and 2 of Schedule M1M, Income Additions and Subtractions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted gross income (see line 1 instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add step 1 and step 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net interest you received from U.S. bonds from line 14 of Schedule M1M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract step 4 from step 3. Enter result here and on line 2 of Schedule M1CR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Line 6

Enter the tax amount from the other state’s tax return. The amount of tax must be before you subtract any income tax withheld by that state or
any estimated tax you paid to that state. Do not include tax you paid to a local unit of government (such as a city, county, or school district).
If you filed Schedule M1LS, do not include any tax you paid on income from a lump-sum distribution from a qualified retirement plan.
Note: If you paid taxes to a Canadian province or territory, complete the Worksheet for Line 6 below.

Worksheet for Line 6 (If You Paid Canadian Taxes)

1 Total foreign taxes paid from line 9 of the federal Form(s) 1116 you completed for your Canadian taxes paid . . . . . . . . . . . .
2 Total federal foreign tax credit from line 24 of the Form(s) 1116 for your Canadian taxes paid . . . . . . . . . . . . . . . . . . . . . . . .
3 Subtract step 2 from step 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Tax paid to a Canadian province or territory on income you received while a Minnesota resident . . . . . . . . . . . . . . . . . . . . . .
5 Amount from step 3 or step 4, whichever is less. Enter the result here and on line 6 of Schedule M1CR . . . . . . . . . . . . . . . . .