M1CR: Credit for Income Tax Paid to Another State (2024)
Minnesota · Minnesota DOR · Used for tax years 2024
2024 Minnesota Schedule M1CR calculates the credit for income tax paid to another state, the District of Columbia, or a Canadian province or territory on income also taxed by Minnesota. It reports the income taxed by both jurisdictions, the other jurisdiction’s tax, and the credi
Who files this form
Use 2024 Schedule M1CR to claim a credit for income tax paid to another state if you meet the eligibility requirements. Generally, all of these must apply:
- You were domiciled in Minnesota for all or part of 2024.
- You paid 2024 income tax to Minnesota and another state on the same income.
- You were a Minnesota resident when you received that income.
- You filed an income tax return with the other state. This may include an entity paying taxes on your behalf.
For this credit, the District of Columbia and Canadian provinces and territories are treated as states.
Wisconsin taxes: Use Schedule M1RCR, not Schedule M1CR.
Michigan or North Dakota wages: Do not use Schedule M1CR if you received personal service income from working in either state and had 2024 tax withheld by that state. File a return with that state to get a refund of tax withheld while you were a Minnesota resident. Other income, such as rental income, may qualify for this credit.
183-day rule exception: You may qualify if you were a permanent resident of another state, must file as a Minnesota resident under the 183-day rule, and paid 2024 tax to both states on the same income. You must include a statement from the other state's tax department saying you cannot claim a credit there for tax paid to Minnesota.
What you'll need
Have these forms and records available, as applicable:
- Form M1 and Schedule M1C: You need amounts from these forms to calculate and report the credit.
- The other state's income tax return: You need its tax amount before withholding or estimated payments are subtracted.
- Schedule M1M: Full-year residents use it for the line 2 worksheet.
- Schedule M1NR: Part-year residents use it to calculate line 2.
- Federal Form 1116 for Canadian taxes: Use it to complete the line 6 worksheet if you paid tax to a Canadian province or territory.
If an entity paid tax on your behalf, include the entity-level return showing the other state's tax liability. If you were not required to file an individual return there, also show your share of the income and taxes paid by the entity.
If you claim the 183-day rule exception, include the required statement from the other state's tax department.
How to file
- Complete a separate Schedule M1CR for each state or province to which you paid qualifying taxes. Use Schedule M1RCR for Wisconsin.
- Full-year residents enter the smaller of lines 5 and 6 on line 7. Part-year residents enter the smaller of lines 5 and 10 on line 11.
- Report the credit on line 3 of Schedule M1C. If you have multiple schedules, add the applicable line 7 or line 11 amounts from each Schedule M1CR and Schedule M1RCR.
- Include Schedule M1CR with your Form M1, along with any required supporting returns or statements.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Continuing when line 4 is zero or less: Stop there. You do not qualify for this credit.
- Using withholding or estimated payments as the tax amount: Line 6 uses the other state's tax before those payments are subtracted.
- Including excluded taxes: Do not include taxes paid to local governments or national governments, including Canada or a U.S. possession. Do not reuse Canadian provincial or territorial tax used for a federal foreign tax credit; follow the line 6 worksheet.
- Including certain lump-sum retirement distributions: Exclude income reported on Schedule M1LS from line 1 and the related tax from line 6.
- Missing entity-tax boxes: Check the appropriate composite or non-composite tax box if a pass-through entity paid the tax on your behalf.
- Incorrect rounding: Round dollar amounts to the nearest whole dollar. Carry the decimals on lines 3 and 9 to five places, and enter 1.00000 if the numerator exceeds the denominator.
Questions people ask
Can I claim the credit as a part-year resident?
Yes, if you meet the eligibility requirements. Generally, you must have been a Minnesota resident when you received the income taxed by both states and must file an income tax return with the other state.
What if I paid tax to more than one other state?
Complete a separate Schedule M1CR for each state, using Schedule M1RCR for Wisconsin. Add the applicable credit amounts and enter the total on line 3 of Schedule M1C.
Can tax paid by an S corporation or partnership count?
The instructions say to include income taxes paid to another state by an S corporation or partnership that you included on line 2 of Schedule M1MB. Follow the entity-return documentation and checkbox requirements.
Is there a penalty for fraudulently claiming the credit?
Yes. If a fraudulent claim results in a refund, the penalty is 50% of the refund attributable to fraud. If it reduces your tax liability, the instructions also provide for a penalty of 50% of the unpaid tax.