M2NM: Non-Minnesota Source Income and Related Expenses (2025)
Minnesota · Minnesota DOR · Used for tax years 2025
2025 Minnesota Schedule M2NM reports an estate’s or trust’s income and related expenses, separating the total amounts into Minnesota and non-Minnesota portions. It calculates the non-Minnesota adjustment reported on Form M2.
Who files this form
File 2025 Schedule M2NM with Form M2 if your estate or trust had income or related expenses from sources outside Minnesota.
Schedule M2NM must also be completed to include amounts on:
- Lines 2 and 7 of Form M2.
- Lines 2 and 7 of Form M2X.
- Lines 2 and 6 of Form M2SB.
What you'll need
Have these returns and details available:
- Your 2025 federal Form 1041 and Minnesota Form M2, which provide amounts for the schedule.
- Schedules KPI, KS, or KF, if the estate or trust is a partner, shareholder, or beneficiary.
- The estate or trust's name, federal ID number, and Minnesota ID number.
- Details showing which income and expenses belong to Minnesota and which belong to sources outside Minnesota, including the portion retained by the estate or trust.
How to file
Include Schedule M2NM when you file Form M2. The supplied text does not give a mailing address or e-file instructions.
To complete the schedule:
- Enter total amounts in Column A, the Minnesota portion in Column B, and the non-Minnesota portion in Column C.
- Round amounts to the nearest whole dollar. Columns B and C must add up to Column A.
- On line 35, subtract line c34 from line c16.
- If line 35 is positive, enter it on Form M2, line 7. If it is negative, enter it as a positive number on Form M2, line 2.
Common mistakes
- Including amounts distributed to beneficiaries. Include only the portion retained by the estate or trust. Do not include amounts being distributed to a beneficiary.
- Leaving the columns out of balance. Columns B and C must add up to Column A.
- Not rounding amounts. Use the nearest whole dollar.
- Carrying a negative line 35 amount to Form M2 as negative. Enter it as a positive number on Form M2, line 2.
- Leaving out the schedule. You must include Schedule M2NM when filing Form M2.
Questions people ask
What counts as non-Minnesota source income?
Examples include gains from selling real or tangible property outside Minnesota, income from a farm or business outside Minnesota, and rents or royalties from tangible property outside Minnesota.
How are interest and dividends treated?
Intangible income, such as income from stocks or bonds, earned by a resident estate or trust is assigned to Minnesota. For nonresident estates and trusts, interest, dividends, and income or gains from securities are non-Minnesota source income unless generated by a trade or business, including S corporations and partnerships, and apportioned to Minnesota.
How do I allocate expenses?
Allocate direct expenses to the income they relate to. For indirect expenses, divide line 9, Column C, by line 9, Column A, then multiply the result by the indirect expenses to determine the non-Minnesota amount. Only expenses related to non-Minnesota income count as non-Minnesota expenses.
What happens to losses from outside Minnesota?
Non-Minnesota source losses must be added back to the extent they were deducted in figuring federal taxable income or loss. Examples include losses from property sales, farms, and businesses outside Minnesota.