Please refresh my memory. If client living in MT gets K-1 from estate in MN for interest income, this interest income is subject to MT taxes only, right? Client doesn't have any ties to MN otherwise. Only if he had cap.gains from property located in MN would he need to pay taxes to MN and file a tax return, right?
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Not 100% sure
I think it depends on the amount of interest income rather than the source. Because it is a Minesota estate it would follow the nonresident rule of $9,350 minimum requirement.
Part-year residents and nonresidents may be required to file a Minnesota return if their gross Minnesota source income is above the minimum filing requirement ($9,350 for the 2010 tax year). -
I agree with this. The general application of whether to file a non-resident return depends on the filing threshold in the non-resident state, not the particular type of income taxed -- unless that particular type of income is specifically excluded (or limited) by that state's laws. It is based on the source of the income,not usually the type. And, of course, if taxes were withheld, you must file to get it back, regardless of filing thresholds.Comment
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Thanks to both of you, in other words (just to get a general rule straight in my mind) the only income not taxed to non-residents is pension income no matter which state.....and this is the only income that has a blanket exemption. Everything else goes by threshold amounts and what the specific state exempts.
I checked on the MN website and they are excluding interest income. What I am not sure about is if this exclusion applies to all interest income or if it is different for Estate interest income flowing through.Comment
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So if
you use on line to buy a C/D at the Bank of Atlanta, located in Atlanta that would give you a chance at having Georgia filing requirement it it is enough, even if you are a full year resident to Montana??? I do not think so. Minnesota has tried a lot of things with all the snowbirds, but that would be a first if they tried on tracing interest through a trust/estate with only interest income. In fact if I remember right an installment sale of land was reportable back to MN for the capital gains, but not the interest income (the land was located in MN).
MN did win on the covenent not to compete that was excuted while in Minnesota the taxpayer left MN and stopped filing in MN. He lost as the covenent was for a period of time worked in MN. I was suprised at that one. You should see the amount of auditors in MN now. State government needs money and has increased the audit staff to collect more and the audit staff is collecting more....
Love to here from others on the interest income.Comment
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Whether or not interest income is sourced can vary depending on the state and the type of interest income. Most states will source interest from a business and at least one I've seen sources interest from installment sales of real property or a business that was sold in the state.Comment
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I think the complication
comes from where the 1041 is reported. It used to be the trust automatically moved to reporting in the state of residency of the trustee. I would love some specifics on when interest income is sourced differently than residency.. I better get aware of that.Comment
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Or considers interest from an OR business activity to be source income and MA sources interest from an installment sale of property in MA.Comment
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