The Minnesota Department of Revenue received questions about the taxability of the?Post-9/11 Veteran Service Bonus distributed by the Minnesota Department of Veterans Affairs (MDVA).

Income tax treatment

For federal purposes, the bonus payment may be taxable. See ?Veterans? Benefits? in IRS Publication 525 for taxability information and the federal Form 1040 instructions for how to report the payment. You may also call the IRS at 1-800-829-1040.

For Minnesota purposes, the payment is not taxable on Form M1, Individual Income Tax.

If taxpayers included this payment in federal adjusted gross income (FAGI), they may subtract the federally taxable amount on line 25 of the 2022 Schedule M1M, Income Additions and Subtractions.

Schedule M1ED and Form M1PR treatment

Taxpayers must include the payment in household income when filing either Schedule M1ED, K-12 Education Credit, or Form M1PR, Homestead Credit Refund (for Homeowners) and Renter?s Property Tax Refund.

If the payment is:

• Not included in FAGI, include it on line 5a of Schedule M1ED and line 20 of Schedule M1PR-AI, Additions to Income
• Included in FAGI, no further action is needed

Questions?

If you have general questions about the Post-9/11 Veteran Service Bonus, contact your county veteran service officer at www.macvso.org or call 1-888-LINKVET (1-888-546-5838).

If you have Minnesota tax questions, call us at 651-296-3781 or 1-800-652-9094.

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