The Minnesota Department of Revenue recently became aware of a potential issue with reporting state tax refunds in tax preparation software.

While the instructions for Form M1, Individual Income Tax, indicated amounts on line 6 of Form 1 should only include amounts reported on line 1 of Federal Schedule 1, you may also need to include state tax refunds reported on Schedules KF, KPI, and KS on line 6 of Form M1.

How is this issue being handled?

We have updated the instructions for line 6 of Form M1 to account for state income tax refunds received through a pass-through entity on the corresponding Schedule KF, KPI, or KS. Impacted Software Providers should be updating their products to reflect this change.

What should I do about this issue?

If your software does not allow state tax refund amounts reported on Schedules KF, KPI, or KS on line 6 of From M1, reach out to your software provider to have them update their software before submitting the M1.

If you already filed the return and did not include these amounts on line 6 of the M1, you may need to amend your return.