Do we have to pay income tax for Minnesota?

Question

Me and my wife purchased a house in Minnesota and moved on 9/1 of this year. We were previously renting an apartment in North Dakota. These two states have reciprocity. We still work in North Dakota but commute from Minnesota now. Do we have to pay income tax in Minnesota since we spent most of the year in ND? Also we filed the paperwork for homestead property tax credit in Minnesota. Will be able to apply this to our taxes for this year if we only pay ND income tax?

MatthewD · Answer

When states have tax reciprocity you pay taxes on the income for your resident state.  So you would need to file a ND return for the part-year residency in ND and a MN return for the part-year residency in MN, regardless of where you are working. You may pay taxes in MN depending on how much you earned.

MN says, "To qualify for a homestead, you must:

* Own a property
* Occupy the property as your sole or primary residence
* Be a Minnesota resident"

https://www.revenue.state.mn.us/homestead-classification

If you only file a ND return, you cannot claim the MN Homestead Credit.

KeriC · Answer

@DLM You will likely need to file a part-year resident return for both states; North Dakota and Minnesota.

By filing a part-year resident MN return for 2024, you will be able to also receive the MN homestead property tax credit if you otherwise qualify.

You and your wife will want to fill out Form NDW-R and provide the forms to your employers. This will allow them to change your withholding to MN taxes. Next year, when you are a full-year resident of MN, you will not be required to file a ND return at all.

https://www.tax.nd.gov/sites/www/files/documents/forms/business/ndwrfillable.pdf