Warning: The IRS Just Ruled On Minnesota’s Frontline Bonus Pay
If you received Minnesota's frontline worker bonus paycheck last year, there are now some guidelines from the IRS regarding your 2022 tax return.
After considerable debate, state legislators here in the Land of 10,000 Lakes FINALLY came to an agreement in May 2022 on issuing a one-time bonus check to those hardworking Minnesotans who worked on the frontlines during the early stages of the pandemic in 2020.
After a sign-up period last summer, checks were finalized and began being deposited in Minnesotans' bank accounts last fall to those workers the state said were eligible. But now that it's tax season, do those who received that check have to pay taxes on the bonus money?
That's the question a lot of Minnesotans are asking themselves right now, as the Minnesota Department of Revenue (MDR) says those checks worth $487.45 were distributed to roughly one million frontline workers in the Gopher State last year.
And according to the MDR website, the answer to whether or not you have to pay taxes on that money is a yes/no question: Yes, it *IS* taxable income and you do need to pay federal taxes on it. And no, it's *NOT* taxable income here in the state of Minnesota, so you *SHOULDN'T* include it as income on your 2022 Minnesota state tax return.
Clear as mud, right? Here's how the MDR website explains the ruling:
- Is taxable on your federal income tax return. Report it on line 8 of federal Schedule 1 (Form 1040).
- Is not taxable in Minnesota and not included in household income. If you report the payment on line 8 of Schedule 1, subtract it on these lines:
- Line 29 of Schedule M1M, Income Additions and Subtractions.
- Line 10 of Form M1PR, Homestead Credit Refund (for Homeowners) and Renter’s Property Tax Refund.
- Line 5b of Schedule M1ED, K-12 Education Credit.
The MDR site goes on to note that if you received that extra $487.45 bonus payment last year, you *WON'T* get a separate Form 1099 because the payment is less than the $600 required to generate such a form.
Meanwhile, if you changed jobs during the pandemic (or subsequent downsizing in some industries since then), or are maybe looking for a different job now, keep scrolling to check out the 30 highest-paying jobs here in the North Star State!