Frontline Worker Pay (MN)

[minnesotapaintlady]

Last October MN sent out "Thank you" pay to people who continued to work in-person at certain jobs considered critical in 2020.  This is not taxable to the state, but is supposed to be included on our Federal returns.  However, I can't find WHERE.  It was under $600 ($487), so the state didn't send out a 1099 of any kind and the instructions on the state site say to see the 1040 instructions for where to include it (helpful).  Would this be a 1099-G? 

I don't know how they expect anyone to claim this at all if they're not sending out forms?  Most people I've brought this up with are like, "What? Screw that.  Nobody told me I have to claim it".  

[haapai]

All that I can say is that 1099s have to be mailed by the last day in January of the following tax year, so there's time for one to arrive.  Also, if your state tax return begins with AGI, there may be special instructions or an additional line to deal with how to deduct those payments from your MN taxable income. 

If you can get your hands on a paper version of the MN state income tax form or it's electronic equivalent, you may find some clues. 

[TheOtherMe]

Internal Revenue Code §61(a)

Internal Revenue Code §61(a)

Current

History

Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:



61(a)(1)

Compensation for services, including fees, commissions, fringe benefits, and similar items;



Unless the state of Minnesota specifically excluded it from federal income, it is taxable.

[haapai]

Oooh, I've just googled a few of the things that you have probably also googled.  You are indeed right.  The state will not send out a 1099 because of the amount, and everyone appears to be on the honor system to report it on their federal returns and then subtract it from AGI on their state returns. 

It's pretty shitty tax collection policy.  If you want people to pay their taxes, you should make it easy for them to figure out what they owe and hard for them to ignore it.  This is the opposite of that strategy. 

As someone who has made IRA contributions that were calculated to qualify for the Saver's credit, I think that this is a filthy business.  What you made and what you owe and what you need to push into an IRA in order to pick up a credit should be more transparent than this. 

[minnesotapaintlady]

Jan 19, 2023 17:16:15 GMT -5 TheOtherMe said:

Internal Revenue Code §61(a)

Internal Revenue Code §61(a)

Current

History

Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:



61(a)(1)

Compensation for services, including fees, commissions, fringe benefits, and similar items;



Unless the state of Minnesota specifically excluded it from federal income, it is taxable.

I know it's taxable.  What I want to know is where it's added when doing my taxes.  If it's considered 1099-MISC, that is actually earned income and would have a different effect on my taxes than if it's unearned.  With no form to go by it seems like I'm just guessing.

[skeeter]

Schedule 1, line 8? (catch all line for "other income")

[minnesotapaintlady]

Jan 19, 2023 20:05:00 GMT -5 skeeter said:

Schedule 1, line 8? (catch all line for "other income")

Ugh.  I'm going to have to research this a little.  Right now my kid is getting tons of financial aid due to qualifying for Auto Zero, but there is this little caveat in the formula...

Only filed a Schedule 1 to report the following additions or adjustments to income: unemployment compensation, educator expenses, IRA deduction, student loan interest deduction, or Alaska Permanent Fund dividend.

Losing that would be huge.  I'd rather give back the $487 than lose that!

However, next year the financial aid formula is completely changing and I think that was eliminated from the qualifications, also it's likely I won't need to file a financial aid application anymore because I already did for next year and (knock on wood), if he takes a couple classes this summer he will finish next year.

[TheOtherMe]

I don't know forms and line numbers any more but I would say other income.  If you don't want to report it there, go for miscellaneous income which carries over to Schedule C, I think.  

It shouldn't be earned income.  

I know nothing about FASA.

[skeeter]

You are a LOT smarter than I am regarding taxes, etc., so I'm probably wrong, but when I pulled up the Schedule 1 Form, line 8i was for prizes and awards, so assumed that is what you were looking for. 

[TheOtherMe]

Jan 19, 2023 20:44:32 GMT -5 skeeter said:

You are a LOT smarter than I am regarding taxes, etc., so I'm probably wrong, but when I pulled up the Schedule 1 Form, line 8i was for prizes and awards, so assumed that is what you were looking for. 

I would say that is where it goes and that is not earned income.

When I won the computer from Staples the FMV was not considered earned income.  Of course, the value was ridiculous and I found the sales price for the date I won the contest and used that as my income amount.  It was during a back to school sale and I wasn't paying taxes on the number they put down.

[skeeter]

Did you happen to find out the answer to your question minnesotapaintlady?

[minnesotapaintlady]

Jan 21, 2023 18:45:32 GMT -5 skeeter said:

Did you happen to find out the answer to your question minnesotapaintlady ?

No.  I haven't looked into it much since I posted.  It makes essentially no difference on my taxes due to over $1000 in non-refundable credits I can't use due to no liability, but that using schedule 1 is making me nervous. 

I can't file before the end of February anyhow, so I have time to do some more digging.

[skeeter]

Jan 21, 2023 19:43:52 GMT -5 minnesotapaintlady said:

Jan 21, 2023 18:45:32 GMT -5 skeeter said:

Did you happen to find out the answer to your question minnesotapaintlady ?

No.  I haven't looked into it much since I posted.  It makes essentially no difference on my taxes due to over $1000 in non-refundable credits I can't use due to no liability, but that using schedule 1 is making me nervous. 

I can't file before the end of February anyhow, so I have time to do some more digging.

When you figure out where to put your "thank you pay", please post the answer. I couldn't find anywhere else to enter it except for schedule 1, so am curious if I just didn't look hard enough.

[minnesotapaintlady]

Well, according to this, the IRS hasn't given instructions on the MN stimulus yet.

ttlc.intuit.com/turbotax-support/en-us/help-article/state-taxes/need-enter-state-stimulus-payment-turbotax/L9uuXUGJm_US_en_US

[minnesotapaintlady]

The state sent out an email to all the recipients today.

Tax treatment of Frontline Worker Pay
The Minnesota Department of Revenue is contacting you about how to report Frontline Worker Pay on your 2022 tax returns. Because federal Forms 1099 were not issued for these payments, we wanted to share guidance on reporting the payment.

How do I report Frontline Worker Pay on my 2022 tax returns?
This payment:
• Is taxable federally. 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:
o Line 29 of Schedule M1M, Income Additions and Subtractions.
o Line 10 of Form M1PR, Homestead Credit Refund (for Homeowners) and Renter’s Property Tax Refund.
o Line 5b of Schedule M1ED, K-12 Education Credit.

Researched the financial aid thing a lot more today and am confident that the schedule 1 thing no longer exists on the new form to be released in October so big sigh of relief there.

eta:  There was like 15 different subsections under line 8.  I added it at the end and typed in specifically what it was from on the form.