Multi State Unemployment

Forum|Forum|6 years ago
February 11, 2020
1 reply
16 views

I have a client that is a full year resident in one state and works in another. They drew unemployment from work state and had state taxes withheld. The unemployment is taxable in the state they live. Getting critical diagnostic #43738 that there must be wages for tax withheld. This is not the case and the returns are correct - Anyone else having this issue and how did you fix it? Thank you.

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itonewbie

Level 15

Unemployment compensation is generally sourced to the state of payment and not covered by reciprocal agreements. This means taxes will need to be paid to the former state of employment and a credit will be claimed in the state of residence.

Why do you think PTO is wrong? Did you read anything different in the reciprocal agreement of the states in question?

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N

NeeruamAuthor

Level 2

I am not sure I am reading your response correctly. There is no reciprocal agreement. They are a full year resident in WI and work in MN. Received Unemployment from MN and paid MN Tax. The Unemployment compensation is taxable in WI and they should get credit for the tax paid to MN, and pay taxes to WI. I entered the Unemployment as taxable in WI and entered the state taxes as MN tax paid, thus I believe what you said and I want. But that is giving me an error, telling me MN requires a 7 digit State ID (done) and a MN income amount when there is a withholding amount.

itonewbie

Level 15

Yes, we're on the same page then. I'd just put it slightly differently - pay tax to MN (as they have the primary right to tax that income) and claim a credit on WI return.

In your original post, you said the diagnostic says you must have wages for the withholding. Your latest post now says the error tells you "MN requires a 7 digit State ID" and that is done. What exactly does the diagnostic say and what is "done"?

Your latest post also says "MN income amount when there is a withholding amount". Question is: Did you code the unemployment income to MN or WI? You need to make sure it is coded to MN.

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