MO preparer question

[artp]

Filing a non-resident MO 1040 with $75 of MO source W-2 income who itemizes on Fed return with $2700 of real estate tax. MO NRI form is adding back the real estate tax as MO source income with result that she is paying $97 of MO tax on $75 of MO source income. How is that correct? What am I missing?
Art

[Bart]

What line on the MO NRI is the real estate tax being added back?

 

[artp]

Bart

 

It is added back on line S (Missouri modifications) on the NRI and comes from line 5Y on MO-A. The effect is to add this to Missouri source income.

 

Art

[Bart]

Is the $2700 of real estate tax non residential?

 

[artp]

No. It is on his personal residence.

[Lion EA]

His personal residence NOT in MO? You'll have to read the MO instructions for what to add back. Do you add back ONLY MO taxes paid or worldwide taxes paid?

[artp]

He is an IL resident paying real estate taxes on his personal residence in IL.

[Lion EA]

What do the MO instructions say about out-of-state state taxes paid?

[JoeFreitag]

On the only return I do like this, the real estate tax isn't added back on that line unless you took it as a deduction to income somewhere else on the Missouri return.

Did you deduct the taxes on line Q  / 8a of the 1040?

[artp]

I guess I am not making myself clear.  Let me try again. Taxpayer is an IL resident who is itemizing on the Fed return and deducting $2700 of real estate tax on his IL home.  He has $75 of wage income in MO. The MO-A is adding the real estate tax back to MO source income on line 5 of the MO-A and flows thru to line S on MO-NRI.

I am attaching a redacted copy of the MO schedules.MO Tax Return.pdf

[Bart]

Perhaps we are not making ourselves clear.  The real estate taxes on his personal residence are NOT an add back in Missouri.

[Lion EA]

But what are YOU doing? Do you have things labeled however your software suggests for non-resident state income AND deductions? Follow the MO instructions for what to add to MO source income and what NOT to add. Maybe use your Help key in that field to find what entries you need to make.

[artp]

Thanks for your replies. After further consideration we will not be filing a MO return for $75 of wages.

[Lion EA]

When all else fails, read the instructions:

You do not have to file a Missouri return if you are not required to file a federal return. If you are required to file a federal return, you may not have to file a Missouri return if you:

a. are a resident and have less than $1,200 of Missouri adjusted gross income;

b. are a nonresident with less than $600 of Missouri income; or

c. have Missouri adjusted gross income less than the amount of your standard deduction for your filing status.

Note: If you are not required to file a Missouri return, but you received a Wage and Tax Statement (Form W-2) stating you had Missouri tax withheld, you must file your Missouri return to get a refund of your Missouri withholding. If you are not required to file a Missouri return and you do not anticipate an increase in income, you may change your Employee Withholding Allowance Certificate (Form MO W-4) to “exempt” so your employer will not withhold Missouri tax.