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2016 Minnesota Income Tax for Estates and Trusts

(Fiduciary) Form M2 Instructions

What’s New for 2016

Filing Requirements

1 was created by a will of a decedent who

at his or her death was a Minnesota resi-

An estate or trust - regardless if it is consid-

Federal Changes Not Adopted by

dent, or

ered a resident - must file Form M2 when:

Update as of January 2017

Minnesota

2 is an irrevocable trust, and at the time

Definitions used in determining Minnesota

A bill signed into law on

1. There is $600 or more of gross income

the trust became irrevocable, the grantor

allocable to Minnesota; or

taxable income are based on the Internal

January 13, 2017, conforms

was a Minnesota resident. A trust is

Revenue Code, as amended through

2. There is a nonresident alien as a benefi-

Minnesota law to federal law

considered irrevocable if the grantor is

ciary.

December 31, 2014.

when determining federal taxable

not treated as the owner as defined in sec-

[M.S. 289A.08.subd. 2]

Since that date, the U.S. Congress has

income for tax year 2016. As a

tions 671 to 678 of the IRC.

enacted tax provisions that may affect your

Income allocable to Minnesota includes:

result, taxpayers are no longer

Minnesota tax for tax year 2016.

For trusts that became irrevocable or were

required to recompute Minnesota

• Income earned from a resident trust or

first administered in Minnesota before

See the instructions on page 9 to determine

estate;

taxable income for Minnesota tax

January 1, 1996: A resident trust means any

if you need to make adjustments to your

• Income earned from Minnesota real or

purposes.

trust administered in Minnesota.

Minnesota return.

tangible property of a nonresident trust

or estate; or

Continue to check our website for further

To be considered a resident trust adminis-

• Business income apportioned to Minne-

updates.

tered in Minnesota, you must meet two of

sota from a nonresident trust or estate.

the following three criteria:

[M.S. 290.17]

• A majority of the discretionary invest-

When required, the trustee of a trust or the

Questions?

ment decisions are made in Minnesota,

personal representative of an estate is re-

• The majority of discretionary distribution

You can find forms and information, including

sponsible for filing the Minnesota Form M2,

answers to frequently asked questions and

decisions are made in Minnesota, and

Income Tax Return for Estates and Trusts

options for filing and paying electronically, on

• The trust’s official books and records are

(Fiduciaries) and for paying the tax.

our website at:

kept in Minnesota.

Bankruptcy estates. If the fiduciary of a

[M.S. 290.01, subd. 7b]

Send us an e-mail at:

bankruptcy estate of a Minnesota resident

businessincome.tax@state.mn.us

filed a federal return, a Minnesota return

Before You File

must also be filed. Use Form M1, Individual

Call us at 651-556-3075

Income Tax Return, to determine the Min-

Complete a Federal Return

Need Forms?

nesota tax and attach it to Form M2. File it

Before you complete Form M2, complete

in the same way you file federal returns.

Go to .

federal Form 1041, U.S. Income Tax Return

We’ll provide information in another format

for Estates and Trusts, and supporting

Resident estates. An estate is considered

upon request to persons with disabilities.

a Minnesota estate if:

schedules. You will need to reference them.

• the decedent was a resident of Min nesota

Complete

Contents

at the time of death, or

If you are a:

federal Form:

What’s new . . . . . . . . . . . . . . . . . . . . . . . . . . 1

• the personal representative or fidu ciary

General information . . . . . . . . . . . . . . . . .1–3

Charitable remainder (enter

was appointed by a Minnesota court—or

Filing requirements . . . . . . . . . . . . . . . . . 1

zero on Form M2, lines 1 and 9) . . . . 1041A

the court administration was performed

Before you file . . . . . . . . . . . . . . . . . . . . . 1

or charitable lead trust . . . . . . . . . . . .or 5227

in Minnesota—in other than an ancillary

Due dates and extensions . . . . . . . . . . . 2

Payment options . . . . . . . . . . . . . . . . . . . 2

pro ceeding.

Designated or qualified settlement

M2 line instructions . . . . . . . . . . . . . . . . .4–8

fund (under IRC section 468B) . . . . 1120-SF

File the first Form M2 cov ering the period

Federal Changes Not Adopted

See “Update” above

from the date of the decedent’s death to the

by Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . 9

Qualified funeral trust . . . . . . . . . 1041-QFT

end of the tax year. Be sure to check the box

Allocation of adjustments. . . . . . . . . . . . . . . 9

Electing small business trust (ESBT) . . 1041

Tax tables. . . . . . . . . . . . . . . . . . . . . . . 10–13

to indicate it is the fiduciary’s initial return.

Minnesota Tax ID Number

File subsequent returns for later years until

the end of the estate’s ad ministration period.

Your Minnesota tax ID is the seven-digit

number you’re assigned when you register

Resident trusts. The definition of a

with the department. It’s important to in-

resident trust differs depending on the

clude your Minnesota tax ID on your return

date—before or after December 31, 1995—

so that any payments you make are properly

the trust becomes irrevocable or is first

credited to your account.

administered in Minnesota.

If you don’t have a Minnesota tax

For trusts that became irrevocable or were

ID, you must apply for one. Go to

first administered in Minnesota after De-

and type Business

cember 31, 1995: A resident trust means a

Registration on the search box or call 651-

trust, except a grantor type trust, that either:

282-5225 or 1-800-657-3605.

Instructions For Form M2 - Minnesota Income Tax For Estates And Trusts (Fiduciary) - 2016

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