In regards to filing MD Form 505-Nonresident Income Tax Return, I have been experiencing an issue with Line 45-Nonresident Tax Paid by Pass-Through's. MD partnerships that withhold nonresident tax from partners distributions are reported on Form 510, Line D-1. Non Resident Tax paid by PTE. For the past two years, I have been having issues submitting MD Form 510 with my MD-505 through ProSeries software. I attached the form in the EF center and specifically select type Form "510 K-1" as the attachment. The returns are received by Maryland but MD disallows the tax withheld claiming they did not receive the attachment. This form is required for all Nonresidents. I then have to respond to the MD notice and resubmit all the K-1's by fax. Has anyone else has this issue? Thank you for your help.
As a MD CPA I get the notice on maybe 25% of the returns even though the K-1 was attached. I actually get this on many states. My guess is that K-1 withholding is not tracked by the states like W-2 or 1099 withholding is, so they cannot see it in their system (they don't post the withholding from the 1065/1120S to the individual). It's embarrassing because the client thinks we messed up but after explanation and mail in, all is well.