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Maryland Resident 510D Payments

KupCPA
Level 2

Have any Maryland tax preparers ran into this problem:

If you "elect to remit tax on behalf of resident Maryland members shares of income" for partnership tax returns, the program is refunding the excess above the tax due. However, the program still give credit for the full tax payment on the K-1. For example, $2000 PTE 510D payment made with only $1000 in partnership tax due, the program lists amount to be refunded $1000. The program would also in that case give the members credit for the full $2000 in payments on the K-1's. Essentially giving the members credit for the $1000 they are refunding. 

Shouldn't this be limited to the total resident tax or not refund the excess?

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dascpa
Level 9

In your opinion if the tax software is issuing a refund, then the 510 is incorrect right? There should be no refund  and the K-1's should reflect the full 510D payment. 

        Correct, the tax return is incorrect in your example above.

        I am no longer having that particular problem with the software.  Wonder why you still are?

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dascpa
Level 9

Two issues here - first, there is to be NO refund on the Maryland 510 UNLESS nonresident taxes have been paid and there are no nonresidents. The program was giving full refund for everything but we got that fixed. Now the program is giving refunds if there is a net loss and that fix is in the works (who knows when).

But your issue is not exactly correct.  If $2,000 was paid with 510D and only $1,000 of tax is due then (a) there is to be no refund of the extra $1,000 on the 510, and (b) the members or stockholders get full credit on their K-1 for the $2,000 as that was what was paid in. No different for the nonresident treatment that has been there for many years.

 

KupCPA
Level 2

Thanks for the response. I understood the MD instructions to indicate there should be no refund unless there was zero tax liability. That's how the program operates for 1120S currently. 

And I completely agree with your answer below. The K-1 should give credit for $2000 in payments and no refund should be issued. In your opinion if the tax software is issuing a refund, then the 510 is incorrect right? There should be no refund  and the K-1's should reflect the full 510D payment. 

Thanks!

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dascpa
Level 9

In your opinion if the tax software is issuing a refund, then the 510 is incorrect right? There should be no refund  and the K-1's should reflect the full 510D payment. 

        Correct, the tax return is incorrect in your example above.

        I am no longer having that particular problem with the software.  Wonder why you still are?

View solution in original post

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KupCPA
Level 2

Are you entering the 510D payment amount in St. Schedule K screen 38 and the line that says Estimated Tax Paid With Form 510D? 

 

I can't get this to jive and customer support replied to our phone call with the form was correct and the matter was closed.

Line 20 of the 510 says "Amount TO BE REFUNDED (enter the amount from line 16D if line 13 is zero) yet it still puts in the refund amount even though line 13 is not zero! 

Anyway, if you have time to respond and I am not entering it correctly please advise. Thanks for all your help.

 

 

 

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dascpa
Level 9

I would not normally post anything on this website but I believe it would be easier in a phone call.  Please contact me after 2pm today. I'll give you my website and you can pull the phone number from there. www.davidsteincpa.com

 

mpkline
Level 3

I am very interested to hear how to remedy this problem.  I am having the same issue in the Partnership module of Lacerte. The S-Corp module is handling it correctly, but not the  Partnership.  If you find the answer, please post here.

Thank you!

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KupCPA
Level 2

I have just been informed by our rep they are working on a fix now.

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mpkline
Level 3

Thank you for letting me know. I have not yet heard back from Lacerte directly on this. 

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