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Maryland Tax Return

Joe Meat
Level 1

I have a PA resident and the software is showing tax in MD, a reciprocal state.  I understand the special NR tax but not the income tax.  Has anyone found a way to do this without overriding?

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9 Comments 9
sjrcpa
Level 15

Is it W-2 income?

Or some other type of income?


Ex-AllStar
Joe Meat
Level 1

Yes it is from a W-2  and the software calculates tax for MD.  There is withholding for the special nonresident tax and that is correct but I am also getting income tax.  I could just not file a MD return.  Let them ask for it later as no tax is due.  .  

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dascpa
Level 10

A PA resident is not taxed on their W-2 income in MD and visa versa. If the W-2 lists MD withholding the program will not understand and you will have to file for a refund in MD showing it all to be taxable in PA. You do this by starting with the Information Worksheet and reporting a nonresident state and overriding the amount to be taxed in MD.  If however there is income from anything other than W-2 wages then there is tax in MD as the reciprocity only applies to wage income.

Terry53029
Level 13
Level 13

If your employer is withholding taxes from the state you are working in, and you live in a reciprocal state you need to have employer correct W2 so it doesn't happen next year. There is no need to override anything in the program, as you just file a non resident return for the state that taxes were withheld from, and a resident return for where you live. At the bottom of the federal worksheet part X1 is the info for nonresident tax info.  

Joe Meat
Level 1

That is my problem.  I know the rules but the software calculates a tax.  I was told to post here to see if anyone else encountered the problem.

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dascpa
Level 10

Then in the MD Nonresident Form 505 you report -0- as taxable to MD and all wages taxable out of state.  The 505 will calculate a refund of withheld taxes.

Joe Meat
Level 1

You have to override it to do that.  Was hoping for another way.  It was a problem last year also

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dascpa
Level 10

You always have to override because the W-2 shows MD income and you're trying to tell the computer it is not.  The software does not understand reciprocity.

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Kyme
Level 1

You don't have to override. In the federal return you can change the allocated amount with the form: 'NR Alloc Wks'. This will change the amount in the state return and not effect the W2.

Kyme CPA
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