Maryland Tax Return

[Joe Meat]

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?

[sjrcpa]

Is it W-2 income?

Or some other type of income?

[dascpa]

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]

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]

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.  .  

[Joe Meat]

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.

[dascpa]

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]

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

[dascpa]

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.

[Kyme]

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.