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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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Is it W-2 income?
Or some other type of income?
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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.
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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.
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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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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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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.
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You have to override it to do that. Was hoping for another way. It was a problem last year also
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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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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.