VA non resident income not flowing to resident state return for Maryland

[Love2Cruise]

Client is a Maryland resident with VA non resident income. On the federal information page, I've entered Maryland as state of residence on 12/31/2024, selected VA as the non-resident state and checked the Non-resident filers box. However, the VA income is not flowing the MD return as it's showing total wages for both states. When I populate the 502CR, it's empty.I've done plenty multi-state returns with FY and PY resident and non-resident income and this is the first time I've had this issue. Am I doing something wrong or has something changed in ProSeries?

[rbynaker]

We may need more info on your fact pattern.

FYI, VA & MD have a reciprocity agreement.  So wages earned in VA by a MD resident are taxable on the MD return (and not taxable on a VA return).

If you have a part-year resident that's a different story.  If you have a VA rental property owned by a MD resident that's a different story.  If you have a Sch C business operating in both VA and MD that's a different story.

Tell us your story. 🙂

Rick (in VA)

[Love2Cruise]

Ahhhh....you are correct. Completely overlooked the reciprocity between the two. 

Client is a MD resident with VA W-2 wages,(traveling medical professional). But why is VA not refunding the entire tax withheld if it's not taxable as a MD resident. 

[rbynaker]

On the W-2 Wks enter all of the income as MD source.  Enter $0 for VA wages but leave the VA withholding.  If there's no other connection to VA you'll file a VA 763-S to get the withholding back (it might still have to be mailed in with the W-2 attached.)

Have your client tell their employer to STOP withholding VA taxes.  If they're friendly they can also START withholding MD tax (and may need to catch up on the missing first 3 months . . .)

Rick

[Love2Cruise]

When I saw the W-2, I was wondering why the witholding was for VA, especially since she basically travels the MD/DC/PA area for her assignments. I mean, they have employees everwhere.But then again, she didn't request the change I'm sure. I will certainly make the suggestion. 

Thank you for your assistance and direction...Rick from VA! 😊

Have a great night!

YG from VA 

[Love2Cruise]

For my clarification, the W-2 is reporting VA wages with the VA state w/h ID number. On the W-2 worksheet, are you saying to leave the state wages blank and just enter the VA withholding?

[rbynaker]

Put $0 for the VA wages.  ProSeries automatically pulls the state wage info from the W-2 into the Non-Resident Wks so that's the easiest way to get the numbers to flow correctly.  If you've already done other entries there it might be easiest to just delete that form and start over (and sometimes it's easier to delete the entire VA state and start over!)

[Love2Cruise]

When I change VA income to $0, it gives me the electronic filing error - "box 17 entry is not valid".

The only way I seem to be able to do this cleanly, although it still may not be correct, is to change the allocation on the non-resident allocation percentage section of the 763 to $0, which then refunds all the withholding. It's essentially going around the butt to get to the elbow, but it worked. Is that what you were getting to from the beginning? Or does it not sound right?

[rbynaker]

I think your endgame is to get a 763-S, which probably can't be efiled.  Maybe you can do the same with a 763 but I've not tried it.

[Love2Cruise]

I agree. However, attempting to change the VA income to $0 on the W-2 worksheet, not only affects the ability to e-file the state, but the entire return. So...I'm going to double-check and review it with the method I used to make sure everthing is flowing and reporting properly. If so, I'll just go with it. 

Again, thank you for your help. I sincerly appreciate it! 😊