Maryland Tax Form Shows More Than I Earned as a Part-Year Resident

plu
plu Member Posts: 4 Newcomer
in Filing my taxes

On my MD Form 502SU, Line ab, it shows more than I actually earned from U.S. Government obligations when in Maryland since I was only a part-year resident. The remainder of my earnings from U.S. Government obligations are in other states, which is even shown in FreeTaxUSA's returns for my other states.

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Answers

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 115

    Hello,

    It sounds like there may be an incorrect entry in the software. When you are a part-year resident, the software will ask you to allocate the income that was earned while a resident vs your total federal amount. This is probably where the error may have occurred.

    For Maryland, please go to State -> (make sure that Maryland is selected) Maryland Income. There, you should see a list of federal income and a space for you to enter the amount of Maryland income. You will just want to enter the amount that is taxable to Maryland in the space provided, which means it may not be the same amount listed for the federal amount.

    If you looked there and are not able to fix the error, I would recommend that you contact support because they can view your individual entries and see where the amount may be coming from.

  • plu
    plu Member Posts: 4 Newcomer

    Thanks for your help. Yes, I made sure to enter the amount that is taxable in Maryland correctly so I am unsure how else to proceed besides having technical support look at it. My thinking prior was that maybe Maryland tax law is written where US gov bonds are tax free and counts against income even if it is not earned in Maryland.

  • kiarab
    kiarab FreeTaxUSA Agent Posts: 115

    Hello again,

    Yes. I would recommend that you contact support at this point of time. They will be able to view your entries and see where that amount is coming from. Also, sometimes the way states calculate things can give the appearance that more income is being taxed in that state than should be, especially if it is a part-year/non-resident return. Our support agents should be able to tell you if that is the case.

  • plu
    plu Member Posts: 4 Newcomer

    Thoughts on what customer service said?

    Hello,

    Thank you for contacting customer support. I'm happy to assist you with this.

    Your total U.S. Government Obligations are included on your MD return because MD calculates your part-year resident taxes in a bit of a backwards way.

    First, MD starts with your total federal income, then they subtract the income you received as a nonresident and your nontaxable state income to get your part-year resident income. 

    So rather than your income and subtractions being based on what belongs to MD, it's more so based on what income does not belong to MD which includes your total U.S. Government Obligations rather than a portion.

    It's just a bit of a backwards way to get to the amount you report being taxable in MD, but this is how their forms are set up.

    Please feel free to respond with any follow up questions.

    Thank you,

    Corina

    Customer Support

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