Hello Irene (or anyone else that is listening from TurboTax),
The answer that Irene provided was part-helpful, so thank you very much, but the eventual answer is still to be provided. I have a comment underneath's Irene's answer below, but I am not sure anyone got informed that there was a clarification required. Could someone from TurboTax please look at my followup question in the response to Irene? You will have to look underneath Irene's answer in the Answer section below for my question, but here is some more clarification on the issue:
I am the owner & sole member of an S Corp, which is based in Colorado and does business part-year in MD. I recently filed my S-Corp MD return - 510, through TurboTax, and at the end, it asked me to send in my tax burden. I realize that I need to pay the MD tax on the S-Corp income, and I have been doing this every month on the Comptroller website. Since the business is an S Corp, and a pass through entity, it in and of by itself is not taxable, but because I earn in MD, and I am a single member LLC, I am paying these income taxes on my individual 505 state tax return. I am paying the tax owed to MD, which is the 5.75% of the Maryland income and the 1.75% non-resident income on my 505 state return. The reason for doing it this way is because the S Corp business earnings eventually flows to me, the individual, because I am sole member. If I am paying MD state income tax on the business portion of my income on my individual/personal 505 return, then I should not have to pay the same tax on that income the second time on my business return 510. Either that, or I pay that tax on the 510, and then I ask for credit on the 505 OR I list the MD business income as zero on my individual/personal return 505. The latter does not seem right because for both the IRS (1120S) and the CO state return, neither of them are asking for a payment on the business earnings - they both expect this to be on the individual returns for federal and state respectively. The confusion is only with the MD return, which is somehow expecting the tax payment on both the 510 and the 505. To explain this better, here is an example:
Let's say I have Maryland taxable income of $10000. The 510 expects me to pay 5.75+1.75 = 7.5 of that income which is $7500 on the 510 (line 9), but that $10000 also lists on the 505 return on line 10 column 2. So I end up paying $7500 twice, which is not right.
I feel that for S Corps in particular, that I should be able to defer the $7500 payment to the individual/personal tax return just like the CO and the Federal business tax returns.
Can someone confirm that this is correct? Perhaps the solution is that I need to send a copy of this explanation to the Comptroller's office with the voucher I was provided by TurboTax with this explanation? If I need to do this, why does the 510 even expect to be paid the business taxes when the personal tax return ensures that the income tax for MD gets paid with the individual's tax return?
Thank you for your kind attention,
Ashwin
