The short story is that you’re
paying the taxes once (with the MD 510) and you get credit for it on your
personal return, MD-505.
The longer story:
The tax that MD wants your
S-Corp to pay is on behalf of the
nonresident shareholders (you). Apparently MD feels more secure getting the
payment from the S-Corp than trying to collect it from a nonresident
shareholder several states away.
The estimated tax payments the
S-Corp has made to MD (on your behalf) should be reflected on the 1120S and they
will then flow to the MD-510 return.
If
you haven’t already, the tax payments should be entered on the 1120S, page 3,
in the Deductions section, line 12, on the yellow lines below line F. [See Screenshot #1, below.]
- Enter Code S – Other
Deductions.
- In the middle
section enter something like MD nonresident shareholder taxes.
- Enter the amount in the far right part of the line.
From here, the figures just
flow: (like the song, the “knee bone is
connected to the leg bone…ankle bone…, etc..)
- The MD tax entered on
line 12 of the 1120S Sch. K flows to line 12 of the K-1 [Screenshot #2] with the description
that you added. [Screenshot #3]
- It appears on lines 7-9
of the MD-510 and onto the MD K-1, line D-1. [Screenshot #4]
- When you enter the K-1 into your
personal return, it will eventually show up on line 45 of the MD Form 505
(personal nonresident return.) [Screenshot #5]
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