The short story is that you’re paying the taxes on...
Level 14

State tax filing

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.]

  1. Enter Code S – Other Deductions.
  2. In the middle section enter something like MD nonresident shareholder taxes.
  3. 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..)

  1. 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]
  2. It appears on lines 7-9 of the MD-510 and onto the MD K-1, line D-1. [Screenshot #4]
  3. 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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