How to file Maryland K-1 504 form (MD resident)

[Ajga83]

Where/how do I enter the information on the Maryland K-1 (504) form. I'm a MD resident and these forms (the federal K-1 and MD 504 K-1) are resultant being a beneficiary of a trust.

The only information on these pages are under the Distributed Net Taxable Income, Maryland Modifications and Nonresident tax paid by Pass-Through Entity (PTE) section, more specifically boxes 1, 3 and 4.

This information doesn't seem to correlate with the federal K-1 information and I haven't seen anywhere to enter this information. Any help is greatly appreciated.

[DavidS127]

Enter the federal K-1 into TurboTax, and then when you complete the MD state return TurboTax will ask for the information needed from the MD K-1.  The TurboTax question will ask if you need to make any adjustments to your K-1 form, and you will use the information from the MD K-1 to answer those questions.

To enter your Form 504 K-1 additions and subtractions, in your Maryland state tax return find the screen "Here's the income that Maryland handles differently".  Scroll down to the Business section of that page, and find the Partnership and S Corporations Adjustments line.  Click to Start or Revisit that section.  You should get a question "Estate and Trust Additions".  Answer Yes, and then on the next screen enter the name of the trust and the amount of your MD K-1 box 3 additions.  Next, Continue and you'll get a screen for "Estate and Trust Subtractions".  Answer Yes, and you'll get a box to enter your MD K-1 box 4 subtractions (enter as a positive number). Your Maryland Form 502 will now include the additions and subtractions related to your MD K-1.

Note that if any if the income from the federal K-1 is interest or dividend income, you may have answered a question about how much of that was from U.S obligations.  TurboTax will automatically deduct that as a subtraction from your Maryland return.  So, check line 13 of your Form 502 to make sure you don't "double-up" the Maryland subtraction by entering that "income from U.S. obligations" once as a response when you entered the K-1 and a second time as a trust subtraction.  

[Edited 03/06/2020|9:25am PST]

[Ajga83]

Thanks, David. I have completed the MD state return and it has checked everything, but it never asked me about Investments, the K1, etc. Is there a specific section I can navigate to to update?

The three boxes (1, 3 and 4) ask state the following information, which wasn't on the federal K1.

1. Beneficiary's share on net taxable income distributed from estate or trust.

3. Beneficiary's  share of Maryland addition modification from estate or trust. (Specify applicable modifications and amounts. See instruction 7, Maryland modifications in fiduciary instructions).

4. Beneficiary's share of Maryland subtraction modifications from estate or trust. (Specify applicable modifications and amounts. See instruction 7, Maryland modifications in fiduciary instructions).

I can't determine where the information from these boxes should be entered.

[DavidS127]

Here is box by box breakdown of your amounts on the Form 504 K-1, and where they go in TurboTax:

Box 1 is your share of taxable income.  I assume this amount is the same as your federal K-1, and if so it is already captured by your federal K-1 entry and doesn't need to be entered again.

Box 3 is for Maryland "additions", and you should have an area in your MD state return for "Additions".

Box 4 is for Maryland "subtractions" and you should have an area in your MD state return for "Subtractions". 

To enter your Form 504 K-1 additions and subtractions, in your Maryland state tax return find the screen "Here's the income that Maryland handles differently".  Scroll down to the Business section of that page, and find the Partnership and S Corporations Adjustments line.  Click to Start or Revisit that section.  You should get a question "Estate and Trust Additions".  Answer Yes, and then on the next screen enter the name of the trust and the amount of your MD K-1 box 3 additions.  Next, Continue and you'll get a screen for "Estate and Trust Subtractions".  Answer Yes, and you'll get a box to enter your MD K-1 box 4 subtractions (enter as a positive number). Your Maryland Form 502 will now include the additions and subtractions related to your MD K-1.

Note that if any if the income from the federal K-1 is interest or dividend income, you may have answered a question about how much of that was from U.S obligations.  TurboTax will automatically deduct that as a subtraction from your Maryland return.  So, check line 13 of your Form 502 to make sure you don't "double-up" the Maryland subtraction by entering that "income from U.S. obligations" a second time as a trust subtraction.  

For more information on what is being added and subtracted, see page 4 of the Maryland Fiduciary return instructions PDF at this link.

[Edited 03/06/2020|9:16am PST]

[Ajga83]

Thanks, David. You are correct in assuming box 1 is the same as the federal amount. It's good to know that I don't need to re-enter this anywhere.

I can't find the additions and subtractions sections that correlate with boxes 3 and 4. Can someone specify where I should enter this information?

[DavidS127]

To enter your Form 504 K-1 additions and subtractions, in your Maryland state tax return find the screen "Here's the income that Maryland handles differently".  Scroll down to the Business section of that page, and find the Partnership and S Corporations Adjustments line.  Click to Start or Revisit that section.  You should get a question "Estate and Trust Additions".  Answer Yes, and then on the next screen enter the name of the trust and the amount of your MD K-1 box 3 additions.  Next, Continue and you'll get a screen for "Estate and Trust Subtractions".  Answer Yes, and you'll get a box to enter your MD K-1 box 4 subtractions (enter as a positive number). Your Maryland Form 502 will now include the additions and subtractions related to your MD K-1.

Note that if any if the income from the federal K-1 is interest or dividend income, you may have answered a question about how much of that was from U.S obligations.  TurboTax will automatically deduct that as a subtraction from your Maryland return.  So, check line 13 of your Form 502 to make sure you don't "double-up" the Maryland subtraction by entering that "income from U.S. obligations" a second time as a trust subtraction.  

[Edited 03/06/2020| 9:13am PST]

@Ajga83 

.

[Ajga83]

Box 3.

(a) Muni Income Taxe 4015

(b) State Taxes 10000

Box 4.

(a) U.S. Govt Intere 234

[DavidS127]

To enter your Form 504 K-1 additions and subtractions, in your Maryland state tax return find the screen "Here's the income that Maryland handles differently".  Scroll down to the Business section of that page, and find the Partnership and S Corporations Adjustments line.  Click to Start or Revisit that section.  You should get a question "Estate and Trust Additions".  Answer Yes, and then on the next screen enter the name of the trust and the amount of your MD K-1 box 3 additions.  Next, Continue and you'll get a screen for "Estate and Trust Subtractions".  Answer Yes, and you'll get a box to enter your MD K-1 box 4 subtractions (enter as a positive number). Your Maryland Form 502 will now include the additions and subtractions related to your MD K-1.

Note that because some of the income from the federal K-1 is interest or dividend income, you may have answered a question about how much of that was from U.S obligations.  If so, TurboTax will automatically deduct that as a subtraction from your Maryland return.  So, check line 13 of your Form 502 to make sure you don't "double-up" the Maryland subtraction by entering that "income from U.S. obligations" once in response to a question when you entered your K-1, and a second time as a trust subtraction.  

[Ajga83]

I don't have a Partnership and S Corporations Adjustment line in the Business section.

@DavidS127How do I access form 502 to check? Sorry if this seems intuitive, but I can't find/access much. I'm not sure if it matters, but I'm using a purchased copy of the Home and Business Turbo Tax.

[DavidS127]

Try this to get the Partnership and S Corporations Adjustment line to appear in order to enter your Maryland Form 504 K-1 additions:

1. Go back to the federal K-1 entry.  If the federal K-1 box that has the U.S. Government interest is box 1 or box 2 of the federal K-1, put the $234 U.S. Govt interest from your MD K-1 in the "U.S. Bond interest" box underneath the box where the income is reported.
2. If instead your U.S. Govt. income was reported as a Capital Gain in box 4a of your federal K-1, you'll enter the $234 in your Maryland return, a screen "Capital Gains from U.S. Obligations are Tax Free".
3. Now go back to the screen "Here's the income that Maryland handles differently".  You should now see the Partnership and S Corporations Adjustment line now. Click on that to enter your Additions from box 3 of your MD K-1, but NOT the Subtraction for box 4 of your Maryland K-1.  That $234 subtraction has already been entered via entries you made in either step 1 or 2, above.

To see your Maryland Form 502 in TurboTax Home and Business, click the Forms mode icon (top right, blue bar) look for the Form 502 in the list of tax forms on the right.  

TurboTax Online users will need to print or preview a PDF of your tax return to see Maryland Form 502.  Select Tax Tools and then Print Center from the left menu, and then select the first option, Print, save, or preview this year's return and follow any additional instructions.  TurboTax Online users may also use the "Preview my 1040" feature to view a state tax summary, which will show the amount of additions and subtractions. Click the drop-down arrow next to Tax Tools (on the left pane), click Tools (just under Tax Tools on left pane), in the pop-up window click View Tax Summary, on then on the left pane click the MD Tax Summary.  Click Back on the left pane to get back to the interview questions.
[Edited 03/06/2020|11:16am PST]

@Ajga83 

[Ajga83]

Thanks, David. I think we're almost there as step 1 that you outlined worked and I entered the $234. Unfortunately, I still don't have the Partnership and S Corporations Adjustment line. Turbo tax did recognize the $234 entry though as it provided a pop-up that recognized the $234 as income from U.S. Obligations that Maryland handles differently, but I'm unable to determine where to add the additions from box 3 previously outlined.

[DavidS127]

First try to go to Forms mode (icon on top right in blue bar).  On the list of forms in the left panel, find the Maryland form 502SU.  If it is not there, open one with the Open Form button and search window.  Now, go to the Maryland return and look for the Partnerships and S Corporations Adjustments line.

If that doesn't work, try this as a workaround to trigger the Partnerships and S Corporations Adjustments line in your Maryland return:

1. Go to Federal>>Personal>>Personal Income>>Business Investment>>Schedule K-1 and add a "dummy" Form 1065 Partnership K-1.  Just fill out the page with a "dummy" name and address, and hit Continue. 
2. Then, go to your Maryland return to see if the Partnerships and S Corporations Adjustments line is there.  If so, complete your MD K-1 box 3 Additions.
3. Then, go back to the K-1 section, and delete the "dummy" Partnership K-1 you don't need.

[Edited 03/06/2020|2:54pm PST]

@Ajga83 

[Ajga83]

@DavidS127

Neither option worked. I'm able to find the 502SU form, but it doesn't "hold/retain" when you switch back to the easy path to answer questions. Do you know where I should enter the box 3 additions directly on the 502SU form? It seems like I could do that.

Adding a dummy K-1 didn't work either. It triggered a lot of forms, but the 502SU was not one of them.

[DavidS127]

To enter your MD K-1 box 3 Additions in Forms mode, look for the "Addition Wks" in the left panel under the Maryland forms.  If it is not there, use the "Open Form" button and search for "Other Additions".  Select the Other Additions Worksheet-Resident.  Enter your MD K-1 box 3 Additions on Line c. Put the trust name in the in the text field and the total amount in the number field.

[RLK03]

I'm a non-resident and i want to enter sch 504 k1 for my wife and