To properly spilt the deduction for U.S. obligations for Maryland state, please follow the instructions below: Open your return. When entering Interest Income, go to the screen titled, Do any of these uncommon situations apply? Then, click My state (ME, MD, MA, NH, NJ, or WV) doesn't tax all of this interest. Use the drop down menu to choose Maryland nontaxable interest, taxable to federal. Now, open your state return. On the page, Here's the income that Maryland handles differently, click Edit next to Two Income Marriage Deduction. On the line, Capital Gains from Sales of U.S. Obligations, enter the amount for Spouse in the column. The remainder will be allocated to the other spouse. If you have any additional questions, please respond below.

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splendidol

Level 1

Question

How can I get the Maryland state tax 2 income split does not correctly split the deduction for interest and dividends on U.S. obligations?

Forum|Forum|1 year ago
July 14, 2024
1 reply
2 views

No text available

TurboTax Online

LenaH

Community Manager

To properly spilt the deduction for U.S. obligations for Maryland state, please follow the instructions below:

Open your return.
When entering Interest Income, go to the screen titled, Do any of these uncommon situations apply? Then, click My state (ME, MD, MA, NH, NJ, or WV) doesn't tax all of this interest. Use the drop down menu to choose Maryland nontaxable interest, taxable to federal.
Now, open your state return.
On the page, Here's the income that Maryland handles differently, click Edit next to Two Income Marriage Deduction.
On the line, Capital Gains from Sales of U.S. Obligations, enter the amount for Spouse in the column. The remainder will be allocated to the other spouse.

If you have any additional questions, please respond below.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

J000

Level 2

I have the same problem. TurboTax Online inaccurately defaults the Maryland two income subtraction by allocating the full amount of (1) interest, (2) dividends, (3) rents and royalties, and (4) other income to just one spouse, thereby precluding the full Maryland two-income subtraction – even though I entered "both" spouses as owners whenever I was given that opportunity when entering the original data. Apparently, TurboTax’s online version won't allow access to Maryland’s worksheets to make appropriate adjustments. I'm concerned about showing interest income as capital gains in the Maryland workaround that was suggested. How do I fix this accurately for the four categories of income I mentioned? (Also, does this need TurboTax’s attention as a programming issue with TurboTax Online?) Thanks.

RogerD1

Level 6

The Maryland two income subtraction allows a deduction of up to $1,200 for a dual income married couple. The maximum amount of the deduction is $1,200, but it can be lower if the other couple's income (including wages and other allocated income items) are lower than $1,200. This is a link to a worksheet for this deduction in MD: Two income worksheet .

I tried a couple of scenarios with a married couple where one spouse only had $500 wage income and the couple jointly had $1000 of interest income and TurboTax correctly allocated half to interest income plus the one spouse's wage income to get a deduction of $1,000 ($500 wages + $1,000/2 interest). When I bumped up the wage income to $2,000 from $500, leaving the interest income at $1,000, TurboTax gave the correct result of $1,200 for the deduction, which is the maximum allowable.

Go back in and check to make sure that the deduction is figured correctly, keeping in mind that it can't be greater than $1,200.

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