Can my Maryland non-resident income tax be more than my Maryland source income?
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New Member

Can my Maryland non-resident income tax be more than my Maryland source income?

I am a member of a Maryland LLC. I am not a resident of Maryland. TurboTax calculated that I owe Maryland an amount larger than my Maryland source income. On my Federal & home state (Vermont) returns I am getting significant refunds. I have a section 179 deduction and a capital loss which Maryland seems to de-couple. This return is for tax year 2016.

3 Replies
Level 10

Can my Maryland non-resident income tax be more than my Maryland source income?

Something is not being handled properly.  There is no way that your Maryland tax would be equal to or greater than your Maryland source income.  

Review your forms 505 and 505NR to make sure that you have appropriately reported your Maryland sourced income and income everywhere. In particular review page 2 of form 505.  Attached are some links to the forms which may help you understand how this works:

http://forms.marylandtaxes.com/current_forms/505NR.pdf

http://forms.marylandtaxes.com/current_forms/Nonresident_booklet.pdf

http://forms.marylandtaxes.com/current_forms/505.pdf
*A reminder that posts in a forum such as this do not constitute tax advice.*
New Member

Can my Maryland non-resident income tax be more than my Maryland source income?

Thanks for the references. I was able to struggle through all of Maryland's smoke & mirrors to verify the TurboTax result. Maryland's procedure is to dis-allow the federal deductions for section 179 and capital loss to calculate Maryland Taxable Net Income of $2658. My Maryland source income is $143 and my Maryland tax is $164. Interesting outcome when considering that my federal gross income is below Maryland's filing threshold.
Level 10

Can my Maryland non-resident income tax be more than my Maryland source income?

Yes that does make a difference when you adjust for state addbacks.  

Don't forget that you will most likely get a credit for taxes paid to other states on your state of residency tax return; this assumes that you live in a state that has an income tax.
*A reminder that posts in a forum such as this do not constitute tax advice.*
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