Capital gains earned in a different state

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I am a resident in Maryland, I sold a rental property in South Carolina. SC taxed this sale X($900) amount. MD also taxed this sale at 9 ($9000)times the rate. This Capital gains was earned in the non-resident state of SC. It seems MD just wants their cut no matter where it comes from. Is there way to allocate this properly?

MaryK4

Alumni - Intuit

Look for the Other State Tax Credit Summary (see below). If you do not see a credit for the SC sale, you can add it here. By giving you a credit for the amount you paid to SC, you will not be taxed twice on the same income.

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JordanH62Author

Level 2

Ok I understand that part. I'm trying to understand MD tax regulations I guess. MD is gaining tax which was earned in SC. SC taxed the capital gains at their rate. MD is taxing me a their rate. it seems both states are getting their due. Where I expect MD not to have a dog in the fight. SC should get the tax not MD.

Does this make any sense?

DMarkM1

Alumni - Intuit

Yes, your resident state will tax you on all income from all sources. That is the same for all states.

Most states including MD do give a tax credit for taxes paid to another non-resident state to mitigate the double taxation. You are also correct that the tax credit will not be dollar for dollar to cover the all the MD tax. Basically, MD taxes at their rate and SC taxes at their rate so the credit will be the lesser of the SC tax you paid on the income or the MD tax on the income.

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