How to claim tax credit paid to another state when composite return was filed by the Partnership

[BobLiu]

I am a resident in Virginia, having a limited partnership in Illinois. The Partnership has filed a composite return to Illinois for all partners.  

When I tried to claim Virginia tax credit paid to Illinois, TurboTax asks me to first file the tax return for Illinois, then come back to finish my Virginia tax return. However, the composite return was already filed on my behalf, I certainly don't want to file another tax return as an individual, what should I do in this scenario?  

Product: Deluxe Edition, Windows Desktop

[RobertB4444 · Accepted solution]

If the partnership in Illinois paid taxes to Illinois for the partnership then the taxes were paid to cover the partnership's tax bill.  If they were paid to Illinois on your behalf through the K-1 then you need to file an Illinois tax return in order to get the credit on your Virginia tax return.  It is also possible that by filing the Illinois tax return you'll just get a refund of the taxes paid to Illinois instead of a credit on the Virginia return.

Either way you need to make sure to file the Illinois return first in order to get the credit.

@BobLiu 

[BobLiu]

Hi @RobertB4444 

Later I found a paragraph in page Credit for Taxes Paid to Another State | Virginia Tax (copied below), which fits my situation, does it affect your conclusion that I still have to file Illinois tax return in order to claim Virginia tax credit? 

• Pass-through entity composite returns: If you are an owner or shareholder in a pass-through entity (PTE), and you are included in a nonresident composite return filed by the PTE in another state, attach a composite filing statement from the PTE showing your inclusion in the filings as well as your share of the income, tax liability, and taxes paid. Preferred formatting for a composite filing statement.