Maryland 2% EXCESS tax

[wms52]

TURBOTAX is posting a Maryland 2% EXCESS INCOME tax (line 21b) on our Capital Gains......despite the fact that our Capital Gain is mostly from the sale of our VIRGINIA rental property (Virginia sale Capital Gain is 387,000 but is reduced by -17,000 LOSS in stocks). Overall total MARYLAND income without the VIRGINIA rental is under $100,000. But Turbotax is calculating that we must pay $27,000 in income tax. What are we doing wrong? 

[MaryK4 · Accepted solution]

Maryland now imposes an additional 2% tax on net capital gains for individuals whose Federal Adjusted Gross Income (FAGI) exceeds $350,000. Since your Virginia rental gain ($387,000) alone puts your FAGI over this threshold, the entire net gain is subject to this surtax, even if the property is located in another state.  See Technical Bulletin 58 Capital Gains.