Maryland Resident with Virginia rental property

[JAPAX]

I am a Maryland resident with Virginia rental property and $8,376 rental earnings in 2021 (no other Virginia income).  Maryland & Virginia have reciprocity, so I expected to pay taxes on the Virginia rental income thru my  Maryland form 502 tax return.  expected to file a Virginia Form 763 Nonresident return to show the income and tax payment thru Maryland.   However, TurboTax Premier 2021 says I need to file the Virginia 763 showing $230  tax due to Virginia and that I need to file a Virginia 760C for Underpayment of taxes.  My TurboTax Maryland 502 form shows  the rental income as a notation in cell 1e (Income < $10,000)  and $230 Credit to my Maryland income tax.  Am I reading TurboTax correct that I need to eFile to Virginia with a $230 payment and eFile to Maryland where the $230 payment is a credit ?  Shouldn't it be the other way around? 

[Cynthiad66 · Accepted solution]

@JAPAX - No.  It sounds like TurboTax is providing accurate information on e-filing both returns.  You owe and will pay Virginia and Maryland, being your home state, will show a credit of the amount owed/paid to Virginia.

If that is the scenario, then it is correct and should be e-filed.

One other thing to consider when preparing multiple states is to prepare the Non-Resident state first and then the home state.  I feel that you did that correct because it is advising you of how the transaction will be treated on both returns correctly.

[JAPAX]

Thanks Cynthiad66, 1 other thing has me extremely frustrated.  I completed all my state and Federal reviews, completed everything to electronically file returns for Virginia, Maryland, and Federal, entered all the payment information, previewed & saved the tax return & key worksheets, etc. ... then was stopped from filing my return with the "Check This Entry" error message on the Activity Worksheet for Form 8582 ... "This form is not ready to be filed due a change in the federal form.  It should be available soon".  I went over and over my entries, the worksheet, and Form 8582 numerous times but can't find an error or what's causing the problem.  I read several prior messages about people with the same issue but haven't seen a solution that's relevant to my situation.  I've never had this problem with a TurboTax product before.  I don't know if I need to change or what to change in my Form 8582, or if the IRS/TurboTax doesn't have the latest 8582.  I could use help --- thanks

[TeresaM]

Thank you for sharing this information. Our team is working to resolve the error message for Form 8582 Passive Activity Loss Limitations during Review of state returns and now expects to have this updated by March 3rd. Please try your return in Review on or after March 4th.

• If you have the desktop version of TurboTax, please be sure it updates when you launch the program.
• If you have TurboTax Online and it still gives this error message, please sign out of TurboTax, clear your cache and cookies, or try another browser, then sign back in and take it through Review. Please see this Help article for directions to clear your cache and cookies. Clearing cache and cookies in your browser 

If the federal forms are all finalized and it is ready to e-file, you can choose to file just the federal return at this time, then come back when your state forms are ready and e-file that return.

1. When you get to the Here are your filing options screen
2. Select Change next to your state return
3. On the Change filing method screen
4. Select I'm not ready to file
5. Click Save 

Note, if you don't e-file them together, you do have to wait until the federal is accepted before you can e-file the state. Sometimes this takes a day or even two. Here is a TurboTax Help article with directions for when you return to file your state return.

File State after the Federal is Filed

This list of state form availability will be updated. Please select the type of TurboTax you are using and your state, to see when forms are expected. State Tax Forms Availability Dates

[JAPAX]

Thank you for the information.  I was able to transmit my Federal return only.  I will try my 2 state returns after March 4th.  I appreciate the quick reply to my question ...      

[Sandpiper21]

I am not an expert, just another real estate investor who also has a rental property in VA while I am a resident of NY State.

I am confused as why the OP needs to pay tax to VA if his rental income is only $8376.   According to VA Tax website, if you are filing as single, the threshold is $11,950, and if you are married filing jointly, the threshold is $23,900.  In other words, if your VA income is less than the threshold, you don't have to file any return and don't have to pay any tax. 

My rental proceeds from VA was around $ 17,000.  Since my wife and I are filing jointly, I was under the impression that we don't need to file any tax return with VA because our income from VA is less than $23,900.  If my understanding is not correct, I would certainly appreciate if somebody can set me straight.

[RaifH]

You are not required to file if your Virginia Adjusted Gross Income is beneath the threshold. This is not the same as your income earned in Virginia.

It is your federal income adjusted to Virginia's tax law. It is usually not much different than the AGI reported on your Federal 1040 Line 11.

If you earned $80,000 federally, even if only $2,000 of that was in Virginia, you are required to file a Virginia nonresident return. 

Like every state, Virginia only taxes the income sourced by their state for a nonresident return, but the calculation to determine if you must file is based on your federal AGI. 

For more information on nonresident returns in Virginia, see the 763 Instructions. See page 10 of the pdf for information about nonresident filing requirements.

@Sandpiper21