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Topher_C
Level 1

MD resident, VA LLC - file in both states?

Hello

 

I'm a physician and live in Maryland (MD), and my office is also in MD. My practice is part of a group that's an LLC with a Virginia (VA) address. I'm a limited partner in the LLC and my receive a K-1 1065 with compensation in box 4.

 

Am I correct that I have to file an MD return (since I'm an MD resident) but also have to file a non-resident VA return because the LLC is based in VA? It looks like the MD/VA reciprocity agreement doesn't apply in my case?

 

Thanks for in advance for any help.

1 Best answer

Accepted Solutions
DavidS127
Expert Alumni

MD resident, VA LLC - file in both states?

Yes, you have Virginia source income and must file a VA nonresident tax return according to the Virginia instructions for Nonresidents at this link:

 

"Virginia source income includes income passed through from a partnership, S corporation or limited liability company that does business in Virginia."

 

And yes, the reciprocity does not apply because the K-1 income is not considered wages.

 

Note, however, that you are eligible for a credit on your Maryland resident tax return for the taxes you pay to Virginia on the "same dollar of income".

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3 Replies
DavidS127
Expert Alumni

MD resident, VA LLC - file in both states?

Yes, you have Virginia source income and must file a VA nonresident tax return according to the Virginia instructions for Nonresidents at this link:

 

"Virginia source income includes income passed through from a partnership, S corporation or limited liability company that does business in Virginia."

 

And yes, the reciprocity does not apply because the K-1 income is not considered wages.

 

Note, however, that you are eligible for a credit on your Maryland resident tax return for the taxes you pay to Virginia on the "same dollar of income".

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Topher_C
Level 1

MD resident, VA LLC - file in both states?

Great, thanks very much, appreciate the help.

KarenM90
Level 11

MD resident, VA LLC - file in both states?

Also please note that TurboTax generally suggests that you file prepare your Non-Resident income tax return first in TurboTax, before preparing your Resident return, just to be sure the credits calculate correctly.

 

 

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