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.
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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".
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".
Great, thanks very much, appreciate the help.
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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