S CORP LOSS IN DC

[eemr19841]

I have a business registered in DC but i live in Maryland and all  the jobs are completed in DC. For 2022 i have a loss of around -7k which is reported on 1120-S and DC Tax Return. I always complete MD 502 full year resident since i reside in MD but my MD 502 tax return shows the AGI from federal including the loss in DC. Do i need to make any adjustment to my MD tax return since the loss came from DC? Any advice is helpful.

[ThomasM125]

No, since Maryland and the District of Columbia have a reciprocal tax agreement, any income or loss you incur in DC will be reflected on your Maryland tax return. The loss will show on your federal tax return and flow down to your Maryland tax return. So, you don't need to do anything special about it on your Maryland tax return.

[eemr19841]

Do i need to file a personal DC tax return as non-resident at all? Thank you.

[LindaS5247]

No you do not have to file a DC return.  Since there is a reciprocal tax agreement between Maryland and DC, you will only have to file your Resident return for Maryland.

A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns.

Click here for additional information on Reciprocal agreements between states.

[eemr19841]

So even if its business income net profit of an S-Corp a DC non resident return isn't required?

[ThomasM125]

Correct, you don't need to file a DC non-resident individual tax return since you are a resident of Maryland, a reciprocal state. That is the purpose of the reciprocity agreement, to reduce the need of residents in ajoining tax juristictions from having to file multiple tax returns.