I lived in Maryland for part of the year, then became a resident of another state (California) but still had Maryland source income while not a resident. In this circumstance Maryland requires me to file two returns, once as a part year resident for the period I lived there, and once as non resident to cover the rest of the year.
Page 1 of the MD non-resident booklet indicate the need to file two returns. (http://forms.marylandtaxes.gov/current_forms/nonresident_booklet.pdf) Per the table on page 1, because I am a "Taxpayer who moved into or out of Maryland during the tax year and received income from Maryland sources while [I was] a nonresident of Maryland, the booklet indicates I should file "Form 505 Nonresident Return and Form 502 Resident Return"
Does turbotax allow multiple returns from the same state for the same person? How do I handle this circumstance in turbotax?
Yes, it appears that you are required to file both a part-year resident Form 502 and a non-resident Form 505.
I'm not aware of a way to file two state returns for the same state within a single TurboTax tax file. Absent a way to do this, I would use the CD/download version of TurboTax, prepare the federal tax return, save two copies of the tax return file at this stage, then prepare the part-year resident Maryland tax return using one copy and prepare the part-year resident California and nonresident Maryland tax returns using the other copy. You'll need to check carefully to see that credit for taxes paid to another state are correctly handled on each of the state tax returns.
(It actually may not matter which file is used to prepare the California tax return, or you could prepare the California tax return before making the copies in which you'll prepare the Maryland tax returns.)
...I think you re mistaken.
The nonresident MD forms are also used for part-year residents and handles income both while you were a (ptyr)resident of MD, and during the time you were a non-resident.
It all is handled during the MD partyr/nonresident interview (whenever TTX finally has those forms)
<a rel="nofollow" target="_blank" href="http://forms.marylandtaxes.gov/16_forms/nonresident_booklet.pdf">http://forms.marylandtaxes.gov/16_forms/nonresident_booklet.pdf</a>
See the last row of the box under instruction 1 on page one of the booklet you linked. I am a "Taxpayer who moved into or out of Maryland during the tax year and received income from Maryland sources while [I was] a nonresident of Maryland", and therefore, should file "Form 505 Nonresident Return and Form 502 Resident Return"
Interesting....Not sure (which is why I put this all in as a comment in the first place).
There have been thousands and thousands of former MD residents in your situation....never been an issue taht I've seen, so I suspect that TTX uses whatever forms are necessary .
............maybe someone who actually has the 2016 software forms and can test that situation (since 2017 isn't out yet) will be able to educate us all.
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Yes, it appears that you are required to file both a part-year resident Form 502 and a non-resident Form 505.
I'm not aware of a way to file two state returns for the same state within a single TurboTax tax file. Absent a way to do this, I would use the CD/download version of TurboTax, prepare the federal tax return, save two copies of the tax return file at this stage, then prepare the part-year resident Maryland tax return using one copy and prepare the part-year resident California and nonresident Maryland tax returns using the other copy. You'll need to check carefully to see that credit for taxes paid to another state are correctly handled on each of the state tax returns.
(It actually may not matter which file is used to prepare the California tax return, or you could prepare the California tax return before making the copies in which you'll prepare the Maryland tax returns.)
Also, I think you can e-file all of the returns. Obviously you'll e-file the federal tax return from only one of these files.
For 2018, you'll only be able to transfer in from one of these tax files, so you'll probably have to adjust the amount of state taxes paid or state refunds received in 2018 to incorporate this info from the other file.
Still, I would think that the TTX software would always include both forms (whenever both are required) for someone in this situation. It's not that unusual...a person moves out of MD mid-year, but still has a rental home, or Farm, or other business presence operating in MD.
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I was hoping that it was like NC, that uses the main resident form for all situations, but, when necessary then uses a special PY/NR schedule to bring in the actual final NC-taxable amount midway down the form. I haven't seen that the MD forms do that (yet)
After some thought, I wonder if perhaps TTX considers this situation one return with two forms (505 and 502), and will fill and file both as part of a single return. (Similar to SteamTrain's comment)
In the Maryland module, a radio button allows you to select one of Full-year resident (Form 502), Part-year resident (Form 502), or nonresident (Form 505). For a part-year resident return, I only see a way to enter non-Maryland income, not Maryland income while not a resident. I see no way to get TurboTax to prepare both Form 502 and Form 505 in the same tax file.
If you use the multiple tax-file method, you'll probably have to allocate all of the Maryland tax withholding and estimated tax payments to the tax file used to file your federal tax return. That will probably mean zeroing the Maryland tax withholding in the other file so that you aren't credited for the same withholding on both the Form 502 and the Form 505. Forms 502 and 505 both require you to attach (included electronically when e-filing) Forms W-2 and 1099 that show tax withholding that you claim on the particular form.
Maryland allows online direct filing of form 502, so my plan is to use TurboTax Online to file Federal, California, and MD form 505, and then separately file 502 electronically via the Maryland portal. I'll have to fill both 505 and 502 first prior to filing California in order to compute the tax credit in CA earned for MD taxes paid. One concern is that I believe CA requires filing a copy of the other state tax return when claiming the credit, and I will have no way to electronically attach both forms 505 and 502 to my CA return.
Upon further investigation, I am incorrect -- CA does not require filing a copy of other state returns when e-filing. I merely have to keep a physical copy for record keeping.
Also, for anyone else who comes upon this question, the instructions for form 505 state that witholdings and estimated payments must be allocated between the two returns. Presumably, that means allocating proportionately by the relative percent of total MD income on each return.
Hi @morpate I might be in a similar scenario for tax year 2019... How did you finally end up filing your return in the above case? Basically I was in MD till Jan 13, then established residency in a income-taxless state but still got a paycheck with MD tax withheld on Feb 1...then started working in income-taxless state for rest of 2019 from late Jan 2019. So would i file the 505 first for period from Jan 14 to Feb 1 and then 502 for Jan 1 to Jan 13?
@ajitv123 Somehow I ended up with two TT accounts, but this is morpate.
Yikes, that's even worse than I had to deal with. I am not a CPA, but you may want to look into when income is considered "earned" in MD. Depending on the law and your particulars, the 2/1 paycheck may be considered income you earned while you lived in MD, and thus you would only need file form 502.
If not, and you have to file 505 and 502, what I did was, through the Turbotax DOWNLOAD only (not online)
1. Create my federal return
2. Create my resident return (in my case California)
3. Create my part-year resident return for MD. (form 505)
I had to do 505 first, because the non-resident taxes from MD had to be calculated in order to properly determine my other state tax credit in CA. That won't apply to you, since you will have no credit to claim in your new state.
I then filed the Federal and CA returns (NOT MD505), and saved the file (return 1). Then, I deleted the CA and MD 505, and created a new MD 502 return, and filled it out. I saved the new return (return 2) with the 502 as a new file.
Then, I printed the 505 from the 505 return and the 502 from the 502 return and filed by paper. In my case, I return to MD regularly, so I filed in person so the desk clerk could check the return was complete and I could get a receipt.
Turbotax download was required because
(A) I could not get the online software to allocate the W2 MD withholdings properly (which were to one return until I had no tax liability and the rest to the other return). The online software will allocate 100% of the MD taxes on your W2 to EACH return (so overclaiming a refund), and I couldn't change it.
(B) I couldn't get the online software to allocate my exemption, which has to be prorated based on percent of income earned while a resident and non-resident (and for which the instructions are entirely unclear in the MD tax booklet)
(C) The online software doesn't let you make a copy of a return and then modify it. The download let me file the federal and CA, and then save a copy and add the 502 on the copy only, which saved time and let me import my federal return.
I couldn't file the 502 online directly because of my tax situation. I was also told by the state of MD that unless you efile BOTH returns simultaneously, you are at risk of MD not associating them together as one return and rejecting the second return because you've already filed.
In 2020, turbo tax won't know that you filed two returns, and so will calculate the taxes paid in 2019 incorrectly (important if you itemize), so keep careful records of the total taxes you pay MD this filing season.
In the end, @dmertz predicted what I would have to do last year and what would happen this year with stunning accuracy.
Great reply - thanks..
But I think the 505 cannot be e-filed - correct? That way nobody will be able to file 502 and 505 simultaneously, unless you mailed both of them together and they processed it together.
I am leaning towards just filing the part year 502 - that will indicate to MD i am done living in their state too. I will use entire amount from old MD employer's W2 and use that to calculate the % of money earned in MD vs total earned factor.
My only thing is ..what date do i give as my last day in MD.. should it be the day i got my license in my new state or when i registered my car in new state or my lease date? All these dates are off my a few days.
The 502 and 505 can be e-filed. Turbotax only allows you to e-file one or the other though, not both simultaneously as the state of MD requires for people in our situation. Your question about what date to put down as your end of residency is outside my wheelhouse, unfortunately.