Your resident state taxes all income but gives a credit for income taxed by another state. Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.
- First, prepare your part year resident DC return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
- Then prepare your resident state VA return and it will generate a credit for your income already being taxed in the part year resident state.
- The credit will be the lower of the state tax liabilities on the same taxable income. You may owe your resident state, if they have a higher tax rate along with differences in how the taxable income is calculated.
It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.
You get credit for the lower state tax on the lowest taxable amount.
- Each state calculates taxable income differently.
- Each state has its own tax rate/ system.
- You get the lowest of both categories as a tax credit.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
