My son worked in another state while away at college

[woodtah]

My son worked in our home state during the summer, but when he went to college out of state he got a job for a few months.  Does a separate state need to be purchased and filed?  The home state is Maryland, and the other state is South Carolina.  If we have to purchase SC, do we need to create a separate federal form for just that W-2 so it can be filed in SC?  If we can use the same federal form and include all income from both states, is the software smart enough to know how to calculate the tax information for just the other state (SC)?  What if the cost of purchasing the extra state is more than the amount of the return he would get?

[KrisD15]

Yes, 

your son will file as a Maryland Resident (since he was only away for school, he keeps his Maryland Residency) but will also file a Non-resident South Carolina return to pay the tax on the income he earned in South Carolina. 

No, you only enter one Federal Return and you enter all his tax documents on that one Federal Return.  Indicate that Maryland is his resident state and "Yes, he earned income in another state".  Indicate South Carolina as that other state. 

Next, do the non-resident South Carolina Tax return and allocate the South Carolina income to that return. He will pay South Carolina tax on that income. 

Finally, do his resident Maryland return and claim all his income. He will be taxed on all the income, however he will also get a credit for the tax paid to South Carolina so that he is not double-taxed. 

Yes, the TurboTax program is smart enough to calculate the tax. 

If he has a 1098-T that is eligible for an education credit (Box 1 on the 1098-T tuition paid is larger than Box 5 scholarships received) and he is your dependent, YOU enter the 1098-T on YOOUR return to get the credit. If there is tax due (Box 1 on the 1098-T tuition paid is less than Box 5 scholarships receive) HE enters the 1098-T and claims that taxable income. 

I am unsure what an additional state return costs, you might post that as a different question as a product question. We answer mostly tax questions

I GUESS it is $40.00 but unsure. 

[woodtah]

Thank you for the information.  I had already entered all of the information for my son except for the SC W-2, including the MD state return, so not sure if this is why I am seeing the issue I am about to ask about.  

I went back and edited the return to say he worked in another state, and purchased that state.  I entered the W-2 information and then proceeded to complete the SC state return.  After I finished and performed the check, I had the following error:

Schedule NR: Line 2b taxable to South Carolina should be entered since there is a taxable interest income amount in column A.  If none of the taxable interest income in column A is taxable to South Carolina, enter a zero in column B.

Am I to enter the state income tax amount from the SC W-2 (box 17) here?