State taxes

[Rlsmo478]

I collect unemployment from DC, lived in Virginia for all of 2020 except the last 3 weeks when I moved to Maryland. When going through TurboTax, all of the state taxes I owe are going to Maryland, but we think they should be going to Virginia. How can we fix it so they do go to Virginia?

[DianeW777]

When you are in the federal return, be sure you have the correct amount of wages,  entered for VA and also MD.  You can use your pay stubs to determine the amount earned in each state. If only one employer and you worked in both states be sure to add another state to that W-2.

If you did not have any wages while you lived in MD, then you need not be concerned with the federal W-2 section.

In the Personal Info section be sure to say you earned money in another state if you had wages in MD and VA. Once this is completed you should be able to enter the correct income on each part year resident return as you go through each state return.

MD and VA rules for unemployment benefits:

• MD: Benefits for qualifying filers. UI payments are currently subject to federal and state income taxation. Beginning with Tax Year 2020 and including Tax Year 2021, the Act exempts from the state income tax the UI benefits received by an individual earning less than $75,000, and couples filing jointly or individual heads of households earning less than $100,000.
• VA: Virginia does not currently conform to federal tax legislation enacted during 2021, including the American Rescue Plan Act of 2021. If related unemployment compensation was excluded from federal adjusted gross income, it should be added back as a Fixed Date Conformity Adjustment on your 2020 Virginia return. Use code 37 to subtract any applicable unemployment compensation benefits.

[Rlsmo478]

We’re still a little confused over here. Here are more details:

1. My state income for VA was $25.5k

2. My state income for MD was $500

3. I earned $27k from unemployment from DC

turbotax calculated that I owe $1200 in state taxes to Maryland. When doing the Maryland return, it asks for income from another state, which we entered as the $25.5k. Should the $27k from unemployment be included in that “income from another state” figure?

thank you!

[DMarkM1]

The first step in multiple state filing is to be sure the My Info section is correct.  Your resident state on 31 Dec should be MD.  The other state you lived in was VA and put in the date you moved to MD. 

For the question did you earn income in the other state section, the answer is "no" .  Washington DC has a reciprocity agreement with all other states you do not need to file there.  

That should trigger TurboTax to generate a part-year form for each of MD and VA.

In the MD interview you will arrive at a page titled "Additional info for part-year residents".  There you will enter the VA income and the amount of unemployment income that was received as a VA resident.

In the VA interview you will get to a series of allocation pages where you enter the VA sourced income including the prorated amount of unemployment that belongs to VA.