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June 1, 2019
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Do I file a Part-Year resident return for Virginia and New York, and file Non-resident for Maryland?

  • June 1, 2019
  • 3 replies
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I lived in three states in 2017. I lived in Virginia, then I moved to Maryland for three months, then moved to New York. It seems that TurboTax will only allow me to file two Part-Year resident returns. Should Virginia and New York be filed as Part-Year resident, and Maryland be filed as Non-resident?

Best answer by DanielV01

It depends.  This is admittedly a little tricky, because Virginia and Maryland are reciprocal states.  Normally that arrangement makes filing state returns easier, but not in this case.  This is because by statute you fit the description of a nonresident for Maryland, and more so since you correctly state that TurboTax (and many states) do not allow for three part-year returns to be filed (when both a move-in and a move-out of the state occur in the same calendar year).  Under "normal" situations, when you file a part-year resident and a nonresident return, your resident state gives you a credit for the amount of income you earned while working in the nonresident state, which is accurate and not that difficult to prepare in TurboTax.  

But, because VA and MD are reciprocal states, they will not allow you to claim a credit in this way.  You are simply taxed to your resident state, and you claim a reimbursement of mistaken withholdings (both VA and MD have special returns for this) to get the nonresident state to return the state tax to that state.  For your situation, this is probably what I would recommend:  file Virginia and NY part-year returns, and treat your MD residency as if you were still living in Virginia at the time, so that you may file a mistaken withholdings return to Maryland and get back Maryland taxes (but then VA taxes that portion of income).   

Admittedly, that is not 100% accurate to your situation, but it most faithfully holds to the spirit of state tax law without making your return overly complicated.  Here is a screenshot to assist you to set up the Maryland return should you go this route of filing:  

3 replies

DanielV01
DanielV01Answer
Employee
June 1, 2019

It depends.  This is admittedly a little tricky, because Virginia and Maryland are reciprocal states.  Normally that arrangement makes filing state returns easier, but not in this case.  This is because by statute you fit the description of a nonresident for Maryland, and more so since you correctly state that TurboTax (and many states) do not allow for three part-year returns to be filed (when both a move-in and a move-out of the state occur in the same calendar year).  Under "normal" situations, when you file a part-year resident and a nonresident return, your resident state gives you a credit for the amount of income you earned while working in the nonresident state, which is accurate and not that difficult to prepare in TurboTax.  

But, because VA and MD are reciprocal states, they will not allow you to claim a credit in this way.  You are simply taxed to your resident state, and you claim a reimbursement of mistaken withholdings (both VA and MD have special returns for this) to get the nonresident state to return the state tax to that state.  For your situation, this is probably what I would recommend:  file Virginia and NY part-year returns, and treat your MD residency as if you were still living in Virginia at the time, so that you may file a mistaken withholdings return to Maryland and get back Maryland taxes (but then VA taxes that portion of income).   

Admittedly, that is not 100% accurate to your situation, but it most faithfully holds to the spirit of state tax law without making your return overly complicated.  Here is a screenshot to assist you to set up the Maryland return should you go this route of filing:  

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February 19, 2021

I have paid $40 for Maryland but it does not come up can you help me 

February 19, 2021

I live in New Hampshire and Maryland

February 22, 2021

If you were a resident of two different states during the tax year (for example, if you moved from one state to another), you'll normally file part-year returns in both states, assuming each state collects income tax and you had income in each state. Please see the FAQ link posted below for more information. Please let us know if this helps:

 

How do I file a part-year state return?

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