Question

part-year residency income after leavng military

Forum|Forum|5 years ago
May 3, 2020
1 reply
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I was in the military in 2019 and separated midway through the year (when I was serving my home of record was a state without income tax). After separating I worked and lived in Maryland. In filing my MD state return as a part-time resident for 2019, one section allows you to subtract your income received during the time of nonresidence in trying to figure out your MD taxable income.

Question: My income from my military W-2 logically goes into this box, however what about dividends and interest that were earned for 2019? Do I enter include these numbers in their entirety, prorate them based on the time I was in the military (and a non-MD resident) for 2019, or not list them at all?

Confused what to do here as these items were earned thoughout the year and I haven’t been able to find any guidance on this on the state website. Thanks!

SteamTrain

For the other numbers, you need to divide them up according to when they were actually distributed to you. Thus, only the Interest and dividends (and capital gains...if any) hat you received after separation from the military should be entered as MD income.

IF you held Mutual funds that issued year-end distributions, then those entire amounts are MD income....but for the rest, you need good monthly statements.

Bank/savings/checking interest is usually pretty pitiful, so only enter interest from a bank account if it was 50cents or greater for the last half of the year. (49 cents , or lower, would round to zero, and may result in form errors)

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I don't have the MD tax forms myself, adn I can't see exactly how the MD software interview proceeds. So the interest/dividends/cap gains might be as separate entries...you can/should go thru the entire interview multiple times anyhow...so run thru it multiple times so you see exactly where and how to enter each of the actual amounts.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

S

S177_2Author

Thanks so much for this helpful information. If you don't mind, I had one more question I could really use your expertise on (had posted it to the community as well but haven't gotten any replies):

For 2019, I paid real estate taxes for a home owned in VA, however was in the military so my state of legal residence was different (it was a state without any state income tax; I also had no income in VA so do not need to file a VA state return). I separated mid-year then became a resident of MD where I am filing state taxes now.

In doing my MD state taxes now, there is a section in the itemized deductions worksheet that accounts for state and local real estate taxes paid (it says to reference line 5b on federal Schedule A) in determining deductions, and Turbotax automatically put in the amount of my VA real estate taxes after I had finished my federal taxes.

Question: Even if I paid real estate taxes in VA, can this amount still be accounted for/deducted in my MD state taxes itemized deductions?

Thank you again, much appreciated!

SteamTrain

@S177_2 OK...Again pointing out that I do not have MD tax forms,a and I'm not fully cognizant of how MD part-year proceeds....here's my reading of the MD forms.

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Nope......messed that up, and I have to remove my evaluation as being off base.

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@dmertz You have & know MD forms (i think) do I have this right?

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*