Turbo Tax Maryland return problem

[rapmarks]

I usually do my son's taxes, and this year I filed his return on my Turbo Tax account.
He and his wife are residents of Massachusetts, she is getting PHD at Johns Hopkins in Baltimore, has a fellowship.
I filed federal, Massachusettes, both efiled, paid extra to do Maryland 505 non resident but asked my son to mail that form in.

He just received a bill from Maryland for an additional $10,000 plus, He called Maryland and they basically told him to figure it out himself. They said he had a mistake and to fix it.
It is obvious they are not accepting that they are non residents. They are taxing his entire salary in Massachusetts and also his inherited IRA withdrawal.

I called Turbo Tax. They refused to talk to me because it is my son's return. I explained that I did the turbo tax on my account. No, they need his permission to talk to me. They also said I must have made a mistake on the return, but it was checked and rechecked by Turbo Tax. In fact it never asked me for any information when I went to the Maryland return, just said I needed to file form 505 and then filled it in entirely from information from federal and Massachusetts return . If there is any mistake, it would be a mistake on all three returns.

I think the answer is to pay Turbo Tax the $25 to efile the return, but they would not let me ask them about it.
So everything is on hold here.

Any suggestions?

 

[SmithOp]

When you prepared the Maryland return, did you select Non Resident? That should be the correct status and form, and may only include the fellowship stipend.

Who did he contact? Most tax authorities have taxpayer advocates that assist. This comptroller page looks like the best contact.

Oops

 

[rapmarks]

When you prepared the Maryland return, did you select Non Resident? That should be the correct status and form, and may only include the fellowship stipend.

Who did he contact? Most tax authorities have taxpayer advocates that assist. This comptroller page looks like the best contact.

Oops

Thanks for the link, I forwarded it to my son
yes we used form 505 non resident and were due a refund
My son mailed the return from the post Office
maryland is taxing him as a resident, even with a Massachusetts address and earned income from Massachusetts.

 

[claraj]

I did some quick research on the internet and I am not providing any tax advice here... But I found that you are considered a statutory resident if you maintain a residence in Maryland for 6 months or at least 183 days. If one spouse is a resident and not the other, you should file separate Maryland returns.

 

[rapmarks]

She does not meet that criteria, she flew in on Mondays and flew out on Thursdays for one semester, but they are going to be closer this year.
the taxes are more than she was given as a stipend.
but I appreciate your post. I told my son to make sure they keep track.

 

[rapmarks]

Problem is worse. maryland is demanding $10000 plus penalties and interest on the $17000 my daughter in law earned as a fellowship at John’s Hopkins. They are residents of Massachusetts they paid Massachusetts income tax. They absolutely refuse to help him.
I filled out taxes with turbo tax.state also. He sent a third copy of all tax forms to them.
at the time of the filing ,she spent one semester, rented a room in a professors home, flew in on Monday and back home on Thursday for basically three and a half months. My son irked in Massachusetts, my grandson went to elementary school in Massachusetts. There is no way they can be considered residents of Maryland
any suggestions. He needs to hire someone to take care of this.

and yes itvwas filed as non resident

 

[dioxide45]

any suggestions. He needs to hire someone to take care of this.

You answered your own question.

 

[WorldT]

Assuming you answered all the questions correctly, I don't know if you need to pay someone. The criteria for residency is pretty straightforward. Someone in the tax office doesn't have all the facts and is likely making a wrong assumption. Maybe your son needs to make an appointment and go into the tax office to clarify the dates and residency status.

 

[Timeshare Von]

What a mess for sure. I agree . . . they need to hire professional help to try to get it taken care of.

 

[DrQ]

Can you do a "what if" see what the tax difference is if they file married but separate? Would that put her earning down to a level where they would not take such a big bite of her income?

 

[wackymother]

You could try writing a letter--an actual paper letter--to the state tax office. I've had to do that a couple of times. Be sure to include your contact information so they can call you and your son and your daughter-in-law, whoever they want to talk to. Move forward on other approaches, too, but write everything up so it's clear and concise and all in one place.

I would get your son to give TurboTax permission to speak with you, or else he should speak with them himself. This might be a known problem with Maryland.

 

[rapmarks]

You answered your own question.

Yes, Can anyone recommend someone.

 

[rapmarks]

Can you do a "what if" see what the tax difference is if they file married but separate? Would that put her earning down to a level where they would not take such a big bite of her income?

I am considering that for this year. She has managed to avoid working by getting three masters and now a PhD so she has no other income.

 

[DrQ]

I am considering that for this year. She has managed to avoid working by getting three masters and now a PhD so she has no other income.

What about an amended return for the year in question?

 

[rapmarks]

What about an amended return for the year in question?

You mean refile federal and Massachusetts as married filing separately.

but I look at the Maryland return and it says Maryland NR, so I don’t know how to get them to stop trying to tax my sons salary in Massachusetts and it will be hard to get Massachusetts to give back what he. paid there. I just don’t get it, I used turbo tax and I have used it many years I didn’t have the problem when my son-in-law law worked out of state.

 

[DrQ]

You mean refile federal and Massachusetts as married filing separately.

That's why I said, run a "what if" to calculate the additional taxes and penalties and weigh it against what Maryland is demanding. If the cost is low enough, it may be worth it to tell Maryland to SFU.

The alternative is to find a CPA in Maryland who is an enrolled agent that can represent clients in front of a MD tax magistrate.

 

[T_R_Oglodyte]

He needs to hire someone to take care of this.

What a mess for sure. I agree . . . they need to hire professional help to try to get it taken care of.

Basic principle: advice you receive from the internet is worth exactly what you paid for it. I concur with the recommendations that your son engage a professional to address these issues.

FWIW - We have a somewhat similar situation. DW is now a full-time resident in CA, while I am maintaining WA residency. We have been working with a CA based tax professional on the tax-related implications. I don't know if any of this applies in your son's situation, but I put it out there for consideration.

• CA is a community property state. Thus, one-half of what I earn outside of CA is imputed as CA income for DW, regardless of where I have generated the income.
• Given the above, our filing would be incorrect if I filed a 540-NR (that's the CA form for reporting non-resident income) for my income, and tried to pay CA taxes based on DW's CA earnings and my CA earnings. To do that correctly, I would have to take 50% of all my earnings and assign them to DW, then file the 540-NR for my half of my earnings.

I throw that out there because if Maryland treats non-resident income similarly to CA, submitting a filing that does not include a community property allocation of joint income may create issues. A quick Google search indicates that with respect to marital assets, Maryland is an "equitable distribution" state. I have nothing to offer on how that might affect tax filings.

I am fully aware that these considerations make the situation significantly more complicated. Which makes it even more important to pay for the services of a knowledgeable and skilled tax professional to sort this out.

 

[T_R_Oglodyte]

Basic principle: advice you receive from the internet is worth exactly what you paid for it. I concur with the recommendations that your son engage a professional to address these issues.

And whatever you do, don't let him lay a guilt trip on you for any alleged mess-ups. When he made the decision to have you file using your TurboTax, he accepted all of the consequences of that decision. You did your best based on your information and expertise. If you did that, you have nothing, nada, zip, zilch, to apologize for. You did what he asked, that's all you could do. He did not engage you as a tax professional. If he failed to appreciate the complexity of his situation, that's on him, not you.

 

[T_R_Oglodyte]

Of course, you can always offer to return to him all of the money he paid you to take care of this for him.

 

[davidvel]

Start with someone like H&R Block or the like. When you earn money in a state, that state usually wants the taxes no matter where you live. There is a procedure to prorate the taxes where you are a Resident in one state and earn in another. Pro athletes are a prime example of this issue. Every state where they play wants their $$, especially when they live in a state with no income tax.

These are some of the most difficult tax issues. You need to go to a professional who will know exactly what to do, not here. We can't agree on electric cars, or HOA vs. developer. Send your son on his way like the big boy he now is.

 

[rapmarks]

I am actually trying to find a name on the chance that a tug member kis from Maryland and had a tax accountant or knows of an agency that helps.
No community property In Massachusetts or Maryland
they withheld taxes from her stipend. Supposedly she is owed a refund of $160. Maryland wants to tax entire family income Earned and taxed elsewhere.
For some reason they want taxes on my son’s entire income as a teacher and on his inherited Ira. according to the tax software income is only supposed to be taxed on the income earned in Maryland.
Between the two states, the taxes are higher than federal. Top if off with the $10000 limit on state and local tax deductions and they don’t even itemize
add the stress of a long commute to work, and taking care of an elementary school child who is in several activities, he basically said that this is the only thing someone does FOR him.
that $17000 she earned doesn’t cover her weekly flights to Baltimore and her expenses to stay there three nights every week. This is not a case of trying to conceal money or not follow the law. What is really strange, she is only student in the program getting taxed on her stipend. my son found a tax compliance office and emailed the form to them. I hope it works this time.
she is in a seven year program. So there are many more years of this. It has to be straightened out. By the time she graduates, my grandson will be in college,

 

[DrQ]

Your problem is this:
When you are dealing with these types of matters, the tax office is prosecutor, judge and jury. There has been a recent Supreme Court ruling against this unfair situation, but it will still take a while to wind back through the courts.

You need a professional who knows the law and knows how to argue the points and to whom to argue. If you miss deadlines you may find yourself in a situation where you are correct, but the point is moot because the timeline on your right to appeal has passed.

 

[rapmarks]

Your problem is this:
When you are dealing with these types of matters, the tax office is prosecutor, judge and jury. There has been a recent Supreme Court ruling against this unfair situation, but it will still take a while to wind back through the courts.

You need a professional who knows the law and knows how to argue the points and to whom to argue. If you miss deadlines you may find yourself in a situation where you are correct, but the point is moot because the timeline on your right to appeal has passed.

You are so correct
he has received three sets of instructions.
one person says they have enough enough information
one letter says to file an amended return and include the letter.
one says fax it, one says mail it. One letter says we don’t want any more copies.
I filed an amended return. TurboTax kept saying the information is the same, you need to change it, and finally TurboTax allowed the amended form.
they say there is no indication he is out of state, but across the top it says 505 non resident tax form.
if this doesn’t work, they need to find a cpa or tax lawyer.

 

[rapmarks]

Met a couple from Baltimore and mentioned the state income tax problem they said it is a common problem, the computers aren’t set up to recognize out of state returns. They lived in an adjoining state and earned money in Maryland and had the same problem. You basically have to prove you are a resident elsewhere with photocop6 of drivers license, property tax bill,etc.

 

[Miss Marty]

Maryland

Filing Information for Individual Income Tax

2023 505 Nonresident Income Tax Return

https://marylandtaxes.gov/forms/23_forms/505.pdf

The Comptroller's Office will no longer accept the federal Form 2848 or
federal Form 8821 as power of attorney forms for Maryland tax purposes.

Maryland Form 548 Power of Attorney
Maryland Form 548 Instructions

Tax information can be disclosed to the appropriate party possessing power of attorney if
the "Check Here" box on the appropriate form (Form 502, Form 505, etc.) has been marked.

If a person disagrees with the tax assessment, they have the right to:
File an appeal and ask for their case to be heard by a hearing officer.

Disclaimer: The information provided in this post is not to be construed as legal advice.