Form 502 Cr - Tax Credits For Income Taxes Paid To Other States - 1998 Page 2
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1
2TAX CREDITS FOR INCOME TAXES
INSTRUCTIONS
PAGE 2
FOR
PAID TO OTHER STATES
FORM 502CR
1998
GROUP A — Nonreciprocal – Credit is taken on the Maryland resident
SPECIAL INSTRUCTIONS
return.
Composite Returns — When a partnership, S Corporation or limited
Alabama
New Jersey
liability company (LLC) files a composite return on behalf of its part-
Arizona
New Mexico
ners or shareholders with states in Groups A and B, Maryland resident
Arkansas
New York
partners or shareholders may claim a credit for their share of the tax
California
North Carolina
Colorado
North Dakota
paid. No credit is available for taxes paid to states in Group C, or for
Connecticut
Ohio
taxes paid to cities or local jurisdictions. If the Maryland resident must
Delaware
Oklahoma
file an individual nonresident return reporting the partnership, S Corpo-
Georgia
Oregon
ration or LLC income, a separate Form 502CR must be completed for
Hawaii
Pennsylvania
each state and submitted with a copy of the return filed with the other
Idaho
(except wage income)
state.
Illinois
Rhode Island
Indiana
South Carolina
Shareholders of S Corporations — Maryland resident shareholders
Iowa
Tennessee
can claim a credit for taxes paid by an S Corporation to a state which
Kansas
Utah
does not recognize federal S Corporation treatment. A copy of the cor-
Kentucky
Vermont
poration return filed in the other state is required to be attached to the
Louisiana
Virginia
Maryland return. A separate Form 502CR should be completed for
Maine
(except wage income)
each state showing the following information:
Massachusetts
Washington, D.C.
Michigan
(except wage income)
Minnesota
West Virginia
Mississippi
(except wage income)
Missouri
Wisconsin
Montana
Territories and
________________ %
x ________________
= ________________
Nebraska
Possessions of the
Stock Ownership
Corporation Taxable
Line 2, Form 502CR
New Hampshire
United States
Percentage
Income
Group A — A Maryland resident having income from one of these
states must report the income on the Maryland resident return Form
502. To claim a credit for taxes paid to the other state, complete
________________ %
x ________________
= ________________
Form 502CR and attach it and a copy of the other state’s nonresident
Stock Ownership
Corporation Tax
Line 7, Form 502CR
income tax return (not just your W-2 Form) to your Maryland return.
Percentage
GROUP B — Reciprocal for wages, salaries, tips and commission
NOTE: A preliminary calculation using Form 502 must be made
income only.
before calculating the credit on Form 502CR. Complete lines 1 through
27 on Form 502 to determine the amounts to be used for the 502CR
Pennsylvania
Washington, D.C.
computation.
Virginia
West Virginia
The credit amount shown on line 8 of Form 502CR must then be
Group B — Maryland has a reciprocal agreement with the states
included as an addition to income on line 5 of the Form 502 you will file.
included in Group B. The agreement applies only to wages, salaries, tips
and commissions. It does not apply to business income, farm income,
D.C. Unincorporated Business Franchise Tax — Self-employed indi-
rental income, etc. If you had earned income other than wages,
viduals and partners in a partnership that are subject to the D.C. unin-
salaries, tips and commissions in these states, complete Form
corporated business franchise tax may claim a credit on Form 502CR.
502CR and attach it and a copy of the other state’s nonresident
A copy of the D.C. return is required for self-employed individuals and
income tax return to your Maryland return.
for partners a K-1 or other statement from the partnership showing the
partner's share of income and the partner’s share of the D.C. tax.
If you had wages, plus income other than wages, you should contact
the taxing authorities in the other state to determine the proper
Sale of Residence in Another State — If you sell or exchange a
method for filing the nonresident return.
residence located in another state in the current taxable year you
GROUP C — No State income tax – No credit allowed.
may be entitled to a credit if:
Alaska
Texas
1. You included the gain in your federal adjusted gross income;
Florida
Washington
2. You deferred recognition of gain for federal purposes on a previous
Nevada
Wyoming
principal residence in a prior taxable year; and
South Dakota
3. Paid tax on the gain to the state where the previous principal
Group C — You must report income from these states on your Mary-
residence was located.
land resident return. You cannot claim any credit for income earned in
If you satisfy all of these conditions do not complete Form 502CR.
these states because you did not pay any income tax to the other state.
Contact any office of the Revenue Administration Division to receive
additional information for claiming this credit.
IMPORTANT NOTE FOR DUAL RESIDENTS
A person may be a resident of more than one state at the same time
Installment Sales in Another State — You may be eligible for credit
for income tax purposes. If you must file a resident return with both
for taxes paid to another state for gain recognized on installment sales
Maryland and another state, use the following rules to determine
proceeds, even if the other state required the total gain be recognized
where the credit should be taken:
in an earlier tax year. Contact any office of the Revenue Administration
1. A person who is domiciled in Maryland and who is subject to tax
Division to receive additional information for claiming this credit.
as a resident of any of the states listed in Group A or B can claim
a credit on the Maryland return (Form 502) using Form 502CR.
2. A person domiciled in any state listed in Group A or B who must
file a resident return with Maryland must take the credit in the
state of domicile.
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