MD/VA Resident

[Gretel]

I have to do a tax return for a student who finished college in summer last year in MD and then moved to VA. In 2007 student was claimed by parents who live in VA and student filed her own resident MD tax return.

Looking at the All States Books it states in MD you are considered to be a resident if you are physically present more than 183 days, even though you are a permanent resident of another state. How can you be a resident of 2 states as the same time and file resident tax returns for 2 states?

It appears the above will apply to the first part of the year (and for 2007 and student should have filed a VA tax return as well). "Normally" you have to pay taxes on all your income in your resident state and then get a credit for taxes paid to the non-resident state. I have no clue how to do with this situation, anyone does?

[Burke]

Temporary absences due to schooling do not make a student a resident of another state, although she might have been required to file a MD return for her income earned there. Since she returned to her home state after graduation, I would have no problem filing her as a full-year resident of VA, with possibly a NR MD return for any 2008 income earned there. You are correct in that VA has an out-of-state tax credit for income earned and taxed in another state.

[Gretel]

Thanks for responding. I am 100% with you and Maryland's instructions drive me nuts. Here they are, from All State TB pg. MD-2:

Residents are individuals: 1......
2. Who have a permanent home outside Maryland, but who maintain a place of abode in Maryland for more than six months of the tax year. The individual most file a full-year resident return if physically present in MD for more than 183 days.

I guess I will call MD or VA how to handle VA and not have TP pay double.

[Gretel]

Found answer

on pg. VA-8 of All-State TB. VA has special provision, called "Border state method".