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winktax
winktax, Enrolled Agent
Category: Tax
Satisfied Customers: 425
Experience:  18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.
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Hi again. I am working on my MD state return that is a part

Resolved Question:

Hi again. I am working on my MD state return that is a part year resident state return (please see my previous question from earlier today). TaxAct asks me as follows: "Please enter the portion of your income received when you were not a resident of Maryland. This amount will be subtracted from your federal AGI to determine your Maryland AGI." Do I simply add the gross income from independent contractor job in Missouri + gross income from Switzerland and this is to be subtracted later on from my federal AGI to calculate the MD AGI? Thanks again
Submitted: 4 years ago.
Category: Tax
Expert:  winktax replied 4 years ago.

winktax :

Look at the AGI, adjusted gross income as reported on your Federal 1040, you want to subtract from MD any income that is included in Federal AGI. MD starts with Federal AGI.

winktax :

Note, Do not subtract the gross MO self employment income, only subtract out the net income that is reported on Page 1 1040. (Sch C reports the gross income, then you subtract out your expenses, net income goes into Federal AGI).

winktax :

Note, do not subtract out the gross income from Switzerland unless you are reporting the gross income. You may not actually be reporting any gross income from Switzerland in your gross income due to the Foreign earned income exclusion (this would be a subtraction on line 21). Only subtract the income from MD which is in your Federal AGI.

Customer:

I dont qualify as a bona fide resident of Switzerland, nor based on physical presence since I have been here since October 2011. I have requested income tax credit instead since I cannot exclude this income. This means that I have to subtract gross income from Switzerland?

winktax :

Yes because it is included in Federal AGI.

Customer:

do i have to subtract gross swiss income or net income that is calculated after they take out money for pension taxes (social security equivalent) or should I just request credit for these retirement taxes that I payed on my US return?

winktax :

You would report gross swiss income and take a credit for the swiss tax withheld.

winktax :

Note, adjust the swiss income to USD, if you are paid in Swiss francs you can use the average exchange rate for 2011 which may be better than a specific day rate or 12/31 rate. The IRS posted ave swiss exchange rate for 2011 was .923

Customer:

one last quick followup: for MO tax reporting, I report my gross income from self emplyed position or the income - expenses from 1040?

winktax :

Income - expenses. Report only Net Sch C income.

Customer:

perfect, thank you very much once again

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