File a part-year resident return with virginia

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Reference no: EM133543548

Scenario: Alice and Bill (wife and husband) are Virginia residents. Their filing status is Married Filing Jointly. They also own rental houses in Maryland and Georgia. Their 20-year-old son, John, attends college full-time in New York. John works part-time during the academic year and earns about $7,000. He earns another $5,000 during the summer in Virginia. State and federal taxes are withheld on his income in both states. John is a dependent on his parents' federal and state returns. Alice and Bill both work full-time jobs; Alice works in northern Virginia and Bill in Maryland. Based on this scenario, select the correct answer for each of the following questions. However, in October of the following year, Alice and Bill sell their house in Virginia and move into their former rental house in Maryland. Rental income had been received on the Maryland house through September. They do not change jobs, and John, their son, is still a full-time college student in New York. All of them obtain Maryland drivers licenses and car registrations immediately after moving in October. John still comes home (to Maryland) for the summer and earns money from a part-time job in Maryland. He again earns $7,000 from his job during the academic year in New York, but he earns $6,000 from a summer part-time job in Maryland.

Based on this scenario, select the correct answer for each of the following questions.

1.- Alice and Bill researched Virginia and Maryland state tax instructions for guidance on their filing requirements for the year that they move from Virginia to Maryland. Which of the following statements is true for Virginia and Maryland?

a) They should file a part-year resident return with Virginia and a resident return with Maryland because they are now legal (domiciliary) residents of Maryland.

b) They should file a nonresident/part-year resident return with Maryland and a part-year resident return with Virginia.

c) They should file nonresident and part-year resident returns with both states.

d) They should file a nonresident and resident return with Maryland and a part-year resident return with Virginia.

2.- John is now totally confused. He thought that he knew what to file during the previous year. Now that his parents have moved, he doesn't know what to do for the year of the move. He is hoping that he was correct in allowing Maryland taxes to be withheld from his pay during the summer. Which of the following actions must John take?

a) File a resident return with Maryland, a resident return with New York, and no return with Virginia because he did not earn any Virginia income

b) Reflect all income earned on his Maryland return. Take a credit for all taxes paid to New York on his Maryland return

c) File a part-year resident return with Virginia, a part-year resident return with Maryland, and a resident return with New York

Reference no: EM133543548

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