Delaware Other State Tax Credit

Other State Tax Credit

If you are a resident of Delaware (or elect to be taxed as one) and pay income taxes to another State on income earned in the other State which is also included in your Delaware taxable income, the law allows you a tax credit against your Delaware income tax. Do not include city wage taxes or county taxes paid directly to the county.

If you claim the tax credit, you must attach to your Delaware return a signed copy of the income tax return filed with the other State(s). In addition, your Delaware return information will be shared with the other State(s) that you claimed the credit for.

If you are claiming a credit for taxes paid to more than one State, you must complete DE Schedule I and attach it to your Resident return. Example: You claim a credit for taxes paid to Pennsylvania AND New Jersey on your Delaware return. On DE Schedule I, enter the names of the other States and amount of credit claimed in HIGHEST to LOWEST credit amount order. If claiming the credit from only one state, then enter the state and amount on the front of the return.

With regard to any credit claimed for taxes paid to another state, the credit is limited to the smallest of the following:

a. The Delaware tax liability;

b. The tax liability due and paid, after the application of all credits (example: tax forgiveness credit, earned income credit, poverty level credit), to the other state (this does not include amounts paid to local jurisdictions). The amount due and paid is not the amount on your W-2; or

c. The amount computed by multiplying the Delaware tax by a frac- tion, the numerator of which is your adjusted gross income from sources in the other state and the denominator of which is your Delaware Adjusted Gross Income (Line 1).

NOTE: If you file using filing status 4 – married filing combined separate – enter the credit in the column for the person who actually worked or was taxed by the other state.

NOTE: Taxes paid to a political subdivision of a state cannot be claimed as credit. The District of Columbia, however, is classified as a "State" for the purpose of this credit and, therefore, can be claimed as credit on Line 10.