Delaware Foreign Taxes Paid: Understanding the Credit
Residents and part-year residents of Delaware who have paid income taxes to another state may be eligible for a credit on their Delaware tax return. This credit helps prevent double taxation and is calculated based on the proportion of income earned in the other state relative to total Delaware-adjusted gross income.
How to Claim the Credit
- Worksheet C: Credit for Taxes Paid to Another State – Found in the Delaware nonresident or part-year resident instructions (Form PIT-NON). This worksheet guides you through the calculation.
- Step 1: Enter your adjusted gross income from the other state.
- Step 2: Enter your Delaware adjusted gross income (Line 38 of your return).
- Step 3: Enter income from the other state while you were a Delaware resident (including federal modifications).
- Step 4: Enter total income from the other state.
- Step 5: Enter your Delaware tax liability (Line 43 of your return).
The credit is computed by multiplying your Delaware tax liability by a fraction: the numerator is your adjusted gross income from the other state, and the denominator is your Delaware adjusted gross income.
Important Notes
- The credit applies only to taxes paid to another state, not local jurisdictions.
- You must attach documentation such as W-2s, 1099-Rs, and federal tax forms (including Form 1040 and relevant schedules) to support your claim.
- Ensure you include all required schedules (e.g., DE Schedule IV) to avoid processing delays.
Software Assistance
Online Taxes (OLT) software can guide you through adding Form PIT-CRS (Delaware Income Tax Credit Information) to claim this credit. Navigate to the "State" section, select "Start or Revisit Delaware state," then go to the "Credits" section and choose Form PIT-CRS. Follow on-screen prompts to enter your information.
Source:
PIT-NON Instructions
PIT-CRS Form
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.