All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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CDS
Valued Pioneer
Posts: 3
Registered: ‎02-01-2016
Accepted Solution

Am I subject to MD state income tax?

Hello,

 

Can anyone with expert advice help answer this question?

-I am a current WA state resident that imposes no state income tax. In May, I became a REMOTE full time employee for a company based in MD, which does impose a state income tax. I was told upon hire by HR (and by my financial adviser) that I would NOT be subject to MD state income tax because I do not live there. In fact, HR said they could be classified as a company in WA and even my payroll checks reflect both the "work state" and "resident state" as WA.

-However, neither of those individuals are tax experts. I came across a "nonresident MD" clause found here: http://forms.marylandtaxes.com/current_forms/nonresident_booklet.pdf. Can anyone definitively tell me if I will be subject to any MD state income taxes? I am very concerned that I might be hit with a major tax liability come end of 2017.

 

Thank you!

CS

Tax Pro
Posts: 5,725
Registered: ‎02-23-2016

Re: Am I subject to MD state income tax?

Hi CDS,

 

 

Welcome to the H&R Block community.

 

I've seen the question a few times and I can tell you with certainty that you absolutely will not owe Maryland state tax unless one of the items below applies to you.

 

As a non-resident you will owe Maryland tax if you:

  • Have a rental property in Maryland that you earn income from.
  • Physically perform work in Maryland as an employee of someone else.
  • Physically perform work in Maryland as an independent contractor or business owner.
  • Had gambling winnings from a Maryland source.

 

Based on the information you provided you should not have any withholdings and you will not owe tax for Maryland.  If you do see any withholdings on your Form W-2 you'll want to file a Maryland non-resident return to get a refund of your withholdings.  In that scenario you'll simply report $0 in Maryland wages on the state return which will result in a full state refund.

 

If you do have to physically go and work in Maryland for a day, a week, etc. then your wages for Maryland will only be for the days that you worked there.  If you're on a salary then multiply your annual income by the number of days worked over 365 to figure your Maryland wages.  For instance, if you go to Maryland to work for 1 week at your employer's request and you work for six days out of that week, and your salary is $60,000 per year, then you would multiply 60,000 * 1.64% (6/365) and your Maryland wages would be $984.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

CDS
Valued Pioneer
Posts: 3
Registered: ‎02-01-2016

Re: Am I subject to MD state income tax?

Hey Louis,

 

Thank you for the quick reply! This is very helpful and a bit comforting. I checked again with our Payroll Dept as well and they indicated that once W2s are released for 2017, the work state will remain as WA and no state income tax will be due for MD.

 

Again, thanks!

Tax Pro
Posts: 5,725
Registered: ‎02-23-2016

Re: Am I subject to MD state income tax?

You're quite welcome.

Pioneer
Posts: 1
Registered: ‎10-20-2017

Re: Am I subject to MD state income tax?

I have a follow-up question to this. I am in a very similar situation as I am moving to CO and will be working from home. However, I will be spending approximately 8 weeks on site in Maryland working per year. I see that I will have to keep track of the days worked and pay tax on that.

 

My question is: for the days worked in Maryland that I pay Maryland tax on, can I claim a credit with CO for those days?

 

Thank you,

Donald

Tax Pro
Posts: 5,725
Registered: ‎02-23-2016

Re: Am I subject to MD state income tax?

Hi thedon986,

 

 

Yes, you can take a tax credit for any tax paid to your non-resident state.  So if you live in Colorado for the entire year then you get a credit for all tax paid to Maryland for the entire year.  Note that the credit may not be exactly equal to the tax paid depending upon the tax rates of the two states since most states figure it using your resident state's tax rate.

 

 

Louis,

Senior Tax Advisor (Tampa, FL)