You are correct you do not qualify for the unemployment compensation exclusion from MD taxes since the benefit was paid by CA. Below is an excerpt from the MD tax form instructions (see page 12).
Amount of unemployment compensation reported on 1099-G, Box 1, that was included in your FAGI for qualified taxpayers. You qualify for this subtraction if:
• You received unemployment benefits from the Maryland Department of Labor;
• You received unemployment benefits from the unemployment insurance program of any of the following jurisdictions, with which Maryland has a reciprocal taxation agreement: Pennsylvania, Virginia, West Virginia, and Washington, D.C.;
• Total unemployment benefits included in your FAGI;
• Your federal adjusted gross income does not exceed: $75,000 for single, married filing separately, and dependent filers; $100,000 for a married couple filing a joint return, or an individual filing as head of household or as a surviving spouse.
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