Residency is the location of your home where you intend to live when you return from a vacation or temporary business trip. You are a Resident of a state if you intend your main home to be in that state.
You are typically a Nonresident of a state for tax purposes if you did not live in that state at any time during the tax year, but you did receive income that is sourced from that state because you:
- Worked in the state (but did not live there)
- Received income from your ownership in a rental property, S-Corp, partnership, etc. that is sourced from that state , or
- Received income as a beneficiary of an estate or trust that is sourced from the state
A reciprocal agreement, also called reciprocity, is an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state. This can save you the trouble of having to file multiple state returns. Virginia and Maryland have state reciprocity.
Since you work in a state with tax reciprocity, your employer can withhold only Virginia taxes from your wages.
If your employer has withheld taxes for the work state instead of the resident state, you'll have to file for a refund from your work state. You'll still file your resident return that also includes that income and pay tax on it.
TurboTax handles reciprocal states and will generate the correct state(s) based on your personal information and your W-2.
If your employer withheld taxes for Maryland, you will file a nonresident return for Maryland and a resident state tax return for Virginia.
Your income will not be counted twice. You will receive a credit on your resident return for the taxes paid on your Maryland earnings.
Once you've determined that you need to file a nonresident state return, the first thing you want to do is make sure you've filled out the Personal Info section correctly:
- With your return open, select My Info in the left-hand menu.
- Then, on the Personal info summary screen, scroll down to Other State Income, and select Edit.
- At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.
- Select Continue to return to your Personal info summary.
After you finish your federal return, you'll automatically move to the State tab, where you'll see your nonresident state(s) listed in addition to your resident state.
Tip: To ensure accurate calculations, always complete the non-resident return first if filing in multiple states because your resident state might give you a credit for any taxes paid in that situation.
Click here for information regarding filing multiple states returns.
Click here for additional information on filing when multiple states are involved.
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