MD taxes income earned while working there. Your w2 should have your MD wags broken out for MD taxable versus nontaxable portion. Working 2 days a week inside MD would be taxable while the rest may not be. If you are operating a business there, then it would be all taxable. Check the income rules for your return.
MD - either:
- file a resident return based on residency of 183 days. The resident return does allow adjustments for part year residents.
- Otherwise, you file a Nonresident return.
NJ - you will file a part year return and claim credit for any income that is being double taxed by MD and NJ.
You get credit for the lower state tax on the lowest taxable amount.
- Each state calculates taxable income differently.
- Each state has its own tax rate/ system.
- You get the lowest of both categories as a tax credit.
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