Yes, its possible to claim a credit for these taxes on your Maryland return.
- When working through the Maryland program, go through the Income screens and you will get to the Deductions and Credits section
- Scroll down to Other Credits and click Credit for Taxes Paid to Another State
- Say Yes to Credit for Taxes Paid to Another State (even though it says not to for PA at the bottom - this is because of the reciprocity agreement)
- Select PA from the list on the next page
- Enter the amount of income that was double taxed and the amount of taxes paid (only enter your local income tax paid)
- You will get a warning about the Reciprocal States to make sure you understand that you should not be claiming a credit for the wages subject to the reciprocal agreement - you can answer No to this because these local taxes are not covered by the agreements
- You should get looped back to your tax credit summary showing the tax credit you are receiving for taxes paid
From Maryland Form 502LC Instructions:
SPECIAL NOTE: If you had wages subject to tax in a locality of Pennsylvania, you may file Form 502LC to claim a State and local tax credit. Enter the amount of tax that you paid to the locality on line 11 of the Form 502LC.
http://forms.marylandtaxes.gov/current_forms/502LC.pdf
