I generally agree with you for a non-reciprocal tax state...BUT... on the first situation....when MD taxes (reciprocal state) are withheld when the W-2 employee lives in VA , you only file MD to get all the MD withholding back, and indicate zero MD income so you can get all your MD withholding back. No tax credit is allowed for VA in that situation. VA expects you to get all your withholding back on your own. (which is want the VA tax letter says....no credit allowed for taxes paid to MD)
In the reverse situation, VA has a special 1-page tax form (763-S) for a MD resident working in VA (with improper VA withholding) that makes this process very simple....Haven't checked to see if MD has something similar that avoids a full MD tax return.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
