DanielV01
Expert Alumni

Investors & landlords

It depends.  You are correct that VA and MD are reciprocal states, and that wages are not taxed in the nonresident state.  However, rental income is not considered as wages, but rather as passive income.  Maryland does require a nonresident return on rental income, even for a Virginia resident, as this MD website shows:  http://taxes.marylandtaxes.com/Individual_Taxes/Individual_Tax_Types/Income_Tax/Filing_Information/D...

Having said this, you are stating that you reported a loss on your MD rental.  Thus, you do not have income to report to MD (although you may choose to file so that the rental is still reported).

When a reciprocal agreement does not cover a tax situation between two states, both of them tax you.  In this case, however, Virginia would give you a tax credit for any tax you would have to pay to MD on the income earned there.  This year it seems like you will not need to file, but this is how the law reads on this subject.

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