Complicated multi-state issue (TX, PA, MD)

[SIGARM]

Up until last year I was living in Texas but started a new job in Maryland in mid January. My new employer agreed to a delayed relocation until my kids' finished the school year, so I flew to Maryland every week, and flew back home to Texas for the long weekend (Fri-Sun). Kept up with this schedule until my family was finally able to move with me to Maryland in June.

What complicates matters is that my employer claimed to not have "business dealings" with Texas and therefore automatically had Maryland state income tax deducted from my first 1 or 2 paychecks without my knowledge and consent until I caught on. Since Texas has no state income tax, I was hoping not to pay into Maryland until I officially moved. In response my employer said the only other options were to pay Virginia or Pennsylvania taxes so I chose the latter since taxes are considerably lower than MD and I have a sister-in-law there with a mailing address I could use. I then started paying taxes to Maryland in June to coincide with my finalized relocation.

Questions:

1. Do I even need to pay taxes to Pennsylvania, or could all or most of that be given back as a refund? I lived in Texas during that time, but worked in Maryland, and didn't even step foot in PA during that time period. 

2. How should I allocate my income then?

• Option 1: Texas (Jan-May or 41.67%) and Maryland (June-Dec or 58.33%); or
• Option 2: Texas (1st half of Jan or 4.17%); Maryland (2nd half of Jan to Dec or 95.83%)
  since I worked in MD from mid-January through end of December
• Option 3: Texas (1s of Jan or 4.17%); Pennsylvania (mid-Jan - May or 37.50%) and Maryland (June-Dec or 58.33%)?

3. Based on my W2 statement, allocation for state income tax determination should be based on which of the following?

• Box 1 - Wages, tips, other comp
• Box 3 - Social security wages
• Box 5 - Medicare wages and tips

[MaryK4]

Because you worked in Maryland, you must pay income tax in Maryland- in this case as a nonresident since you were still a Texas resident until June.  The option of paying Virginia or Pennsylvania tax withholding only applied in terms of state tax reciprocity- if you are a RESIDENT of Virginia or Pennsylvania (or DC) but work in Maryland, you can choose to file and pay only in your resident state for wages earned in Maryland.  Using you sister's mailing address does not absolve you from paying the nonresident Maryland income taxes.  If you had Pennsylvania withholding you would have to file a PA nonresident return to claim the PA tax withholding.

You will have to file a Maryland Part-Year return and allocate nonresident for the time you were a Texas resident and resident income for the income after you became a Maryland resident.  

[SIGARM]

Thank you -- based on your response shouldn't I expect a refund of the state income taxes already paid to Pennsylvania if I will correctly allocate my income as a Maryland nonresident and PY resident for 2019? I downloaded the PA state form and selected "Nonresident" but TurboTax is saying I don't owe taxes or qualify for a refund. 

[JosephF8]

You will need to change the PA taxable income to 0 as you neither lived nor worked in PA. You will the need to allocated that same income to the MD return. To allocate the state income you will use the amounts from Box 16.