Federal employee teleworked in a different state part of 2022

[Zvezda73]

I am a federal employee who owns a home & has residence in California. My primary office is in California (though of course most gov agencies have an office in DC & other states), and I have been teleworking from home in California for the duration of the pandemic. For part/most of 2022, I teleworked from a family member's home in Maryland (did not pay rent or own in MD) though I never set foot in any of my agency's offices in Maryland and the services I provided are for my California federal office. My employer withheld only California taxes. Do I need to file taxes and pay for both states? And if yes, how would I do that on the downloaded Turbotax Deluxe?   

[ErnieS0 · Accepted solution]

Yes. You are liable for income tax for both Maryland and California because you were physically working in Maryland while maintaining a permanent residence in California.

Generally, Maryland imposes income tax, and therefore a withholding requirement on employers, for employees living in Maryland and non-residents receiving Maryland-sourced income. Income is deemed Maryland-sourced income when the income is compensation for services performed in Maryland. 

See Employer Withholding Requirements For Teleworking Employees During The Covid-19 Emergency

California residents are taxed on worldwide income.

You can use TurboTax Deluxe to file a resident California return and a nonresident Maryland return. 

Maryland will ask you to subtract all "non-Maryland" income. Exclude all your California wages plus any other non-compensation. For example, interest and dividends are not taxable to a non-Maryland resident even if you earned it while teleworking in Maryland.

You will owe tax to MD. You can file both returns and wait until you receive you CA refund to pay MD. The MD filing deadline is April 18.

To learn more see How do I file a nonresident state return?

[Zvezda73]

Thank you so much!