Filing taxes in multiple states (Iowa and Maryland)

[gkhuat]

I started working for an employer since August 2021. I lived in Iowa from January to August 2021. My employer is in Maryland but I started working remotely from Iowa. Then I moved to Maryland in September 2021.  I am filing state income tax for Iowa and Maryland and I was told that I am part year resident in both Iowa and Maryland. 

For Iowa filing, it told me enter income from Iowa sources. I am putting the total wage I earned from my employer during my time as an Iowa resident. Is this correct ? I believe Iowa sources income is defined as income earned while performing the work in that state, regardless of the employer's location. 

For Maryland filing, I was asked to put in non-Maryland income. Should I put the wage I got paid as an Iowa resident (the wage above) ? 

Lastly, my W-2 specified two states and the wages I got from each state accordingly in boxes 16. Should both of them add up to box 1 in W-2 (Total Federal Taxable Income) ? I only lived and worked in these two states in 2021. My filing status is Single. 

[RaifH]

Yes, you have it exactly right. File part-year resident returns for Iowa and Maryland. You want to report your income earned while you lived in Iowa to Iowa and then report that income again when Maryland asks for non-Maryland income. 

The wages from your two states in Box 16 should add up to Box 1, or at least be very close. Sometimes states tax things a little differently than federally, so the total might be slightly off, which will probably be due to an item reported in Box 12 of your W-2, like life insurance policies above $50,000. If the two box 16 amounts are significantly higher than the Box 1 total and it does not look like it's attributable to something reported in Box 12, it is possible you are being double-taxed on a portion of your income, maybe for the month of the move. If that is the case, you should receive a tax credit in Maryland by reporting that you were already taxed on it by Iowa.