For many years I have lived in Maryland and worked in DC. But my W4 shows I paid tax in both states and now I owe in MD. What can I do to fix the error?

If you feel that your W-2 shows an error with state withholdings, you will need to contact your employer and ask for a corrected W-2. (You can file an extension until you receive this updated W-2.)

You will include all your income (including DC sourced wages) on your MD resident state income tax return

DC and MD have what is called a state reciprocal agreement. This allows nonresidents to not have nonresident state withholding taxes taken out for wages earned in the reciprocal state.

If DC withholding were taken out of your wages, you will not be able to claim a state tax credit in MD for these DC withholdings. Instead, you will need to file a DC nonresident state income tax return to claim a refund.

To claim a refund of DC taxes withheld or DC estimated taxes paid, use Form D-40B, Non-Resident Request for Refund (available by visiting  DC - Tax Forms )

You must mail in this DC nonresident state income tax return and include your state W-2 information. You will want to include an explanatory statement with your DC return stating your situation (that your DC employer withheld DC taxes from your wages in error due to a reciprocal agreement with MD).