I live in MD but work in DC. MD taxed me but DC did not. Do I file for both?

[tdlyons115]

I only earned income in DC not MD, but MD withheld my wages for taxes and DC did not.  Do I file for both? If I do file for DC, do I put in a non-resident request for refund, and if so, what do I put in it, when nothing was withheld?  And why did MD withhold taxes when I did not earn money in that state?

[BarbL · Accepted solution]

No, you do not need to file a D.C return. If you work in D.C. and are a resident of any other state you do not have to pay D.C. income taxes on your wages, due to reciprocal agreements with the states.  Income earned in D.C. is taxed in the home state.  In your case, you will claim all your income on your Maryland return.

[teresaconard16]

yes

[pamaechi1]

What if there was a mix up during New Hire paperwork and a DC W4 was filled out instead of a MD W4? I work in DC and live in MD and my employer had me fill out a DC W4 so it looks like I paid no Maryland taxes. Can this be reversed? I wasn’t aware that it was for DC until now, while filing it says I owe a thousand dollars to state taxes.

[AmyC]

Your DC employer withholds DC wages unless you give them a Form D4-A that tells them to withhold MD instead.

For now, you will have to file DC and MD, in a special order.

1. prepare your non-resident DC return.. This creates your tax liability.
2. prepare your resident state return of MD and it will generate a credit for your income already being taxed.

The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state.

It isn't possible for the program to create a credit before it knows the liability.

For more information on the DA-4, see this link.

[mghunter112]

Hm this makes good sense to me but Turbotax isn't picking this up on mine. Since MD and DC have reciprocity agreements and my W2 doesn't show any DC tax withheld, I don't think I actually need to file DC nonresident or refund request--but TurboTax is giving me a "review" error saying I need to file anyway.

[SteamTrain]

@mghunter112 

If you are a MD resident, the usual error you probably made is in the "My Info" section.  You probably entered DC as an "other" state that you worked in.  IF the DC employer only withheld MD taxes, then go back there and take out DC.....because, for tax state purposes, you effectively only worked in MD..  After doing that, go to the State taxes section and remove the DC tax return entirely

[mghunter112]

Wow, ok that's worded in a confusing way then! Thank you! 

[somehelpyouare]

I'm not sure how turbotax would handle it, but DC has a rather simple form, D-40B non resident request for a refund, basically  you confirm you did not live in DC, and the withholding were in error. Otherwise you would need one more turbo tax state form just to get the $$ back.

[edcmikegold]

I have the same situation only a year later.  I’m a new employee in DC but live in Maryland, I did not catch that my state withholdings were in DC.  I have the DC D-40B form, thanks for the help.

How do I inform Maryland that this mix up has occurred and is being corrected? Can I proceed with sending my taxes in with TurboTax and designate MD for State taxes even though the correction is in progress?

Also, is there a form that can be used to reassigned the tax funds that went to DC to Maryland? Or will this be a manual transfer... meaning I petition DC, DC returns the funds to me, I send the funds to MD

[Cynthiad66]

You will need to prepare a DC return to be able to assign the taxes to Maryland.

The only reason to file a DC return is to get back any DC withholding.

DC and MD have a reciprocity agreement--an agreement between two states that allows residents of one state to request exemption from tax withholding in the other (reciprocal) state.  However, since they withheld in DC in order to credit that on your Maryland taxes you will have to file just to get the refund.

[TomD8]

@edcmikegold --

Just file the D-40B with DC.  No need to file a DC tax return. 

2020 D-40B | otr (dc.gov)

If you haven't done so already, submit form D-4A to your DC employer to stop the DC withholding.  Here's a link to that form:  

https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2018%20D-4A.pdf

Retrieving the DC refund and paying MD is a manual process; there is no form and it can't be done online.

If your employer cannot or will not withhold MD taxes for you, you should begin making quarterly estimated tax payments to MD.  This link explains: 

https://www.marylandtaxes.gov/individual/tax-compliance/estimated-tax-payments-for-ind.php 

[edcmikegold]

Thank you.