Live in NC and telecommute for work based in Maryland

[bodekms]

I've just gotten a job with work based in Maryland, but I live in North Carolina.  I will be telecommuting 100% of the time.  Since the states do not have a reciprocity agreement, I have a few questions.

How do I set state taxes for Maryland?  Should I file as "EXEMPT" in Maryland, and then just know that I'll have a large tax bill from NC at the end of the tax year?  Or should I have Maryland state taxes withheld?

Will I need to submit a non-resident form for Maryland next year?  If so, will I put my income as $0, or for the amount that my income actually is?

And for my NC state taxes, will I put my income as $0, or the amount that it actually is?

[RaifH]

Ideally, your employer will withhold North Carolina taxes if you are a full-time telecommuter and never go to Maryland for work. You should contact the payroll department and see if they will accept a NC-4 to withhold North Carolina income tax. You can also fill out a MW507 to declare yourself exempt from Maryland tax.

As a full-time telecommuter, you will not owe income tax to Maryland. The only reason to file a Maryland state tax return would be if they did withhold Maryland taxes, you would need to file one to have those taxes refunded to you. If that was required, yes, you would say that $0 of your income was Maryland-sourced. 

If they are unable to withhold and remit taxes to North Carolina for you, your next best course of action would be to declare yourself exempt from Maryland taxes using that form and pay estimated taxes to North Carolina so that way you are not hit with a huge bill and underpayment penalties at the end of the year. Remember to keep records of your estimated tax payments as the NC Department of Revenue may not give you a record at the end of the year and it will not be reported on your W-2. 

[bodekms]

Thanks!  My new employer can't deduct NC taxes apparently, so I will have to go the 2nd route you suggested.  I appreciate the help!