Maryland wants to charge an underpayment penalty on partial year when taxes from Virginia cover the full tax owed easily.

[Cbbluecrab27]

Have prorated money received for income and taxes paid for time in Virginia for old job of 8 months for 6 months living in Virginia before moving back to Maryland. New job was all Maryland.  Is there a way to get credit for taxes paid over the year?  Currently owe 690 + 31 penalty for Maryland with refund of 740 from Virginia.. I know it is a wash, just checking.

[BillM223 · Accepted solution]

It is not enough to pay your entire tax amount, you have to pay it over the course of the year. The income tax in the US is a pay-as-you-go system.

If you would have withheld Maryland taxes during the year, you likely would have avoided the underpayment penalty. But I understand that sometimes this doesn't happen.

And unlike the federal income tax, where you are excused the underpayment penalty if your tax due is less than $1,000, for Maryland, you are excused only if the tax due is $500 or less. 

Please see the Maryland 502UP form to get an idea.