Moved to FL, but still work remotely in MD

[gdubbz]

I am a self-employed consultant, paid estimated taxes to MD & Feds, and receive a 1099-NEC from my Maryland employer. I also have investment income from stocks. From Jan-July 1 of 2023, I resided in MD and worked remotely from home. On July 2, 2023, I moved and established residence in FL, however, I continued to work remotely just the same as I did before the move. 

I'm working through filing taxes for 2023. Turbotax directs me to file a MD Resident Income Tax Return. While stepping through the State of MD return, I am unsure what income to allocate to MD. Since beginning residency in FL, 100% of my work was conducted remotely via computer/telephone. I will continue working in the same fashion now and in the future.

Reading other posts on the support site here, leave me confused as to answers.

Now that I am not a resident of MD but still perform 100% of my work there remotely from FL, do I have to pay taxes on that income for all of 2023 or just the portion that I was a MD resident? How is the situation to be handled for 2024 and forward years - Do I have to file a non-resident tax return and continue paying estimated taxes since I am still going to be issued a 1099-NEC?

Would greatly appreciate any guidance that you can provide.

[DaveF1006]

It depends. According to the State of Maryland filing instructions, you will need to file as a full year resident. The instructions state:

1. You are a resident of Maryland if:
2. Your permanent home is or was in Maryland (the law refers to this as your domicile). OR
3. Your permanent home is outside of Maryland, but you maintained a place of abode (a place to live) in Maryland for more than six months of the tax year. If this applies to you and you were physically present in the state for 183 days or more, you must file a full-year resident return. The period of time between 1/1-7/2 is 183 days and more than 6 months.
4. Thus in 2023, you would need to file a Maryland Resident tax return based on this parameter.

For 2024, you will not have a filing requirement to the State of Maryland since your business is not based there.

Yes, you should pay estimated taxes to avoid an estimated tax penalty if you owe or expected to owe more than $1000 in taxes. You do not need to make estimated tax payments this year if:

• You had no tax liability for the prior year
• You were a U.S. citizen or resident alien for the whole year
• Your prior tax year covered a 12-month period

Estimated Tax Payment Requirement

[Edited 02/22/22|7:45 AM PST]

@gdubbz 

[gdubbz]

Thank you kindly for your response! The wording at question for 2024 and thereafter is ""on income from a business, trade, profession or occupation carried on in Maryland". The latest copy of the non-resident booklet is here: https://www.marylandtaxes.gov/forms/current_forms/Nonresident-Booklet.pdf 

Being that my work is 100% remotely completed by computer at my residence in FL, I question the meaning of "carried on in Maryland".  

I can see similar questions to mine, asked elsewhere and the answers are different than yours. So some confusion still persists... Please refer to: https://www.justanswer.com/tax/lg5b6-live-florida-work-remotely-company.html 

Can you help me drill down on this further? Thank you in advance, Dave!

[Vanessa A]

The income you received working remotely from FL for a company based in MD is NOT taxable to MD, so it will not be taxed by the state.  Income is considered to be MD sourced income if you are physically present in the state.  

The income you received while a resident of MD, is taxable to MD. You will still need to file form 502 which is for Full Year and Part Year residents. All of your income will be reported on line 1 of the return. You will receive a deduction from your income on line 12 for income received while not a resident (income while living in FL)  So in the end, your income from FL will be removed from MD taxable income. 

If in future years, if you remain a resident of FL and working remotely for a MD employer, you will not have any state taxes to pay since FL does not have any state tax. 

[gdubbz]

Thank you Vanessa, for your reply. 

So just to confirm for 2024 with me remaining a FL resident working 100% remotely for a MD employer; there is no need to pay estimated taxes to MD and no need to file any tax return with them either? I'll still receive a 1099-NEC from the MD employer, but nothing will need to be done with it except retain it for my records?

With no FL income taxes to file/pay, I'll only be responsible for paying estimated Federal taxes and subsequently filing a federal tax return for 2024 and thereafter?

Thanks again, in advance.

[RobertB4444]

For 2024 and forward that is correct.  You would only need to file a Maryland return if there were income tax withheld on your 1099-NEC in order to get that returned to you.

@gdubbz 

[gdubbz]

Hi Dave and thank you for the edit/reply. To clarify on the matter of paying estimated taxes for 2024 and thereafter, I would be paying ONLY federal estimated taxes - not estimated taxes due to MD, since no taxes should be due there and no tax return will be filed there.

If I may ask, what about the situation here - caused you to edit your original reply to my question(s)? I've been researching these issues for days and still cannot find cause to have to file a MD tax return or pay estimated taxes. But for some reason, I'm still looking because I want to ensure that I'm doing the right thing by the law.

[ThomasM125]

You are correct, you don't have to pay estimated taxes to Maryland or file a Maryland tax return if your residence is in Florida for the whole year and you don't physically transact any business in Maryland. @gdubbz