Moved to PA at the end of 2019 and lived there all...
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dnw5024
Level 2

Moved to PA at the end of 2019 and lived there all of 2020. Employer paid state taxes to wrong state for first few weeks.

I moved to PA at the end of 2019. I lived there all of 2020 so I am filing as a full-year resident for my PA return. My employer paid about 3 weeks' worth of state taxes to my old state (MD) before switching to PA for the rest of the year. My PA return is using the total federal income number and not the PA income number from my W-2. It is also only using the PA state income taxes paid and is excluding the MD taxes paid. When I go to get a credit for the MD taxes paid, TurboTax won't allow me as it is a reciprocal state. How do I fix this issue?

3 Replies
ThomasM125
Employee Tax Expert

Moved to PA at the end of 2019 and lived there all of 2020. Employer paid state taxes to wrong state for first few weeks.

You have to file a tax return for Maryland to get a refund of the taxes you paid there. File as a non-resident.

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dnw5024
Level 2

Moved to PA at the end of 2019 and lived there all of 2020. Employer paid state taxes to wrong state for first few weeks.

Yes, I am filing a return in MD as well as PA but there's still a discrepancy somewhere. Are you saying that for MD I would list my taxable income there as $0 instead of what's listed on my W-2 for the MD line?

Without using real numbers here is my situation:

 

W-2 lists:

PA Wages, PA withheld Tax

MD Wages, MD withheld Tax

 

MD Return uses MD Wages and applies MD withheld tax, so the return is about what I would expect with nothing owed and nothing due for return.

 

PA Return uses PA Wages + MD Wages but only applies PA withheld tax. So for this one, it's counting the income I made in MD, but not the taxes I paid on that income because it went to MD and not PA.

 

So, the MD Wages are being used in both MD and PA, but the MD tax withheld is only used in MD. I figure I have three options:

 

1.

For PA return: PA Wages + MD Wages, apply PA withheld tax + MD withheld tax

For MD return: $0 wages, no withheld tax

2. 

For PA return: PA Wages, apply PA withheld tax

For MD return: MD Wages, apply MD withheld tax

3.

For PA return: PA Wages + MD Wages, apply PA withheld tax

For MD return: $0 wages, MD withheld tax

ErnieS0
Employee Tax Expert

Moved to PA at the end of 2019 and lived there all of 2020. Employer paid state taxes to wrong state for first few weeks.

File a non-resident Maryland income tax return to get your Maryland withholding back.

 

The credit for taxes paid to another state is for double-taxed income. You do not have double-taxed income if you lived and worked in PA for all of 2020. You have a withholding mistake by your employer.

 

Maryland says:

 

If Maryland tax was withheld from your income, you must file to obtain a refund of the withholding. Complete all of the information at the top of Form 505 through the filing status, residence information and exemption areas.

 

Check the box provided to the right of the residence information for you to indicate your withholding was withheld in error.

 

Enter your federal adjusted gross income on line 17 in both columns 1 and
3 and line 24. Then complete lines 43-47, 49 and 51.


Sign the return and attach withholding statements (Forms W-2 and/or 1099) showing the Maryland tax withheld equal to the refund you are claiming.

 

See Maryland Tax withheld in error on page 2 of the 2020 Nonresident Booklet.

 

TurboTax Online does not handle this situation. You may want to complete Form 505 using the state fill-in form. Or you can print out your MD return and fix it. There's no match. You will just have to white out some boxes and check the withheld in error box.

 

If you are using CD\Download, after completing the MD section, click on Forms in the upper right. Find Form 505 in the left column (Forms in My Return). Check the box "Check here for Maryland taxes withheld in error" and print your return.

 

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