Work in Maryland but live in Pennsylvania. Do I need to file a Maryland State Tax form, or only Pennsylvania?

[Brandon5]

When following the instructions for filling my Federal Taxes, do I select "No, I didn't make money in any other state."?

[ChristinaS · Accepted solution]

Only Pennsylvania. MD and PA have reciprocity, so you only have to file a tax return with the state you live in, unless you have non-wage MD income such as rental property or a business. You would also need to file a Maryland return if MD income taxes were mistakenly withheld from your pay.

If your only MD-source income is W2 income, and only PA taxes were withheld, do not list Maryland anywhere in Turbo Tax. Say No to making money in another state....

[ndy856]

so when the MD employer has the PA resident (employees) fill out the MW507 exemption withhold form, all 100% MD state & local should be exempt?

It mentions York or Adams counties so it was confusing.  MD Comptroller website has Local Tax Rate table also confuses me with they have a rate for 'Nonresident' and fail to mention that it does not apply to reciprocity states residents.

Bottom Line, with the reciprocity agreement MD has with PA,  the PA resident that earns wages from MD employers only owes Fed income tax and the PA State flat-rate (~3.07%) income tax. No need to withhold any MD local nor MD state taxes from each paycheck nor file with MD returns later in tax season.

[AmyC]

1. Yes, reciprocal wages are exempt.

2. MD does tax nonresident income that is not included in the reciprocal agreement.

3. Correct, PA tax only.

@ndy856