Partial year resident of Maryland but still have nonresident income from MD (move to a state without reciprocal agreements)

[yuf31]

Hi There,

During the last year, I lived in Maryland for the first half of my year and then moved to New Jersey. But I worked for the Maryland employer for the whole year. In my understanding, I am a partial-year resident of MD, with the first half part of my wages of the MD employer subjected to the resident tax in  MD, and the second half part of my wages subjected to the non-resident tax rate. However, the form MD-502 does not have a place to discriminate the resident and non-resident parts of my income, and a local tax rate (higher than the additional non-resident tax rate) applies to the whole part of my income. In this case, how should I file my MD tax return. Is it OK that I just go with the current way of filing for simplicity? Since the total tax I pay to MD is higher then what exactly it is?

Thank you!

[MaryK4]

If you WORKED in New Jersey after you moved there, the wages would not be Maryland nonresident wages.  If you did work in Maryland, you would be able to claim a credit for taxes paid to another jurisdiction on your New Jersey Part Year return so you are not double taxed.

[yuf31]

My case is that my employer is still MD, and I am doing a hybrid working mode by commute to MD 2 days per two weeks. In this case, is my wage after I moved to NJ from my employer counted as nonresident taxable for MD?

[AmyC]

MD taxes income earned while working there. Your w2 should have your MD wags broken out for MD taxable versus nontaxable portion. Working 2 days a week inside MD would be taxable while the rest may not be. If you are operating a business there, then it would be all taxable. Check the income rules for your return.

MD - either: 

• file a resident return based on residency of 183 days. The resident return does allow adjustments for part year residents.  
• Otherwise, you file a Nonresident return.

NJ - you will file a part year return and claim credit for any income that is being double taxed by MD and NJ.

You get credit for the lower state tax on the lowest taxable amount.

• Each state calculates taxable income differently. 
• Each state has its own tax rate/ system.
• You get the lowest of both categories as a tax credit.