Does the Maryland RELIEF Act apply to me if I'm a resident of Maryland but received unemployment payments from another state (CA)?

[miahk99]

It looks like I'm getting taxed by Maryland for my 2021 unemployment income from California. Does the MD RELIEF Act apply to me if I'm a resident of Maryland but received unemployment benefits from a different state?

"The RELIEF Act provides a State Income Tax Exemption for Unemployment Insurance (UI)
Benefits for qualifying filers. UI payments are currently subject to federal and state income taxation. Beginning with Tax Year 2020 and including Tax Year 2021, the Act exempts from the state income tax the UI benefits received by an individual earning less than $75,000, and couples filing jointly or individual heads of households earning less than $100,000."

[KrisD15]

Yes

Unemployment income is claimed on your resident state tax return, no matter which state paid it. 

How your resident state taxes Unemployment is up to your state. 

[miahk99]

Thank you. How would I receive this subtraction on Turbo Tax? The only thing I see is the "Unemployment Compensation" option under my Maryland income section. But the instructions are:

Include the following as "Maryland Unemployment Compensation" which qualifies for a Maryland subtraction:

* You received unemployment benefits from the Maryland Department of Labor

* You received unemployment benefits from the unemployment insurance program of any of the following jurisdictions, with which Maryland has a reciprocal taxation agreement: Pennsylvania, Virginia, West Virginia, and Washington, D.C.

Given that my compensation is neither from the MD Department of Labor nor is it from any of the listed states, what are my next steps? 

[DMarkM1 · Accepted solution]

You are correct you do not qualify for the unemployment compensation exclusion from MD taxes since the benefit was paid by CA.  Below is an excerpt from the MD tax form instructions (see page 12).

Amount of unemployment compensation reported on 1099-G, Box 1, that was included in your FAGI for qualified taxpayers. You qualify for this subtraction if:

• You received unemployment benefits from the Maryland Department of Labor;

• You received unemployment benefits from the unemployment insurance program of any of the following jurisdictions, with which Maryland has a reciprocal taxation agreement: Pennsylvania, Virginia, West Virginia, and Washington, D.C.;

• Total unemployment benefits included in your FAGI;

• Your federal adjusted gross income does not exceed: $75,000 for single, married filing separately, and dependent filers; $100,000 for a married couple filing a joint return, or an individual filing as head of household or as a surviving spouse.

[DH Lewis]

In April 2022, after filing my taxes with TurboTax and charged taxes on my CA unemployment. I lived in MD all of 2020, but still received my CA UI due to the pandemic UI rules. I was angry and confused by this! After many calls to TurboTax, MD State Legislators I was given the appropriate office/person to speak to.

I spoke with The Maryland Comptrollers office and was informed legislation was made so that NO Unemployment Insurance payments should be taxed by MD. I was instructed to do an amended return with an adjustment made in the section that has the unemployment claimed as income. I amended my return through Turbo Tax - having to tell the agent what MD Comptrollers told me to do step-by-step..., mailed the amended return (502X) to MD Comptrollers addressed as advised, and I got a confirmation of receipt 2 weeks ago. They said it may take up to 8 weeks or more before they can review my amended return. I am now awaiting the results of their decision. I will keep you posted on the final outcome.