MD & WV Residency Question

[MDeBaise1]

Last year I was living and working in West Virginia. In October I moved to Maryland but still work in West Virginia. 

1) I assume I need to file a state return for both states. 

2) On the West Virginia state return it asks for part year resident allocations. It shows my West Virginia Resident Income and asks how much "West Virginia Income While Nonresident". I have to assume this would be equal to the amount of State wages and tips earned while living in Maryland for the remainder of the year. 

My question is if both of the above are correct (have to file both returns and also pay West Virginia for taxes while not living there). Why would I need to pay West Virginia tax and also pay Maryland tax for that period of time from October until now. 

[DaveF1006]

You will still need to file taxes in both states but Turbo Tax will recognize that you paid state taxes in one of the states. Usually what happens is that you will be given a refund in the state you worked in and will need to pay taxes for the state that you didn't, for that 3-month period of time.. 

To avoid this next year, there is a reciprocal state agreement between Maryland and West Virginia. If you work in West Virginia and live in Maryland, you must file a form WV/IT-104R with your Human Resources Dept to avoid having state taxes withheld in the state of West Virginia.  Here is a link that explains reciprocal agreements  and i also will include a link to a pdf copy of the WV/IT-104R.  Here is the the link to the copy to fill out and submit to HR.

[MDeBaise1]

Thank you for your reply. Actually, they had me fill out that form (WV/IT 104) when I updated my W4's. 

I asked payroll today why I would be getting charged WV tax after I moved and they said I shouldn't be but consult with a tax consultant. 

I believe the issue is that I'm entering a value in when it says "West Virginia Income While Nonresident" and it should be zero. 

On part year resident allocations for West Virginia I have;

                                             Federal Income          WV Resident Income         WV While Nonresident Income

Wages & Salaries                  $xxx,xxx                               $xx,xxx                                           $??????

I think the question marks should be zero and not the value in which I paid the taxes to Maryland. Being double taxed for the same amount seems incorrect since the states are reciprocating. Entering the amount of wages from the Maryland box where the ?????? are causes me to owe West Virginia tax. 

Am I wrong in my thinking?

Thank you. 

[DaveF1006]

Let me try to break this down to where it makes sense. If you earned $100,000 during the year, your income should be allocated 75/25 between the two states meaning that $75,000 was earned as a West Va resident and 25% as a West Virginia non-resident. This is how the allocation should be reported. 

The beauty is, once you filled out that form with Human Resources, you should not need to complete a West Virginia state return in 2020 because they should not withhold any taxes.

[MDeBaise1]

So the moral of the story for 2019 is that I have to pay non-resident WV tax and MD tax for those three months even though I filled that form out? 2020 I will just file a MD state return. 

Thanks. 

Mike

[DaveF1006 · Accepted solution]

That is correct but it may be less painful then you might imagine.

[MDeBaise1]

Dave,

Can you point me to the resources or tax law that indicates this? I'm being told I should not be paying that non resident tax in WV because I did file that form and paid tax for the remainder of the year in MD. 

Thanks. 

[JamesG1]

Does not West Virginia have a reciprocal agreement with Maryland?  Is all of the income earned in West Virginia from wages? 

See if this helps.

West Virginia, page 10

[MDeBaise1]

Hello,

Yes there is a reciprocal agreement. All of my earned income is from West Virginia, that is correct. I find it very confusing to understand this scenario. 

* Lived and worked in WV from Jan - October 2019. I paid taxes both federally and at the state level. 

* Moved to MD in October, updated W4's as well as the WV Non-Resident Form (WV/IT-104)

* I paid taxed to MD from October through Decemeber 2019. 

* It appears that I also have to pay WV Non-Resident taxes from October to December though I believe you are not supposed to be charged state taxes by two difference taxes in the same period. 

I'm just at a loss if I need to be paying WV or if I don't and if so, why would I be paying taxes to both states. 

Thanks. 

[DaveF1006]

it is very difficult at this level trying to determine if your were taxed on the right income for both states or if you were given proper credits for income taxes paid in each state.  if you have a little time, you might contact phone support so they can do a diagnostic in your state returns just to see if everything was calculated correctly. If i had the ability to do that now, I could tell pretty quickly if it correct or what you need to do to correct it.

Please select this link for information to contact phone support so they can research this first hand.