Renting Home in One State, Own Home in Another - Tax Liability

[amylepre]

Hello,

I own a home in Pennsylvania, but moved out in March of 2023. I am renting a home in Maryland since then. I changed my address with my employer and state taxes for Maryland have been withheld, but not Pennsylvania. I am worried I am going to be liable for the Pennsylvania state taxes since I own the home. What is my liability and how should I inform my HR department to update my withholding (if necessary)?

[tagteam]

It appears that you were a part year resident of Pennsylvania, but did your employer not withhold during your period of residency? 

[amylepre]

Hello. My employer did withhold PA taxes when I lived there. I am just concerned that I am liable for taxes in that state since I still own the house. Or is that an inaccurate assumption?

[tagteam · Accepted solution]

Part year only, as it appears.

See https://www.revenue.pa.gov/TaxTypes/PIT/Pages/Determining-Residency.aspx

Individuals who are domiciled in PA or who are statutory residents of PA are subject to PA personal income tax on income, regardless of where the income was earned. Both residents and statutory residents may qualify for credits against tax paid to other states on income earned outside of PA.

Individuals who are neither domiciled in PA nor have statutory residency in PA are taxed only on income from sources within PA and cannot qualify for PA credits against taxes paid to other states.

[amylepre]

Thank you so much for your help and information. 

[TomD8]

Be aware of PA's definition of "statutory residence."  Since you have maintained a "permanent place of abode" inside PA for part of the year, PA will consider you a statutory resident unless you spend more than 181 days of the tax year outside PA (a day is midnight to midnight).  A statutory resident of PA is subject to PA income tax on ALL their income.

See "What is statutory residence?" in this PA tax reference:  Determining Residency (pa.gov)

If your move to MD is permanent, and you do not meet PA's definition of statutory resident, then for 2023 you would file a part-year resident tax return in each of the two states,