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P_Questions
New Member

State Tax Withholding

I live in CA and work remotely for a company in Maryland.  I saw a note about nonresidents that get income from a source in MD are subject to taxes and some additional special tax. Should I be paying taxes in Maryland as a nonresident as well as taxes where I live?

3 Replies
Critter
Level 15

State Tax Withholding

You will file a non resident MD return  AND  a resident CA return on which you will get a credit for the taxes you pay to MD so you are not taxed twice.   In the TT program, in the MY INFO tab, you will indicate CA is your resident state and that you earned income in MD as well.   Then in the STATE tab you MUST complete the MD return FIRST (even if you will not file it first)  so the proper credit will carry to the CA return. 

P_Questions
New Member

State Tax Withholding

Thank you. In regards to what my job deducts, they are taking both CA and MD state taxes. So, that is accurate? To recap, if so, I then need to file my taxes for both states, one resident and one nonresident. Making sure that I file the MD tax return first. Correct?

TomD8
Level 15

State Tax Withholding

Maryland does not tax a non-resident's income the source of which is "services performed outside this State" or  "a business, occupation, profession, or trade that is carried on wholly outside this State."

 

See sections (C)(1)(b) and (C)(1)(c) of Maryland Statutes. http://www.dsd.state.md.us/comar/comarhtml/03/03.04.02.06.htm

 

Therefore, as long as you never actually (physically) work within Maryland, your work income is not taxable by MD, and you need not file a non-resident MD return so long as you have no non-work income from MD, such as rental income from a property located in MD.

 

Finally, you should file MD Form MW507 with your employer, advising them that you are exempt from MD withholding under exception 3(b).  https://forms.marylandtaxes.gov/current_forms/mw507.pdf

 

Your income, of course, is entirely taxable by your home state of CA.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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