If I work for a federal agency that is located in Maryland, but I was hired to telework from Tennessee (where I reside full time) and I go to MD two days every month for meetings (zero days now because of COVID), does MD have a right to deduct state taxes from my monthly pay, and, should I submit a state return for MD?
Thanks.
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MD has the right to tax the portion of your income earned on the days you physically worked in MD.
MD does not tax non-resident remote income. The income you earned working remotely from TN is not taxed by MD.
You must file a non-resident MD tax return if you were required to file a federal return and you had MD-source income, or if you had MD taxes withheld from your pay.
It depends on whether you were compensated for personal services performed in any Maryland county or Baltimore City and you lived in a jurisdiction that imposed a local or earnings tax on Maryland residents. They can potentially charge you tax for the days you visited Maryland before you began working remotely.
See Page 4, Maryland 2020 Nonresident Tax Forms & Instructions
Thanks for the quick reply. The building is located in Montgomery county. I have never set foot there actually, because I was hired during the COVID pandemic. So far, 100% of my work is done in the state where I reside. The state where I reside has no state income taxes but has a higher sales taxes.
If you never lived in or physically worked in MD in 2020, then your income is not subject to MD taxation.
Unfortunately, if your employer mistakenly withheld MD taxes, you'll have to file a non-resident MD return, showing zero MD income, in order to get those taxes refunded.
@TomD8 could you give your input on a similar situation I am dealing with?
One expert said that it is MD sourced income, while another expert said it is not.
Here is my post
Maryland does not tax teleworkers unless there are days when they are working in-state.
Generally, Maryland imposes income tax, and therefore a withholding requirement on employers, for employees living in Maryland and non-residents receiving Maryland-sourced income. Income is deemed Maryland-sourced income when the income is compensation for services performed in Maryland.
See EMPLOYER WITHHOLDING REQUIREMENTS FOR TELEWORKING EMPLOYEES DURING THE COVID-19 EMERGENCY
That is my understanding as well. My employer - I work for the Department of Defense ( my duty station is in MD), but I live in MA. Never psychically worked in MD. My employer- The Department of Defense has been withholding MD and MA taxes however. So that is why I am questioning if this is MD sourced income.
Thank you for the link. I am attempting to reconcile two sections in that announcement.
Thank you! That makes sense so all about your physical location. Not physically present, not MD sourced income. That is it right?
Correct. The work income of a non-resident of MD who never works from a physical location inside MD is not MD-source income.
Thank you, sir!
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