100% Remote worker live in one state and his employer in another state, file non-residence form?

[lsimposn467]

If he is100% remote worker work from home in MD and his employer is in DC. Does he still file non-residence for DC? If so, can he not request for a refund for DC? He has a choice, right? Will he be penalized for not requesting refund from DC? Also, if no refund, he still has to submit his non residence to DC Tax office, right?

[LindaS5247]

If he is a 100% remote worker living in Maryland (MD) for a District of Columbia based employer, he is not required to file a DC non-resident return, provided no work was physically performed in DC. 

Maryland and the District of Columbia have tax reciprocity. Because of this, taxes should only be paid to Maryland. He would have to file a District of Columbia nonresident tax return to get a full refund of his DC withholdings.

If he files a nonresident tax return for the District of Columbia, he should prepare it first in TurboTax (before preparing his Maryland state tax return).

He can submit a Form D-4A Certificate of Nonresidence in the District of Columbia to his employer to stop future District of Columbia tax withholding.  

 See these links for additional information:

Multiple States—Figuring What's Owed When You Live and Work in More Than One State

How do I file a nonresident state return?

If you have additional information or questions regarding this, please return to Community and we would be glad to help.

[lsimposn467]

He has to file it regardless if he getting refund or not, correct? 

You mentioned that he has to do DC non residence first before submitting MD taxes. Does he need any documents to go with it?

When can he send his MD taxes? Does he has to wait for his DC taxes get ccepted or no?

On W2 form in box 15 or 16, it said MD. Need to file DC non residence anyway?

[DaveF1006]

To answer your questions individually.

Does he have to file the DC non-residence form regardless?

1. No. He only needs to file the DC form (D-40B) if DC taxes were actually taken out of his paycheck. 
2. If Box 15/16 on the W-2 says MD: This means the employer correctly withheld Maryland taxes. Since he didn't pay any money to DC, he doesn't need to ask DC for a refund. In this case, he can skip the DC filing entirely and just file his Maryland resident return.
3. If Box 15/16 on the W-2 said DC: Then he would have to file the D-40B to get that money back.

2.  Does he need any documents to go with it?

1. If he does end up needing to file the DC D-40B (because of a mistake on the W-2), he will need:
2. A copy of his W-2 showing the DC withholding.
3. Starting in 2026, DC now requires a copy of the Maryland State Tax Return to prove he is paying taxes there instead.

3. When can he send his MD taxes?

1. He does not have to wait for DC to "accept" anything.
2. Maryland and DC do not talk to each other in real-time for processing.
3. He can (and should) e-file his Maryland taxes as soon as he is ready.
4. Note: The DC D-40B is often a paper-filed form (unless using the MyTax.DC.gov portal), whereas Maryland is usually e-filed. They are separate processes.

The W-2 says "MD"—Does he still need DC non-residence?

No. Since the W-2 already says MD, the employer has recognized the reciprocity agreement. He has no "tax footprint" in DC that needs to be cleared. He should simply file his Maryland return as a resident and report all his income there.

@lsimposn467 

[lsimposn467]

Thank you for clearing it up for him. 

He will do his MD taxes (e-file) and leave DC non residence info in turbotax as documentation purposes. 

Like to suggest turbotax to add this information in help/guidance section on non residence 'if your W2 in box 15/16 says this state as your residence,  no need to file it'.