Employer issued 2 W-2 for states one is incorrect

[user17581249518]

My employer issued two W-2 for 2024 listing the same income for both  MD and NC.  I am resident of NC and they only deducted taxes for MD.  All  should have been reported to NC.  I understand I need to file a non-resident tax form for MD claiming zero income.  For the NC return will I be penalized for not paying any taxes before the extension deadline?

[SwapnaM]

Yes, you are right. You owe tax to North Carolina, and since no payments were made through withholding, you may be subject to a penalty for underpayment as your employer incorrectly withheld taxes for Maryland

(a non-resident state for you) instead of North Carolina (your resident state). 

Maryland taxes nonresidents only on income earned physically in Maryland. If your w2 wasn't earned while physically residing in MD, you will file the MD Non -resident return to get a refund of the taxes paid to MD.

Consider writing a letter to the North Carolina tax office to explain the employer's error. They might waive the penalty. Also make sure your employer fixes your tax withholding immediately, so this doesn't happen again next year. Even if you can't get the penalty waived, you should file your returns and pay the tax owed as soon as you can. This will stop the accumulation of interest and additional penalties.

@user17581249518 Thanks for the question!!

[rjs]

@user17581249518  How did Maryland get involved? Did you work in Maryland? @SwapnaM is assuming that you did not work in Maryland, and that withholding Maryland tax was a mistake by the employer, but you didn't say that. Is that what happened, or did you work in Maryland? If you worked in Maryland, then withholding Maryland tax was correct. You have to pay Maryland tax on income that you earned for working in Maryland, even though you live in North Carolina.

[VolvoGirl]

This doesn’t answer your main question but did you enter each W2 separately?   Just checking.  They probably needed to go on 1 W2.  

If the EIN number is the same and you work in more than 1 state or city, sometimes they will give you another W2 with the extra state information on it and the top part the same or not filled in.  If this is the case, list one W-2 but include both state or local  taxes on it.  It will let you type in more than one line for boxes 15-20.  Don't add the boxes together.  

[user17581249518]

Residence is in NC but I do telework for company in based in MD.  From what I have read all the income should be reported to NC and not MD.

[SwapnaM]

Yes, you are correct. If your employer was based in Maryland, they may have withheld Maryland taxes from your W-2. However, if you didn't live or work in Maryland, your employer was not required to withhold Maryland tax and you won't owe Maryland taxes on those wages. If the employer withheld Maryland tax on income from working remotely in a state other than Maryland, file a nonresident return to claim a refund of those withholdings.

@user17581249518 Hope this helps!!