Question

Reciprocity MD and PA: Reside in both MD and PA, tax resident of MD, work is in PA and income comes from PA job; employer withheld state income from both states.

Forum|Forum|5 years ago
May 27, 2021
1 reply
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I am filling non resident return for PA to ask refund and planning to file resident tax for MD. The software does not seem to acknowledge the tax reciprocity.
Question : How do I use the software to get refund from PA as PA non resident or are some income tax required to PA because the employer is located in PA, despite the fact that I am tax resident of MD and normally should only pay taxes to MD even if I work in another state (with a reciprocity agreement)? In the software, I am to pay additional PA taxes instead of getting a refund.
I have not yet started the MD return since it’s advised to do the non resident return first. Please help

P

pk12_2

Employee

@Lizy 11 , am not sure I understand the situation --- what I get is :

(a) you a resident of MD -- don't understand "reside in both MD and PA, tax resident of MD". You can be a resident of ONE state at a time.

(b) you are employed (and all income is from employment ) in PA -- don't understand "employer withheld state income from both states"

(c) in such a situation ( i.e. if ONLY Bold is true ) , you needed to file ONLY a resident state --PA . Because that should have been withheld and there would be NO non-resident state.

If the employer mistakenly had withheld only PA then you would have to file MD as resident, and PA either as Non-Resident and ask for return of all withholding asserting reciprocity between the two states of PA and MD. Usually this is a special form for the return of the withheld taxes - you often do not have to do this using a non-resident filing but can do that also. I

Is your case where the employer withheld for each state only for part of the year e.g. Jan through June for PA and Jul through Dec for MD ? In such a case and assuming that you were a resident of MD for the whole year, you would file a Non-Resident return for PA covering Jan through June withholdings and allocating all the income to MD i.e. zero to PA -- thus all your taxes would be refunded. Then you prepare the MD return with the whole year income ( which you would do any ways and claim NO earnings in another state ). This then would result in all income being taxed ONLY by your resident state -- MD

Does this make sense ? Do you need more help ?

pk

L

Lizy 11Author

Thanks for the answer! To clarify my post,

(a) I was a tax resident of MD the entire year and had logding in both states the entire year

(b) my employer is in PA and the work is in PA. This PA employer withheld MD and PA state income taxes as shown in my W2.

please clarify your guidance based on this clarification, thanks

M

Mike9241

let's not talk residency but domicile. you can be a resident of many states but you can only have one domicile at a time. so what is your state of domicile?

Domicile is a person’s permanent place of dwelling. It is a legal relationship between a person and a locality. It may or may not be the same as a person's state of residence (not permanent).

For purposes of income taxes, “domicile” means a legal residence which is the place where a person has a fixed dwelling with an intention of making it his/her permanent home.

Domicile is a combination of two factors namely, residence and intent to remain. As the term domicile includes residence, the scope and significance of the term domicile is larger than the term residence.

Pennsylvania
Submit exemption Form REV-419 to your employer if you work in Pennsylvania but are a resident of Indiana, Maryland, New Jersey, Ohio, Virginia, or West Virginia

Maryland

Submit exemption Form MW507 to your employer if you work in Maryland and are a resident of the District of Columbia, Pennsylvania, Virginia, or West Virginia.

for this year and maybe 20201 you'll need to file returns in both states. file a resident state return for your state of domicile. file a nonresident return reporting no income in the other state so you can get back your withholding.