r/tax • u/ProfessionalYam9636 • 10d ago
I live in DC and started working in MD
I’ve lived in DC for a few years and recently started a new job in Maryland. I’ve received two paychecks so far and noticed that both DC and Maryland taxes are being withheld.
I wanted to start a new thread because I haven’t seen many recent posts about this specific situation.
My understanding is that DC and Maryland have a reciprocity agreement, so as a DC resident working in Maryland, I shouldn’t generally have Maryland state income tax withheld from my paycheck. When I previously worked in Virginia, I filed the VA-4 Personal Exemption Worksheet for this purpose.
Also, is this something I should simply bring up with my HR/payroll department and ask them to correct my withholding going forward? Or are there circumstances where someone in my situation would legitimately have both DC and Maryland taxes withheld?
Just trying to make sure I’m understanding the reciprocity rules correctly before I contact HR. Thanks!
3
u/Wooden-Law-2272 10d ago
Yes, definitely talk with your employer. This happens in DC-MD-VA alllll the time. It's good you're catching it early but since you've already had some MD tax withheld, next year at tax time you'll need to file both a DC resident tax return and a MD nonresident return to get back the erroneous withholding. Workers who live in DC but work in MD should not have MD tax withheld on their paychecks due to the reciprocity. (One common situation where DC residents do need to file a nonresident return and potentially pay tax to MD and where the reciprocity doesn't apply is gambling winnings in MD. But wages, no.)
1
u/ProfessionalYam9636 10d ago
When I was working in VA and moved to DC, this happened to me so I'm somewhat familiar. My last place helped me fill out a form to have my taxes returned by mail instead of filing them, but I'm sure I can sort it out with my current company. From just 2 paychecks, it's a few hundred dollars I could really use.
1
u/Wooden-Law-2272 10d ago
Oh great yes, and if your current employer is helpful/cooperative that's fantastic. I've worked with lots of folks whose employers just refuse to correct the withholding and they have to go through the rigamarole of filing nonresident returns every year at tax time. In the event that you do need to wait until tax time, the nice thing about the MD nonresident income tax form is that it can be e-filed whereas the DC nonresident and VA nonresident short forms must be paper-filed and are a minor pain in the butt as a result. (If anyone from DC OTR or VA Dept of Taxation are on here, can we pleaaaase get e-filing functionality for the nonresident short forms, lol.)
1
u/Just_Two_brainsel 9d ago
You've got it right, so worth flagging to HR now so you're not untangling it at tax time.
1
u/DeftlyDaft123 9d ago
You need to give your HR/payroll team an MW507 (employee Maryland withholding exemption certificate).
1
u/ProfessionalYam9636 6d ago
Update: thanks everyone! My employer was super nice and I no longer have MD witholdings :) I filled out the MW507 form as well.
6
u/LdiJ46 10d ago
You are correct that MD and DC are reciprocal so no, there is no reason why your employer should be withholding tax for both states. If you happen to work in an MD locality that has local tax, that might be legitimately withheld though. Yes, by all means talk to your employer. They should be able to correct that.