MD Taxes for VA Workers

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  • Balzer94

    Active Member
    Feb 27, 2011
    769
    My fiance just started a new job a few weeks ago working in Leesburg, VA. One of her big question is how to handle Maryland Income Tax. Does it have to be paid periodically through out the year, or can it be paid once during tax season? Is there a source to figure out how much we should be paying?

    I am also paying a Frederick Tax. How do we go about taking care of this? We just want to make sure everything is being taken care of and dont get screwed by messing things up going in to the new year.
     

    whistlersmother

    Peace through strength
    Jan 29, 2013
    8,948
    Fulton, MD
    At one time, VA and MD had income tax reciprocity in that neither would double tax the other's residents. Work in VA, live in MD, pay only MD income tax and vice versa.

    I do know some PA jurisdiction got greedy and double tax MD residents working there - MD retaliated and double taxes those PA residents from those jurisdictions. Nice, huh?

    The payroll dept. will have her fill out the proper state withholding form. As judged by the damned traffic across the American Legion, lots of companies and workers going both ways.
     

    Inigoes

    Head'n for the hills
    MDS Supporter
    Dec 21, 2008
    49,365
    SoMD / West PA
    At one time, VA and MD had income tax reciprocity in that neither would double tax the other's residents. Work in VA, live in MD, pay only MD income tax and vice versa.

    I do know some PA jurisdiction got greedy and double tax MD residents working there - MD retaliated and double taxes those PA residents from those jurisdictions. Nice, huh?

    The payroll dept. will have her fill out the proper state withholding form. As judged by the damned traffic across the American Legion, lots of companies and workers going both ways.

    Which gave us the WYNNE decision, where Maryland cannot tax money that has already been taxed by another state.

    The short version:
    https://en.wikipedia.org/wiki/Comptroller_of_the_Treasury_of_Maryland_v._Wynne

    the long version:
    COMPTROLLER OF THE TREASURY OF MARYLAND V. BRIAN WYNNE
     

    t84a

    USCG Master
    MDS Supporter
    Jan 15, 2013
    7,733
    West Ocean City, MD
    Your wife's employer should be withholding and submitting Maryland state and local taxes. Are you self employed? If not, the answer is the same as for your wife.
     

    Balzer94

    Active Member
    Feb 27, 2011
    769
    Thanks for the input. I just told her to ask her HR for paperwork for Maryland. When she started they gave her the Virginia withholding form, which had info about not having to pay VA if in Maryland and several other states but they did not give her any form to fill out for Maryland.

    We will see what they say about Maryland’s withholding form
     

    silver78

    Ultimate Member
    MDS Supporter
    Jan 18, 2009
    2,312
    Many companies in the DC area are willing to withhold taxes for all three jurisdictions (DC/MD/VA) because so many workers live in one jurisdiction and work in another. DC/MD/VA all have employee income tax reciprocity so if you live in one jurisdiction but work in another you only have to pay taxes in your state of residence. However, if a business is located in VA and does not do business in MD they can choose not to withhold taxes on a MD employee who works in VA. Then as others have said one has to make quarterly tax payments to MD.

    In today's computerized world most companies are using a payroll system like Paychex or ADP so it is very easy to withhold on all three jurisdictions. IMO - If your wife's company is not willing to withhold MD taxes I would think hard about working there. I have been part of small company management teams for over 20 years. Our view is that good employees are our most valuable asset and we treat them well. If a company's management is so cheap that they do not want to withhold taxes for their out of state employees then they are probably very cheap and will screw their employees every time they can.
     

    mac1_131

    MSI Executive Member
    MDS Supporter
    Jan 31, 2009
    3,280
    I work in VA and they do MD witholding it's a non-issue for me.

    HR Dept needs to handle this, only way you would have to deal with it yourself is if you were self-employed.
     

    Pinecone

    Ultimate Member
    MDS Supporter
    Feb 4, 2013
    28,175
    One thing, if any taxes were withheld for VA, she will have to wait until tax season, and file a return in VA for refund of those taxes.

    So fix it NOW, otherwise, she will be waiting until 2021 to get all her money back. BT, DT, got the T-shirt.
     

    OMCHamlin

    Ultimate Member
    BANNED!!!
    May 17, 2017
    1,115
    The Cumberland Plateau
    So there is how things are supposed to work, and often, how they actually work. I have been a tax preparer as a part time gig, and I live right close to the VA/MD line, so I get lots of opportunities to see the "actually work" side of things. In a nutshell, yes, you certainly can ask HR or more likely, payroll, to withhold for Maryland instead of Virginia, but don't be surprised when they politely (or otherwise) tell you to "suck it up, buttercup" and withhold for the state the company is physically located, not where the employee requests. Why? I don't know, honestly, but they do, I've seen it too many times to doubt it.
    Problem is, that's your problem, tax preparers will generally charge you to file in both states (why wouldn't they, they didn't create this mess?) and that goes for if you buy a program or file on line with one of the big boys, like Turbo Tax or what not.
    So in short, yes, you can and should ask, but don't be surprised if they don't accommodate your wishes, whether it costs you money to file an extra state or not.

    While we're at it, remember one rule about HR. They are NEVER here for the employee, they are ALWAYS in support of their (and your) employer, and they WILL look right at you, smile, and lie through their crooked little teeth about that, just about 7 days a week...
     

    N3YMY

    Ultimate Member
    Jan 21, 2013
    2,763
    I too live close to the border of VA (and WV for that matter).

    I have worked a number of opportunities on the VA side of the Potomac.

    In each instance, on the day of first report I was given the proper MD withholding forms and only MD tax was withheld.

    It is my expectation, even with a small shop (ie 5 employees; yes I worked for a place that small), there's no reason for the process to work correctly...
     

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