District of Columbia has a reciprocal agreement with Maryland & Virginia.
Maryland & Virginia Residents
Nonresidents from Maryland & Virginia are exempt from taxation on the wages, salary and other compensation for personal services rendered in District of Columbia, and DC residents are exempt from taxation on wages, salary and other compensation for personal services rendered in Maryland.
If your employer withheld Maryland or Virginia taxes in error, you will need to file a MD or VA return to claim a refund. You cannot claim a credit for taxes paid to the other state on the DC return.
Credit for Taxes Paid to Another State
The credit for taxes paid to another state is automatically calculated in your account when you add a Nonresident return to your already created Resident DC return. If you qualify for the reciprocal agreement, you will need to manually remove the automatic calculation.
- Create a DC Resident State return
- Add a Maryland Nonresident return
- Go to the Basic Information within the MD return and answer the questions indicating Maryland or Virginia tax was withheld in error.
The program will calculate the return refunding most or all of the MD or VA state withholdings. The DC return may show an amount owed if you did not make estimated payments or have DC taxes withheld.