District of Columbia has a reciprocal agreement with Maryland.
Nonresidents from Maryland 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 taxes in error, you will need to file a MD return to claim a refund. You cannot claim a credit for taxes paid to the other state on the DC return.
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 remove the automatic calculation.
Within your account:
- Log into your account and create a DC Resident State return.
- After completing your DC resident return add a Maryland Nonresident return.
- Go to the Basic Information within the MD return and answer the questions indicating Maryland tax was withheld in error.
The program will calculate the return refunding most or all of the MD state withholdings. The DC return may show an amount owed if you did not make estimated payments or have DC taxes withheld.
To claim exempt
from future Maryland withholdings, complete form MW507 and file it with your employer.