Nonresidents Who Work in Maryland

If you are a nonresident who works in Maryland and/or derives other income from a Maryland source, you are subject Maryland's 4.75 percent income tax rate as well as the special nonresident tax rate of 1.25 percent. By law, the nonresident tax rate must equal the lowest local income tax rate paid by Maryland residents (currently 1.25 percent) combined with the top state tax rate of 4.75 percent. For more information about the filing requirements for nonresidents, see the instructions in the Maryland nonresident tax booklet.

If you are a nonresident who works in Maryland, you must also complete Form MW507 (Employee's Maryland Withholding Exemption Certificate) for your payroll department to determine the proper number of exemptions in calculating your income tax withholding.

Residents of Pennsylvania, Virginia, West Virginia and Washington, D.C.

If you work in Maryland but reside in a reciprocal tax state (Pennsylvania, Virginia, West Virginia or Washington, D.C.), you can be exempt from Maryland withholding. Follow the instructions for line 4 of the MW507 form.

Delaware residents

If you work in Maryland but reside in Delaware, you must file Form 505 (Maryland Nonresident Income Tax Return).

Residents of Delaware, New York, and Pennsylvania jurisdictions which impose local taxes

If you work in Maryland but reside in jurisdictions of Delaware, New York, and Pennsylvania that impose a local income or earnings tax, you must file Form 515.

Correcting Maryland taxes withheld in error

If you reside in a reciprocal state and your employer withheld Maryland taxes in error, you should file Form 505 to claim a refund, following Instruction 4 in the nonresident tax booklet.

Nonresident sale of property

If you sell or exchange real property that you own in Maryland, tax must be withheld at the time of sale unless a specific exemption applies. The tax will be withheld based on the total payment from the sale of that property and associated tangible personal property. The person responsible for recording the deed must pay the withholding tax to the Clerk of the Court or the Maryland Department of Assessments and Taxation (MDAT) at the time of recordation. The payment must be made before the deed or other instrument of transfer is recorded with the court, or filed with the MDAT. For more information, see Withholding Requirements for Sales of Real Property by Nonresidents.