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 to Maryland's income tax rates as well as the special nonresident tax rate of 1.25 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.),and your only income from a Maryland source is wages, you can be exempt from Maryland income tax and Maryland withholding tax on those wages. 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) and Form 505NR (Maryland Nonresident Income Tax Calculation). However, if you reside within the city limits of Wilmington, you must file Form 515 to report your taxable wage income.

Residents of Alabama, Delaware, Indiana, Kentucky, Michigan, Missouri, New York, Ohio, and Pennsylvania jurisdictions which impose local taxes on Maryland residents

If you work in Maryland but reside in a local jurisdiction of Alabama, Delaware, Indiana, Kentucky, Michigan, Missouri, New York, Ohio, and Pennsylvania that imposes a local income or earnings tax on Maryland residents, you must file Form 515. To verify local tax laws, contact your local government in the jurisdiction in which you reside.

Correcting Maryland taxes withheld in error

If Maryland tax was withheld from your income in error you must file to obtain a refund. Complete all of the information at the top of the Form 505 through the filing status, residence information and exemption areas. Check the box provided to the right of the residence information for you to indicate your withholding was withheld in error. See instruction 4 of the nonresident 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.