Dear Tax Expert,

I have the following questions for you:

1. Both me and my husbands work on H1B visas and we are considered residents for tax purposes. Last year we filed a joint tax return for federal and IL state taxes. We plan on filing jointly this year.

My husband changed jobs in Nov 2006 from an employer in IL to an employer in MD but he (we) lived in IL for the entire year 2006. For the 2 months in 2006 that he was paid from an employer in MD he received a W-2 form showing an income of $8000.0 in which he was taxed for IL but not for MD. Turbotax software indicated that we need to pay taxes to IL and to MD and fill the form MD-505 (non resident). However, the instructions for that form say:

"IF YOU ARE A NONRESIDENT, YOU ARE
NOT REQUIRED TO FILE A MARYLAND
RETURN IF:
• your Maryland gross income is less than
the minimum filing level for your filing status,
OR.."
And the table for persons under 65 years shows:
Single persons (including dependent taxpayers) $ 8,450
Joint return $16,900

According to my interpretation (his income for 2006 from MD was $8000 and I am employed in IL) we don't need to file taxes for MD this year. IS THIS CORRECT? Or we should go by turbotax?

2. Should my husband arrange for his employer to have MD taxes deducted form his paycheck in the future? We still live in IL.

3. Is there any difference in us filing jointly or separately for federal or state taxes? I never knew how to file...


Thank you for your help!

If he worked INSIDE the borders of Maryland, then he must pay taxes on the Maryland-sourced income as a part-year resident or as a non-resident who earned money in Maryland.

If he worked in Illinois (which seems to be the case), he owes NOTHING to Maryland and does not need to file a Maryland return.

If you file jointly on the federal return, most states (including Illinois) require you file jointly on the state return.