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    handymann316's Avatar
    handymann316 Posts: 3, Reputation: 1
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    #1

    Nov 19, 2010, 10:45 AM
    State taxes being taken out
    I live in NC and work in MD. I have state taxes being taken out of my pay check from MD, which I do not hold a residence in, Do I have to pay state taxes for NC, the state I do have a residence in?
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    Nov 19, 2010, 11:05 AM

    Yes you do - you prepare incomne tax returns for both MD and NC. It works like this:

    1. You pay MD income tax on the portion of your income that comes from MD sources (namely, your job). You file as a non-resident of MD.

    2. You calculate an initial tax owed to NC based on all your income, and then take a credit for taxes paid to MD. The result is that you'll probably end up owing little or maybe even nothing to NC (unless you have other sources of income besides your job).

    One question though: are you commuting each day between NC and MD? If not, and you're staying over in MD from Monday to Friday each week it may mean that you are actually a MD resident.
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