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VERIFY: Where to file taxes if you live in Virginia or Maryland and work in D.C.

Normally if you work in one state and live in another you must file two income taxes, but the DMV is a little different.

WASHINGTON — This is a gentle reminder to all you procrastinators out there: Your taxes are almost due.

Most income taxes are due on Monday, April 18.

The DMV has a uniquely fused workforce: you have people living in one state or jurisdiction and working in another. 

That presents a lot of questions this time of year.

THE QUESTION:

If you work in D.C., Maryland or Virginia, and live somewhere else in the DMV, where should you file your taxes?

THE SOURCES:

  • Henry Grzes - lead manager on tax practice and ethics, Association of International Certified Professional Accountants
  • Mark Steber - chief tax information officer, Jackson Hewitt Tax Service

THE ANSWER:

D.C., Maryland and Virginia have a reciprocity agreement, which means that their tax laws make it so that if you work in one state and live in another, you only need to file one return in the state where you live.

WHAT WE FOUND:

"The general rule is this: you owe taxes to the federal government, and to the state where you earn money," Steber said. "Now having said that you also generally owe a tax return in the state where you live. So if you live in one state and work in another state, most taxpayers have to file two tax returns— a resident tax return where they live, and a non-resident tax return where they earn money."

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For example, if you live in New York but travel to California during the week to work, you would have to file two tax returns.

"You can't pay twice — that's against the law under a whole host of constitutional provisions," Steber said. "So you'll get a credit for taxes you paid while working in California, even if you lived in New York. It's that simple, but it can be complicated."

Part of the complication, he explained, is differing tax rates between states and figuring out how much of your income was earned in a particular state.

Taxes became even more complex during the pandemic, when working remotely in other states, became prevalent.

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It's a different ballpark if you live and work in the DMV.

"If you have somebody who's a non-resident of D.C., but working in D.C., and they live in Maryland, or Virginia, then there's no obligation for them to file a D.C. return," Grzes said.

Now let’s say for some reason, your job was withholding taxes for you in the wrong state. For instance you live in Maryland but you were paying D.C. income tax accidentally. 

“If they withheld those, you would just apply for a refund in D.C. to get that money back that you do not owe," Steber said.

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