Live in MD, work in PA, paid PA local income tax
I live in MD, my legal residence is in MD, and 2023 I worked in PA and paid local income taxes in Philadelphia. How to get a refund on those taxes?
Should I file a refund request directly with the city of Philadelphia? Should I add the local income tax to my MD or PA tax returns?
My PA W2 shows a PA address, should I get that corrected by my employer? Thank you so much!
Answers
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Hi AnonQuestions,
Since Pennsylvania and Maryland have a reciprocal agreement, your wages should not have been taxed by PA state, though some PA localities (such as Philadelphia) will still impose tax on your earned wages.
Maryland allows a Credit for Income Taxes Paid to Other States and Localities. Maryland instructions state, "If you had wages subject to tax in a locality in Pennsylvania, you may file Form 502CR to claim a State and local tax credit."
To do this in your FreeTaxUSA account, you will need to do the following:
- Go to State > Taxes Paid to Another State/Locality.
- Click the "Add a State" button.
- Choose Pennsylvania as the state the locality is located in.
- The next screen will ask about the income taxed by MD and Philadelphia. Make sure to enter that information, as well as the amount of your Philadelphia tax liability.
