Live in MD, work in PA, paid PA local income tax

AnonQuestions

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!

rachels

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:

1. Go to State > Taxes Paid to Another State/Locality.
2. Click the "Add a State" button.
3. Choose Pennsylvania as the state the locality is located in.
4. 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.