Grateful2002
Level 3
03-25-2023
03:24 PM
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So yes, the announcement is a little bit of a word salad.
But I concluded that this:
"Compensation paid to a Maryland nonresident who is teleworking in Maryland is Maryland-sourced income, and therefore, subject to withholding."
The wording is a bit ambiguous, but the meaning is that if you're a non-resident of MD who happens to be "teleworking" from a physical location inside Maryland, then your income from that work is Maryland-sourced regardless of your employer's location, and it is taxable by Maryland. The work income of a non-resident of MD who never works from a physical location inside MD is not MD-source income.
And it does say that the taxability is determined by employee physical presence. So to me, that is the answer right there. If MD will end up having issues with us requesting a refund of all taxes, I will show them their ambiguous announcement.
One thing that does make me question my conclusion is the fact that Department of Defense has been withholding MD taxes from her check for 2 years. I concluded that if there are no reciprocity agreement between the states AND if the income is MD sourced, ONLY then they should withhold. But they have been withholding anyways. I would think DOD knows and understands these tax laws, but perhaps they were confused by that announcement as we were and or during/post covid time and teleworking and all that, there was too much confusion of what is state sourced income and what is not. Hmm.
