Were you a Maryland resident in years 2011, 2012, 2013 and/or 2014 who filed and paid income taxes to another state? If so, you may be entitled to receive a tax refund against the county portion of your Maryland state income taxes.
Why? Maryland’s personal income tax on State residents consists of a State income tax and a local tax collected for and distributed to your county (or Baltimore City) of residence. Residents who paid income tax to another state were allowed a credit against the State income tax, but not against the local tax. The Supreme Court recently determined (decision here) that this taxing scheme was unconstitutional. The legal reasoning is complex but bottom line: Credit for taxes paid to other states can be applied toward Maryland’s local income taxes.
Who is entitled to a tax refund?
Any Maryland resident who has paid taxes on income earned in any other state, a local jurisdiction of any other state, or the District of Columbia may be eligible for a refund. This primarily applies to owners or partners of firms operating in other jurisdictions who received “pass through” income from that business, but applies to other types of income as well.
- The decision has no impact on Maryland residents who earned only wages or salaries in DC, Virginia, or West Virginia as these states have reciprocity arrangements with Maryland and don’t require these Marylanders to also file or pay income taxes to them. Pennsylvania also has reciprocity with Maryland. If, however, you paid an income or wage tax to a local jurisdiction in Pennsylvania on your wages or salaries, you may also be entitled to a refund.
- What if I live in Maryland, but work in Delaware (or any jurisdiction other than DC, Virginia, Pennsylvania or West Virginia)? Taxpayers who live in Maryland and earn wages or salaries in Delaware (or any jurisdiction other than the four specified above) must file income tax returns with both states. Any Maryland resident who worked in and paid taxes to another state, including Delaware, may be entitled to a refund for these tax years.
What steps do I need to take to find out if I’m entitled to a refund?
- Comptroller Peter Franchot and his office are committed to helping our citizens get the information they need and issuing refunds to those entitled to them as quickly as possible. So, to get started visit here for the latest information from the Comptroller’s office.
- Depending on your specific circumstances, this issue can be extremely complex. You may want to have a tax professional advise you regarding the “Wynne” decision.
- Will I be contacted by the Comptroller or receive a refund automatically?
No, you must file specific forms in order to be considered for a refund. These forms are available here.
- The case was named Comptroller of Maryland v. Wynne; was the Comptroller fighting against Maryland taxpayers?
Absolutely not! The Comptroller did not initiate this action, but as is always the case in tax law, as the senior tax official in our state the Comptroller is named in the suit. Governor Hogan and Comptroller Peter Franchot are working together to rein in wasteful spending and help families and small businesses to prosper. Comptroller Franchot is committed to helping Marylanders entitled to a tax refund under Wynne to receive it as quickly as possible.