By Payroll and Entitlements Editorial Staff
The Maryland Comptroller has issued guidance on income tax withholding requirements for teleworking situations due to the COVID-19 pandemic. The guidance notes that Maryland employer withholding requirements are not affected by the current shift from working on the employer’s premises to teleworking because taxability is determined by the employee’s physical presence. Generally, compensation paid to a Maryland nonresident who is teleworking in Maryland is Maryland-sourced income, and therefore, subject to withholding. However, Maryland has a reciprocal exemption agreement with several bordering states, including:
- Virginia,
- Washington D.C.,
- West Virginia, and
- Pennsylvania.
Therefore, residents of these states who earn wages, salaries, tips, and commission income for services performed in Maryland are exempt from Maryland state income tax, and therefore, withholding. According to the guidance, because Delaware has not entered into a reciprocal agreement with Maryland, withholding would be required for wages paid to a Delaware resident for services rendered in a Maryland office, and those paid for services rendered while teleworking in Maryland.
