While every state has its own unique tax complexities, Maryland and its proximity to Washington D.C. are unique. Many people live in one jurisdiction and work in the other, leaving questions on where and how you should file your income taxes.
Maryland offers reciprocity with D.C. for tax purposes, but many taxpayers still have questions on how to avoid state or federal disputes. A Bethesda state and local tax lawyer can help answer these questions, and resolve any controversy you may have with the state taxing agency. Instead of trying to handle it yourself, rely on the guidance of a skilled tax lawyer from Pontius Tax Law.
What is the Office of the Comptroller?
The Comptroller is a public official who serves as Maryland’s chief financial officer. Their office oversees state tax law, including the collection of income tax. It shares many of the responsibilities taken on by the Internal Revenue Service (IRS) at the federal level.
The duties of the Office of the Comptroller are extensive. On top of receiving tax payments and processing returns, the office has the power to collect delinquent obligations and audit taxpayers. The collection tools used by the state government can include options like wage garnishment, bank levies, and withholding tax return proceeds. When controversies arise, a Bethesda state and local tax attorney can work to resolve them, including: preparing for a state-based audit, resolving liens, and analyzing debts regarding the Unemployment Insurance tax.
State Income Tax Requirements
The requirement to file a tax return for Maryland residents applies broadly. Any person who lived in the state during any part of a given tax year could be required to submit a return.
The requirement to file a return is based primarily on a taxpayer’s status with the federal government. Anyone who meets the requirements to submit a return to the IRS must also submit one to the Comptroller. Eligibility is based on an income threshold; someone who makes too little in a given year (generally under $12,550) does not have a filing requirement.
The threshold varies depending on certain life factors. Single filers or married people filing separately have the lowest threshold, meaning they are the most likely to have to file. Married filers and heads of household have additional room to earn an income without the need to file a tax return. A state and local tax lawyer in Bethesda could offer strategic insight if there is more than $50,000 at issue in the dispute or you have an income above $100,000 which makes you more vulnerable to a state audit.
Maryland Has Reciprocity with the District of Columbia
Maryland and Washington D.C. have a tax reciprocity agreement, which can impact anyone who lives in the state but works in the District. This is a common occurrence, as countless government employees live outside of the city.
Under the agreement, a Maryland resident may ask for a waiver that exempts their employer from withholding D.C. income tax from their paychecks. The end result is that a resident of Bethesda could deal only with the state they live in without having to file a return in the District. For taxpayers with significant income or multiple forms that might complicate their tax return, it may be advantageous to seek the aid of a lawyer who can account for all of their obligations.
Speak with a State and Local Tax Attorney in Bethesda Today
Many of the controversies that occur on the federal level may also occur at the state or city level. The good news is that reciprocity agreements can simplify things on your end if your domicile is different from your place of work. If you have questions regarding your income tax obligations, we could provide you with the answers and identify possible paths of halting further collection efforts by the State of Maryland. Reach out to our Bethesda state and local tax lawyer to learn how we can add value to your situation.