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Subject:  Re: residency requirements for state taxes Date:  4/29/2003  7:41 AM
Author:  kentm401 Number:  65216 of 131768

Got this one on-point...

I can't speak for California, but as a long-time Maryland resident I can attest that Maryland is very aggressive in going after income, wherever earned. Given that she's planning to retain her MD driver's license and voting registration, I can assure you that MD will regard her as one of its residents, and will want to tax her income. Depending on how CA feels about it, she may wind up paying taxes in both places. (She would then get "credit" in MD for paying CA taxes, so that's some consolation.)


MD is very agrressive in taxation of income on P/Y, MD residents. Had a case where there was income in three States (including FL w/o income tax), and discovered that while main State of residence on 12-31 was NC, the "payer" was taxed by both MD and NC on the FL income with credit given by both tax authorities against the actual income tax "paid" by the other. Income offsets were "allowed" by both primary tax States.

Resulted in a liability to MD, and a refund from NC netting an over all liability to MD. Some States will allow you to offset ALL income (rather then taxes paid) one against the other, but not MD. They will offset only the other State taxes paid against income earned, and the FL income counted on the MD return, (but not the NC return), considered "earned" while a "resident" of MD even if only part year. And if you are considered an MD resident for more then half a year, can result in over taxation on the MD side, and under taxation, on the final State of residency side at 12-31-....that's what happened.

Interesting, the way the State deal with these issues. Can't speak to CA or NY in cases like this, but am well aware of Mid Atlantic inter-state tax treatments.

KBM (Advised tax client to avoid MD at all cost in the future <VBG>, and client moves around alot for work)

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