If you are a nonresident of Maryland, you are required to file Form 505 (Maryland Nonresident Income Tax Return) and Form 505NR (Maryland Nonresident Income Tax Calculation) if you have income derived from:
- Tangible property, real or personal, permanently located in Maryland;
- A business, trade, profession or occupation carried on in Maryland; or,
- Gambling winnings derived from Maryland sources.
You are not required to file as a nonresident if:
- Your Maryland gross income is less than the minimum filing level for your filing status;
- You had no income from a Maryland source; or
- You reside in Pennsylvania, Virginia, West Virginia or Washington, D.C., and earned only wages in Maryland. For more information, see If You Are A Nonresident Working In Maryland (below) and the instructions in the Maryland nonresident tax booklet.
Nonresidents who work in Maryland or derive income from a Maryland source are subject to the appropriate Maryland income tax rate for your income level, as well as a special nonresident tax rate of 1.25%. By law, the nonresident tax rate must equal the lowest local income tax rate paid by Maryland residents (currently 1.25%) combined with the top state tax rate.
You will use your total income (with certain modifications) to compute the tax rate to be used on Form 505. You will then use Form 505NR to compute your Maryland taxable net income with your subtractions for non-Maryland income. This Maryland taxable net income will be used as the numerator of a nonresident factor. Your Maryland income without allowing you the non-Maryland subtractions will be the denominator. This nonresident factor applied to the tax that was calculated on your total income arrives at the Maryland tax. The special nonresident tax is applied to your Maryland net taxable income as calculated on Form 505NR. For more information, see the instructions in the Maryland nonresident tax booklet.
You can calculate your nonresident tax due using our estimated nonresident tax calculator.
Nonresident taxpayers may either use Maryland's standard deduction or itemize deductions. You may elect to use the standard deduction whether or not you itemized deductions on your federal income tax return. You may itemize deductions on your Maryland return only if you have itemized them on your federal return. Deductions and exemptions must be apportioned using the ratio of Maryland income to federal adjusted gross income.
If you are a nonresident and amending your Maryland income tax returns, you should obtain a Form 505X and a nonresident tax booklet for the year you wish to amend so that you will have the proper instructions and rates. Exemptions, deductions and certain credits must be prorated using the Maryland income factor. Attach revised Forms 505 and 505NR to your amended return.
Nonresident Sale of Property
If you are a nonresident who owned and sold or transferred real property and associated tangible personal property in Maryland, you must make a tax withholding payment to the local clerk of the circuit court or the State Department of Assessments and Taxation (SDAT). The payment must be made before the deed or other instrument of transfer is recorded with the court clerk or filed with SDAT. For more information, see Sales of Real Property by Nonresidents (below).