District of Columbia has a reciprocal agreement with Maryland and Virginia. Nonresidents from Maryland and Virginia are exempt from taxation on the wages, salary, and other compensation for personal services rendered in District of Columbia, and DC residents are exempt from taxation on wages, salary, and other compensation for personal services rendered in Maryland.
If the taxpayer's employer withheld Maryland or Virginia taxes in error, the taxpayer will need to file a Maryland or Virginia return to claim a refund. The taxpayer cannot claim a credit for taxes paid to the other state on the District of Columbia return.
If the other state is Maryland:
If the other state is Maryland, to adjust the Maryland wages, Maryland Return menu select:
- Income and Adjustments
- Wages, Salaries, Tips, etc.
- Adjustments to Wages - Enter as a negative amount
To claim exempt from future Maryland withholdings, the taxpayer should complete Form MW507 and file it with their employer.
If the other state is Virginia:
If the other state is Virginia, a Virginia return is not required if the taxpayer's only source of VA income was from wages and salaries. Instead, file Form 763-S to claim a refund for the taxes withheld.
To complete Form 763-S, from the Virginia Nonresident Return menu select:
- Personal Information
- Other Categories
- File Form 763-S
Form 763-S needs to be mailed to the state of Virginia with a copy of the DC Return and copies of the W-2 (s) used to create the return. The mailing address is located on the form.
To claim an exemption from future withholdings, the taxpayer should complete Form VA-4 and file it with their employer.
Additional Information: