Form 502 Resident Individual Income Tax Returns

File Form 502 if any of the following apply:

The taxpayer:

1. Is a full year or Part-year Maryland resident

2. Has Maryland income tax withheld form wages

3. Is a minor that has gross income in excess of the personal exemption plus the standard deduction       based on the filing status

4. Is a resident of Maryland employed out of state

5. Is a resident of Maryland employed in a foreign country on a temporary or transitory basis

6. Is a survivor or representative of a deceased taxpayer

Residency:

1. Resident:

   An individual who:

   - Who thinks of Maryland as his/her permanent home

   - Whose center of financial, social, and family life is Maryland

   - Who intends to come back to Maryland when away

2. Part-Year Resident:

   An individual who:

   - Moved into Maryland during the year to maintain residence from another state or country

   - Moved out of Maryland during the year to maintain residence in another state or country

3. Non-Resident:

   An individual:

   - Whose permanent home is outside of Maryland all year

Underpayment of Estimated Tax Penalty:

A penalty is applicable if any of the following apply:

The taxpayer:

1. Fails to file the required estimated tax return and pay the tax within the time allowed

2. Underestimated the required amount

Penalty:

The penalty rate is 7% for the first quarter and 8% for any quarter after the first. Penalty is charge for the underpayment of tax from the due date to the date of payment.

Late Filing Penalty:

For returns not filed by the due date, Maryland may impose a late filing penalty of 4.5% of the tax due and is limited to 25% of the tax due.

Late Payment Penalty:

For taxes not paid by the due date, the taxpayer is subject to a late payment penalty of .5% per month or fraction of a month that the tax remains unpaid up to a maximum of 10%.

Late Payment Interest:

Interest is charged on any taxes not paid by the return due date even if an Maryland extension of time is granted. Interest will be charged for the period of time from the original return due

date until the tax is paid in full at the same rate of interest currently charged by the Internal Revenue Service.

Form 505 Nonresident Individual Income Tax Return

File Form 505 if:

1. The taxpayer is not a resident of Maryland, and

2. The taxpayer received taxable income from Maryland sources, and

3. The taxpayer's gross income from Maryland sources exceeds the

   allowable prorated personal exemption amount

Residency:

1. A resident is an individual who

   - lives in Maryland

   - has their permanent home in Maryland

   - intends to return to Maryland when absent

2. A part-year resident is an individual who

   - moved into Maryland during the year from another state or

     country to maintain residence in Maryland, or

   - moved out of Maryland during the year to maintain residence

     in another state or country

3. A nonresident is an individual who

   - has their permanent home outside of Maryland the entire year

Underpayment of Estimated Tax Penalty:

A penalty is applicable if any of the following apply:

The taxpayer:

1. Fails to file the required estimated tax return and pay the tax within the time allowed

2. Underestimated the required amount

Penalty:

The penalty rate is 13% annually. Penalty is charge for the underpayment of tax from the due date to the date of payment.

Late Filing Penalty:

For returns not filed by the due date, Maryland may impose a late filing penalty of 4.5% of the tax due and is limited to 25% of the tax due.

Late Payment Penalty:

For taxes not paid by the due date, the taxpayer is subject to a late payment penalty of .5% per month or fraction of a month that the tax remains unpaid up to a maximum of 10%.

Late Payment Interest:

Interest is charged on any taxes not paid by the return due date even if an Maryland extension of time is granted. Interest will be charged for the period of time from the original return due

date until the tax is paid in full at the same rate of interest currently charged by the Internal Revenue Service.

Form 502X Amended Individual Income Tax Resident Return

File Form 502X to correct any errors made on the originally filed Maryland individual income tax return. In general, if the taxpayer amended the Federal individual income tax return, the Maryland individual income tax return must also be amended.

NOTE:

An amended return can be filed within 3 years of the original

due date of the return, including extensions.

Form 505X Amended Individual Nonresident  Income Tax Resident Return

File Form 505X to correct any errors made on the originally filed Maryland individual income tax return. In general, if the taxpayer amended the Federal individual income tax return, the Maryland individual income tax return must also be amended.

NOTE:

An amended return can be filed within 3 years of the original

due date of the return, including extensions

Form 502CR

Form 502CR is used to claim personal income tax credits for individuals.

Credit for Income taxes paid to Other States:

If you are a Maryland resident and you paid income tax to another state, you may be eligible for a credit on your Maryland return.

A credit for taxes paid is not available for wages, salaries, tips and commission income earned in reciprocal states.  The reciprocal states are Pennsylvania, Virginia, West Virginia and Washington DC.

Credit for Child and Dependent Care Expenses:

If you were eligible for Child and Dependent Care Credit on the federal return, you may be entitled to a credit on the Maryland return. The credit starts at 32.5% of the federal credit allow but is phased out when federal AGI exceeds $41,000 ($20,500 for MFS).  No credit is allowed for federal AGI above $50,000 ($25,000 for MFS).

Quality Teacher Incentive Credit:

This credit is available to Maryland teachers for tuition paid to take graduate-level courses required to maintain certification.

This credit applies to individuals who:

1. Currently hold a standard professional certificate or advanced professional certificate.
2. Are employed by a county/city board of education in Maryland.
3. Teach in a public school and receive a satisfactory performance evaluation for teaching
4. Successfully complete the courses with a grade of B or better and
5. Have not been fully reimbursed for these expenses.

Credit for Aquaculture Oyster Floats:

A credit is allowed for 100% of the amounts paid to purchase a new aquaculture oyster float tha is designed to grow oysters at or under an individual homeowner’s pier.

Long-Term Care Insurance Credit:

A one-time credit may be claimed against the state income tax for the payment of qualified long-term care (LTC) insurance premiums as defined by the IRS (Publications 502) for a policy to insure the taxpayer, spouse, parent, stepparent, child or stepchild, who is a resident of Maryland.

Credit for Preservation and Conservation Easements:

If the taxpayer donated an easement to the Maryland Environmental Trust or the Maryland Agricultural Land Preservation Foundation to preserve open space, natural resources, agriculture, forest land, watersheds, significant ecosystems, viewsheds or historic properties, the taxpayer may be eligible to a credit if:

1. The easement is perpetual
2. The easement is accepted and approved by the Board of Public Works, and
3. The fair market value of the property before and after the conveyance of the easement is substantiated by a certified real estate appraiser.

Neighborhood Stabilization Credit:

If the taxpayer lives in the Waverly or Landsdowne sections of Baltimore City, or in the Hillendale, Northbrook, Pelham Woods, or Taylor/Dartmouth areas of Baltimore County, the taxpayer may qualify for this credit.

Heritage Structure Rehabilitation Tax Credit:

A credit against state income tax for a percentage of the amount spent to rehabilitate a certified heritage structure is provided for all tax years beginning after December 31, 1996. Credit for a rehabilitation certified after June 30, 2001 may be refunded if the credit exceeds the State tax liability and the structure is located in Maryland.  Prepare form 502H to calculate the credit.

Refundable Business Income Tax Credit:

Prepare form 500CR for the allowable business credit.

IRC Section 1341 Repayment Credit:

If the taxpayer repaid an amount reported as income on a prior year tax return this year that was greater than $3,000,  the taxpayer may be eligible for an IRC section 1341 repayment credit.

Form 1041 Schedule K-1 Nonresident PTE Tax:

If the Taxpayer is the beneficiary of an estate or trust for which nonresident PTE tax was paid, the taxpayer may be entitled to a credit for the taxpayer’s share of the tax.

Form 502SU Resident Subtractions From Income

Form 502SU is used to claim subtractions from income for Form 502 Maryland resident Income tax return.  See Form 502SU to determine which subtractions from income apply to the taxpayer.

Form 502INJ Injured Spouse Claim Form

To qualify as a injured spouse, the taxpayer or spouse must have:

1. filed a joint income tax return with the spouse owing the debt
2. received income (such as waes, interest, etc.)
3. made payments (such as withholding and estimated tax payments) and
4. an overpayment, all or part of which was or will be applied to the following debts owed by the other spouses (past due state or federal taxes, past due child support or other state debt that has been referred to the Central Collection Unit)

Form 502TP Computation of Tax Preference Income

Any individual or fiduciary of an estate or trust with items of tax preference in excess of $10,000 ($20,000 for a joint return) must complete Form 502TP and file with the income tax return.

Items of tax preference are

1. Depeletion
2. Depreciation (Pre-1987 rules)
3. Intangible drilling costs
4. Exclusion of gains on sale of certain small business stock
5. Interest from

Form MD 502D Estimated Tax Payments

File Form MD 502Dto pay Maryland income tax liability not prepaid through withholding.

File Form MD 502Dif all of the following apply:

The taxpayer:

1. Does not have at least 90% of his/her annual Maryland income tax liability prepaid through withholding

2. Has an annual tax liability that exceeds $1,000.

Form MD 502UP Penalty on Underestimate of Individual Income Tax

File Form 502 D to pay Maryland income tax liability not prepaid through withholding.

File Form 502UP if tax minus withholding is $1,000 or more.

Penalty:

Underestimating the required amount of tax or failure to file estimated tax returns and pay the tax within the time allowed will result in an assessment of interest. The interest rate is 13% annually.

Form MD 502E Application for Automatic Extension of Time

File Form MD 502E to request a six month extension of time to file the Maryland individual income tax return.

If the taxpayer expects to owe additional tax, all of the state taxes due must be paid with Form MD 502E by the return due date.

Late Payment Interest:

If any state taxes due are paid after the return due date, the taxpayer will be charged an additional amount for late payment interest. The interest will be charged from the due date of the

return until date of payment. The interest rate is 1% per month or fraction thereof.

Late Filing Penalty:

If the Maryland individual income tax return is not filed by the extended due date of the return, the taxpayer will be charged an additional amount for late filing penalty. The penalty rate

is 10% of the tax due or $50, which ever is greater.

NOTE:  Form MD 502E only extends the time to file the Maryland

       individual income tax return, it does not extend the

       time to pay any Maryland income taxes due.