Film production businesses may be entitled to a tax credit against the State income tax for certain costs incurred in the State that are necessary to carry out a film production activity. This credit is available for tax years beginning after December 31, 2010, ending July 1, 2014, without further action required by the General Assembly.
To qualify for the credit:
A qualified film production business shall incur total direct costs of at least $500,000 and may include costs incurred for wages and benefits, fees for services, acquiring or leasing property, and any other expense necessary to carry out a film production activity, but may not include any salary, wages, or other compensation of an individual who receives more than $500,000 for personal services in connection with any film production activity.
An initial application describing the anticipated film production activity must be submitted to Department of Business and Economic Development (DBED) by the film production entity before beginning a film production activity. A Preliminary Tax Credit Certificate(s) for these credits cannot be issued until July 1st of the fiscal year from which the credits will be drawn. The Final Tax Credit Certificate(s) will be issued after DBED has reviewed all required closing documentation, including completion of the Agreed Upon Procedures process.
How the credit is calculated:
After the production activity is completed, the film production entity must apply to the DBED for a tax credit certificate, providing proof of the total direct costs that qualify for the credit and the number of employees hired and qualifying wages paid. DBED will determine the total direct costs that qualify for the tax credit and issue a tax credit certificate for 25% of the total direct costs that qualify for the tax credit (27% of the total direct costs for a television series).
The qualified film production entity may claim a credit against the State income tax in an amount equal to the amount stated in the final tax credit certificate approved by DBED. If the tax credit allowed in any taxable year exceeds the total tax otherwise payable by the qualified film production entity for that taxable year, the qualified film production entity may claim a refund in the amount of the excess.
A copy of the final certificate(s) issued by DBED must be submitted with Form 500CR. Form 500CR must be submitted with the appropriate Maryland Income Tax Return - Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities and Form 502 or 505 for Individuals.
Catherine Batavik, Deputy Director
Maryland Film Office
Maryland Department of Business and Economic Development
World Trade Center
401 E. Pratt Street, 14th Floor
Baltimore, MD 21202