Here are some of the most important changes and benefits affecting the approximately 3.5 million taxpayers working on their 2013 Maryland income tax returns.
Claiming Business Tax Credits???
If you are having trouble complying with the electronic filing mandate for claiming a business tax credit, we can help. Not all tax software supports electronic filing of Forms 500CR or 502CR. Be sure to use a Comprehensive Software vendor which you can find on our website at: Individual Tax Software and Business Tax Software.
For additional assistance email Barbara Fogle in Taxpayer Services at email@example.com;or call 410-260-7823.
Personal income tax returns are due by April 15, 2014.
Business income tax return dates vary. See Filing Extensions and Deadlines for Corporations
Local Branch Offices
Branch offices will be open from 8:30 a.m. to 4:30 p.m., Monday through Friday to help taxpayers fill out and electronically file their tax forms for free.
New Tax Rates and Brackets
- Local Tax Rate Increase - For tax year 2013, Anne Arundel County has increased its local tax rate back to 2.56%; Talbot County has increased its rate to 2.40%; and Wicomico County has increased its rate to 3.20%. See Local Income Tax Rates for the list of rates by county. Please note the changes on 2013 Form 502D. For tax year 2014, Caroline County has increased its rate to 2.73%, Carroll County has decreased its rate to 3.04%, and Charles County has increased to 3.03%. Please note the changes on 2014 Form 502D
Personal Exemption Amount - The exemption amount of $3,200 begins to be phased out if your federal adjusted gross income is more than $100,000 ($150,000 for joint taxpayers). The $3,200 exemption is phased out entirely when the income exceeds $150,000 ($200,000 for joint taxpayers). See Instruction 10 in the Resident tax booklet for the reduced amounts, or review the page, Determine Your Personal Income Tax Exemptions. The additional exemption of $1,000 remains the same for age and blindness.
Dependent Form 502B - will be required to be attached to Form 502, Form 505 and Form 515 to determine what exemptions you are entitled to claim. Taxpayers claiming more than 2 dependents on Form 503 must use Form 502.
Tax Forms, Instructions & Booklets
The resident and nonresident tax booklets contain both the tax forms and the instructions for each form. The tax forms on the Web site are available separately from the resident and nonresident instruction booklets.
- Tax Forms and Instructions Online - Tax forms and instructions for Individual and Business taxpayers are available here online at Maryland Tax Forms and Instructions.
- Tax Booklets at Post Offices - The Comptroller's Office no longer supplies local post offices with tax booklets.
- Tax Booklets at Libraries - We have provided a limited supply of tax booklets to a number of libraries throughout the State who have requested them.
- Tax Booklets at Comptroller's Branch Offices - Tax booklets are available at our 12 local branch offices.
- Request a Tax Booklet - Taxpayers may request a resident or nonresident tax booklet by calling (410) 260-7951, or by e-mail at firstname.lastname@example.org.
While further action following the Wynne case is being considered, taxpayers should be aware that the statute allows three years to file amended tax returns and taxpayers are advised to speak with a tax professional to determine whether the case affects them. For more information on the Wynne case, please see the information on the Maryland Association of Counties (MACo) website.
Increased pension exclusion - Maryland's maximum pension exclusion, which is available to qualifying taxpayers 65 or older, increased from $27,100 to $27,800 for tax year 2013.
The new subtraction modifications for tax year 2013 are:
- Expands the existing conservation tillage equipment income tax subtraction modification to include qualified purchases of specified (1) manure spreading equipment; (2) vertical tillage equipment; (3) global positioning system devices used for management of agricultural nutrient applications; and (4) integrated optical sensing and nutrient application systems. The subtraction modification for qualified purchases of vertical tillage equipment is equal to 50% of eligible costs incurred.
- Creates a subtraction modification against the State income tax for the noneconomic damages received by a claimant in satisfaction of a claim of unlawful discrimination.
- Expands the applicability of an existing income tax subtraction modification for reforestation or timber stand improvement, making it available for land ranging from 3 to 1,000 acres (instead of 10 to 500 acres) and allowing for a broader range of timber stand improvement activities.
Earned Income Tax Credit Eligibility
Effective January 1, 2012 the Comptroller is required to publish the maximum income eligibility for the State earned income tax credit (EITC) on or before January 1 of each year. The Comptroller shall also notify the employers of such information, and the employers must notify each employee who may be eligible.
Individual Taxpayer Changes
- Inclusive language: We have modified our instructions to use more inclusive language as a result of Maryland’s recognition of same sex marriage
- Reporting your Federal earned income: If you are claiming a federal Earned Income Credit (EIC), enter the earned income you used to calculate your federal EIC on line 1b on Form 502 or line 3a on Form 505NR. Earned income includes wages, salaries, tips, professional fees and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you included in your federal adjusted gross income
- Limits on your itemized deductions: Limits on itemized deductions based on your income level has returned to both the federal and Maryland returns. In addition, Maryland has decoupled from the federal 2013 itemized deduction threshold limiting itemized deductions. See Instruction 14 for more information. A calculator is under development and will be available soon.
- New subtraction modifications: There are two new subtraction modifications available. See Instructions 13 for more information.
- New income tax credit of Form 502CR: Health Enterprise Zone Practitioner Tax Credit. If you are a qualified “Health Enterprise Zone (HEZ) Practitioner,” you may be able to claim a credit against your state tax liability for income that you earned for practicing health care in a HEZ.
- Attachment Sequence Numbers: Most of our major paper resident tax returns have Attachment Sequence Numbers to aid in the placement order of tax returns to speed tax return processing.
Business Taxpayer Changes
New business tax credits: There are six new business tax credits available. See Instructions to Form 500CR.
Electronic Format: The paper version of Maryland Form 500CR Business Income Tax Credits no longer is available. You must file your Maryland return electronically to claim the business income credits available from Form 500CR. See Instructions to Form 500CR.
Form 500: must be filed electronically to claim a business income tax credit from Form 500CR or a Sustainable Communities Tax Credit from Form 502S.
New tax credits include:
• Health Enterprise Zone Hiring Tax Credit
• Security Clearance Costs Tax Credit
• Oyster Shell Recycling Tax Credit
• Wineries and Vineyards Tax Credit
• Small Business Research and Development Tax Credit
The Maryland General Assembly has removed the expiration provisions from the Maryland Disability Employment Tax Credit.
Tax exempt organizations which qualify for business tax credits against their withholding tax will now use Form MW508CR to claim the tax credit on Form MW508.
Tax Professional Changes
There will be a significant change in the software approval process for Maryland MeF for Tax Year 2013. Beginning January 1, 2014, the Comptroller of Maryland will designate e-File Software Vendors’ Maryland products as either Basic or Comprehensive (see Tax Alert). This will apply to both business and individual income tax software packages.
The Basic designation will be used for simple returns. Software packages designated as Comprehensive will support all electronic forms, including Form 500CR, Amended Returns (new for 2013 tax returns) and the transmission of binary attachments (PDFs).
These designations will help taxpayers and tax professionals determine which software will best fit their needs. Please see the list of approved eFile software vendors for individuals and businesses. We will update this page for Tax Year 2013 as we approach the tax season.