Here are some of the most important changes and benefits affecting the approximately 3.5 million taxpayers working on their 2017 Maryland income tax returns.
Opening of the 2018 Tax Filing Season
Maryland will begin processing personal income tax returns for Tax Year 2017 on January 29, 2018, the same day the Internal Revenue Service (IRS) begins accepting returns. Note: If the IRS experiences delays, these delays will postpone our opening date.
We plan to begin processing business returns on January 8, 2018, the same day the IRS begins accepting returns. No returns will be processed before the start-up dates, even if sent prior to that date. The Comptroller's Office recommends filing electronically to ensure returns are received and processed quickly.
Claiming Business Income Tax Credits
For tax years beginning after December 31, 2012, you must file your tax return electronically in order to claim a business tax credit unless you submit a waiver from the electronic filing requirement. To request a waiver from filing the Form 500CR electronically, you must submit a completed Form 500CRW Waiver Request For Electronic Filing of Form 500CR and it must be attached to Form 500CR in the filing of your return.
Beginning with Tax Year 2015 certain individual taxpayers may elect to claim the Community Investment Tax Credit and/or the Endow Maryland Tax Credit on Maryland Form 502CR, and thus avoid the electronic filing requirement. Read instructions to Form 502CR to see if you qualify for this election.
Personal income tax returns are due by April 17, 2018.
Business income tax return dates vary. See Filing Extensions and Deadlines for Corporations
Maryland recognizes Emancipation Day as a legal holiday. Returns with a due date of April 15, will be due the next business day.
Local Taxpayer Service Offices
Taxpayer Service 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 Maryland income tax forms for free. Please bring any W-2 statements or other withholding statements, such as 1099s, that you have, along with your completed federal income tax return.
New Tax Rates
- Local Tax Rate Changes - For tax year 2017, Calvert County has increased its rate to 3.00% and Somerset County has increased its rate to 3.2%. Please note the changes on 2017 Form 502D. For tax year 2018 Cecil County has increased its rate to 3.00%. Please note the changes on 2018 Form 502D.
Exemptions and Deductions
There have been no changes affecting personal exemptions on the Maryland returns.
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.
Itemized Deduction Limitation - The State of Maryland continues to recognize the federal itemized deduction limitation threshold (Pease Limitation). This means that a taxpayer will reduce the federal itemized deductions used on the Maryland return only when the federal adjusted gross income is high enough for the federal itemized deductions to be reduced or limited on federal Form 1040, Schedule A.
If a taxpayer with high income is subject to limitations on itemized deductions, and has taken a state income tax deduction, the taxpayer will need to use the revised itemized deduction worksheet (Resident Worksheet 14A or Nonresident Worksheet 16A) to reflect the amount of state income tax deductions that were limited on the Maryland return.
Tax Forms, Instructions & Booklets
The resident tax booklets contain both the tax forms and the instructions for each major form. The tax forms on the Web site are available separately from the resident and nonresident instruction booklets.
All of our tax forms have been reformatted to ensure enhanced readability when paper forms are filed. This format has increased the number of pages of some of the tax returns. Make sure that you attach all pages of your return to ensure that your return is processed correctly.
- 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 that have requested them.
- Tax Booklets at Comptroller's Taxpayer Service Offices - Tax booklets are available at all of our local taxpayer service 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.
Increased pension exclusion - Maryland's maximum pension exclusion, which is available to qualifying taxpayers who are age 65 or older; are totally and permanently disabled; or have a spouse who is totally and permanently disabled, increased from $29,400 to $29,900 for tax year 2017.
New pension exclusion for qualifying retired law enforcement officer or fire, rescue, or emergency services personnel – Up to a $15,000 subtraction for resident retired law enforcement officers, fire, rescue and emergency personnel who are at least 55 years old and (1) were employed by the State, a political subdivision of the State, or the federal government, and (2) receive pension income related to their above employment. An individual may not claim both this subtraction and the standard pension exclusion.
Subtraction modification updates for tax year 2017:
- Increase to the existing Honorable Louis L. Goldstein Volunteer Fire, Rescue and Emergency Medical Services Personnel Subtraction Modification Program maximum amount from $4,250 to $4,500. Note: the increase of this subtraction does not apply to volunteer reserve and auxiliary police officers. They are entitled to a maximum subtraction of $4,500.
- The mileage rate for certain qualifying charitable use of a car on Form 502V has decreased from 54 cents to 53.5 cents.
- A subtraction modification for the amount of qualified principal residence indebtedness included in federal adjusted gross income that was allowable as an exclusion under the Mortgage Relief Act of 2007, as amended is available as a subtraction modification.
- A new subtraction modification is available for an amount included in federal adjusted gross income contributed by the State into an investment account under § 18-19A-04.1 of the Education Article during the taxable year. This includes amounts included in federal adjusted gross income contributed by the State into an investment account under the Maryland College Investment Plan.
- A new subtraction modification is available for any amount included in federal adjusted gross income for: (1) the value of any medal given by the International Olympic Committee, the International Paralympic Committee, the Special Olympics International Committee, or the International Committee of Sports for the Deaf; and (2) any prize money or honoraria received from the United States Olympic Committee from a performance at the Olympic Games, the Paralympic Games, the Special Olympic Games, or the Deaflympic Games.
Individual Taxpayer Changes
- Interest Rate Decrease: The annual interest rate decreases from 12% per annum to 11.5% per annum on January 1, 2018. The annual interest rate changes again on January 1, 2019. Interest is due at a rate of 11.5% annually or .9583% per month for any month or part of a month that a tax is paid after the original due date of the 2017 return but before January 1, 2019.
- Updated Form 502CR, Part E: Reflects a maximum credit of $410 for the payment of Long-Term Care Insurance Premiums for a resident age 40 or younger for whom this credit has never been claimed.
- Refundable earned income tax credit (REIC): The REIC increases each year through 2018 when it reaches 28% of the federal EIC. For 2017, the REIC amount for eligible residents is 27%.
- Retirement Income Form – Form 502R: New part created to capture information regarding the new retired law enforcement officer or fire, rescue, or emergency services personnel pension exclusion. The reported amounts are from Line 8 of Worksheet 13E in the Resident Instruction Booklet.
- A new income tax credit on Form 502CR for student loan debt: A new refundable income tax credit is available for certain individuals who have incurred at least $20,000 in undergraduate student loan debt. Certification must be attached.
- Many state revenue agencies, including Maryland, are requesting additional information in an effort to combat stolen-identity tax fraud and to protect you and your tax refund. If you and your spouse have a driver's license or state issued identification card, please provide the requested information from it. The return will not be rejected if you do not provide a driver's license or state-issued identification. If you provide this information, it may help to identify you as the taxpayer.
Business Taxpayer Changes
New business tax credits: There are three new business tax credits available, the Apprentice Employee Tax Credit, Qualified Farms Tax Credit, and Qualified Veteran Employees Tax Credit. See Parts Y, Z, and AA of Instructions to Form 500CR for more information.
Reminder about Electronic Format: For tax years beginning after December 31, 2012, you must file your tax return electronically in order to claim a business tax credit unless you submit a waiver from the electronic filing requirement. To request a waiver from filing the Form 500CR electronically, you must submit a completed Form 500CRW Waiver Request For Electronic Filing of Form 500CR and it must be attached to Form 500CR in the filing of your return.
Beginning with Tax Year 2015, certain individual taxpayers may elect to claim the Community Investment Tax Credit and/or the Endow Maryland Tax Credit on Maryland Form 502CR, and thus avoid the electronic filing requirement. Read Instructions to Form 500CR to see if you qualify for this election.
Changes to business tax credits:
- Biotechnology Investment Incentive Tax Credit: The definition of “biotechnology company” has been expanded to include a company that will, within 2 months, become primarily engaged in the research, development, or commercialization of innovative and proprietary technology that comprises, interacts with, or analyzes biological material including biomolecules, cells, tissues, or organs. Previously the company had to be engaged in these activities at the time of investment. The definition also extended the time period in which the company has been in business. A qualified company cannot be in business longer than 12 years (previously 10). The Department of Commerce can extend this time period to 15 years if it determines the company needs additional time to complete process of regulatory approval. If a company receives an investment but fails to satisfy the requirements of biotechnology company within 2 months, the Department of Commerce shall revoke the tax credit certificates issued and recapture tax credits already claimed by the qualified investor.
Tax Professional Changes
Please see the latest updated list of approved eFile software vendors for individuals and businesses.
The new Maryland Power of Attorney Forms are now available.
Fiduciary Tax Changes
New business tax credits: There are three new business tax credits available, the Apprentice Employee Tax Credit, Qualified Farms Tax Credit, and Qualified Veteran Employees Tax Credit. See Parts Y, Z, and AA.
The Schedule A is now detached from Form 504 and renamed Form 504 Schedule A. This detachment was done to help us process paper-filed tax forms faster.