A qualified film production entity may be entitled to a refundable Maryland income tax credit for certain costs incurred in the State that are necessary to carry out a film production activity in the State. This credit is available for tax years beginning after December 31, 2010.
To qualify for the credit:
To claim the credit, before beginning a film production activity, a qualified film production entity shall apply with the Maryland Department of Commerce for an initial credit certificate for the estimated production costs. Generally to qualify as a film production entity, the estimated total direct costs incurred in Maryland must exceed $250,000. However, for a Maryland small or independent film entity to qualify as a film production entity, the estimated total direct costs incurred in Maryland must exceed $25,000 and at least 50% of the filming of the film production activity must occur within Maryland. The credit claimed cannot exceed the amount stated in the final certificate.
An initial application describing the anticipated film production activity must be submitted to the Maryland Film Office of the Department of Commerce (DOC) 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 DOC 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 DOC 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. DOC will determine the total direct costs that qualify for a refundable Maryland income tax credit and issue a tax credit certificate for 25% of the total direct costs that qualify for the refundable income tax credit (27% of the total qualified direct costs for a television series).
A film production entity will not receive more credit than the amount certified by DOC.
This tax credit is a refundable tax credit, i.e. 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.
For taxable years beginning after December 31, 2012, this credit is available only with an electronically-filed return. A copy of the final certificate issued by DOC must be included with the electronic return, and the Form 500CR section of the return must be completed.
Catherine Batavick, Deputy Director
Maryland Film Office
Maryland Department of Commerce
World Trade Center
401 E. Pratt Street, 14th Floor
Baltimore, MD 21202
Phone: 410-767-6342 or 1-800-333-6632