Maryland offers five filing categories. Four of these are defined in the same way as on the federal return: single, married filing jointly, married filing separately and qualifying widow(er) with a dependent child. Maryland does not provide a special filing status for a head of a household.
The fifth category for Maryland taxpayers--married filing combined separate returns--is for a married couple who filed a federal joint return and wish to file separate Maryland returns.
You should use this category only if husband and wife had Maryland taxable income. Figure your tax both ways (joint and combined separate), then use the method that provides the lower total tax.
If you file combined separate returns, use a single Form 502 and enter the husband's data in Column A, the wife's in Column B. All other filers use Column B only. Exemptions
Maryland residents claim $800 per exemption ($66.67 a month for less than a full year). You are entitled to one exemption for each personal and dependent exemption claimed on the federal return.
In addition, on the Maryland return you get an extra exemption for each dependent who has reached the age of 65. But the additional exemption for blindness is only allowed for the taxpayer and spouse. Income
The first step in calculating Maryland income is to transfer the figures for the various income categories from the federal return to Schedule A on page 2 of the Maryland return.
If you are filing combined separate returns, you must allocate the appropriate part of each category to husband and wife. One half of the total income from any asset registered in joint names is considered to belong to each spouse. Adjustments
On your Maryland tax return you may claim--by a single lump-sum entry on line 35--all the adjustments taken on your federal return. Additions
Using Schedule C on page 2 of Maryland Form 502, there are several modifications of federal income required to arrive at Maryland income.
Since the Maryland tax structure doesn't impose a tax penalty on married couples, you must add back to income the federal deduction for two-earner couples. Most couples with two incomes will file combined separate returns; add the federal allowance to the income of the lower earning spouse.
Maryland does not allow the federal exclusion of $100 ($200 on a joint return) in dividend income, so the amount claimed on the federal return must be added back.
You must also add any interest received in 1982 on any state or local obligations other than Maryland that was not reported on your federal return.
Other miscellaneous additions are explained on page 19 of the Maryland instruction booklet. Subtractions
Some income that is normally included on your federal return may be excluded for Maryland tax purposes. Use Schedule D on page 2 for these subtractions.
First deduct from federal income interest on U.S. government or government agency obligations, and any state tax refund reported as income on your federal return.
Also exclude, to the extent it was included in federal income, any capital gain realized on the sale of bonds issued by the state of Maryland or any of its political subdivisions.
Maryland allows the exclusion of up to $8,700 of pension income if you were 65 or older or totally disabled on Dec. 31, 1982--but reduced by any Social Security or Railroad Retirement benefits received. Compute the exclusion on the worksheet at the bottom of page 2 of Form 502.
Then you may subtract 20 cents a mile for the use of your car in volunteer work for certain charitable purposes, if reimbursed. Use Form 502V to show your calculations.
The Maryland tax benefit for dependent care expenses is taken as a subtraction from income rather than a tax credit. Enter the dollar amount of qualifying expenses on which the federal tax credit was based, and attach a copy of federal Form 2441 to your Maryland return.
You may also exclude from Maryland income an amount equal to half of all political and newsletter fund contributions, up to a maximum of $50 ($100 on a joint return), refunds of state or local income tax reported as income on the federal return, and any income received while not a resident of Maryland.
If you're a former police or fire officer, you may exclude all pension payments received for injury or disability incurred while working in that capacity.
And if you were a Maryland state trooper at any time during the period 1974 through 1977 and received subsistence allowance payments that were reported as Maryland income, you may claim a special deduction on your 1982, 1983 and 1984 Maryland returns. See page 19 of the instruction booklet for details. Deductions
The standard deduction is equal to 13 percent of Maryland adjusted gross income (line 5 of Form 502) up to a ceiling of $1,500 per taxpayer ($3,000 on a joint return).
If you use the standard deduction on a combined separate return, it must be computed on the income of each spouse separately.
You may itemize even if you used the zero bracket amount on your federal return--but then total itemized deductions may not exceed the federal ZBA allowance. Of course, if you itemized on the federal return, this ceiling doesn't apply.
Itemized deductions on the Maryland return are the same as on the federal return with two exceptions. You must eliminate the deduction for state and local income taxes. And a qualifying artist may include as a deduction the value of his or her artworks donated to certain Maryland museums. Tax computation
You may find your tax on the tax tables in the instruction booklet if your Maryland adjusted gross income, after additions and subtractions, was $20,000 or less and you don't itemize deductions. Tha tables have built-in allowances for the standard deduction and for personal and dependent exemptions.
If you elect not to use the tables, you compute your tax from the tax rate schedule on page 17 of the instruction booklet.
After computing the Maryland state tax from either the tax tables or tax rate schedule, you must add the local "piggyback" assessment to determine your total tax liability.
The local rate is 50 percent of the state tax in every county (and Baltimore City) except for the following: Calvert County, 20 percent; Queen Anne's, 40 percent; Talbot, 30 percent; and Worcester, 20 percent. Property tax credit
Maryland does not offer a property tax credit as a part of the income tax system. But for your convenience an application for the Maryland homeowner's property tax credit (Form HTC-60) is included in the tax package mailed to you.
Do not attach Form HTC-60 to your income tax return, and do not forward it in the same envelope with the tax return. Two envelopes are included in the instruction booklet--gray for your income tax return, blue for mailing the homeowner's tax credit application.
There is a Maryland personal property tax credit available on the income tax return--but it applies only to state personal property tax paid on property used in a trade or business
If you are eligible for this credit, use Maryland Form 502-CR and include the amount of the tax for which credit is claimed in Schedule C of Form 502, as an addition to federal adjusted gross income.