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Maryland Returns

October 2025

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Useful References

Maryland Resident Booklet

Line-by-Line instructions
What’s New for current tax year
Information on Maryland Credits/Subtractions

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Maryland Returns

TY25 Coming

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Useful References

Maryland TaxSlayer User Guide

Comprehensive working aid for Maryland-specific topics
Bridge between MD tax law and TaxSlayer
Supplements cover

Amended Returns
Part Year Maryland Returns

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Useful References

Maryland Checklist

Highlights MD specific Subtractions and Credits not covered in the Intake Interview Booklet
Taxpayer can review as you are reviewing the Intake Sheet and/or entering taxpayer information

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Accessing the State Return

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Accessing the State Return

May be beneficial to review the Maryland return before starting to make any adjustments

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Create a PDF of the Maryland return

Enter the Maryland return

Delete the Maryland return and start over

(normally only used when starting a Part Year return)

Maryland Returns

[CLICK] The Maryland return has now been created in TaxSlayer. You can see it by clicking on the State Section in the index on the left side of TaxSlayer. If it hasn’t been automatically created for some reason, you are offered the option to add a state return at this point.

On the State Return screen, you’ll see a list of any state returns that have been created. There are three icons on the right side of the screen for each state return listed. [CLICK] The first is a small printer, which allows you to view a PDF of just the state return, [CLICK] the second is a small pencil, which opens up the state return for editing, and [CLICK] the third is a trash can, where you can delete the state return and start again. Normally we don’t delete the state return, but if we need to complete a part-year state return, we do have to delete the full year version that is automatically created and re-add it as part-year state return.

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Who must file?

Taxpayers must file a Maryland return if:

A Federal return is required to be filed

and

Taxpayer is a Maryland resident

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Where’s my data?

Many items flow directly from Federal to Maryland return*

Personal data & dependent data & filing status
Income
Itemized deductions (if used on Federal return)
MD tax withheld
MD estimated tax payments
MD State pickup on W-2 (but not on 1099-R)
MD taxable part of Fed tax exempt interest & dividends
Savings Bond or Other U.S. Government obligation not taxed in MD

*If entered correctly on the TaxSlayer Federal entry screens

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Extra steps required during Federal entry to ensure MD return is correct:

1099-R Box 19 for MD State Pickup
Subtraction of Savings Bonds or MD municipal bonds interest
Addition of tax-exempt Federal interest that is taxed by MD (see MD Guide)
Refund of state income tax included in Federal AGI

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Where’s my data?

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Where’s my data?

Adjustments may need to be made in the Maryland module for:

Maryland Pension Exclusions and Subtractions
Maryland State Pickup
Maryland Two Income Subtraction

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Maryland State Return

NTTC Training – TY2019

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Maryland Returns

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Maryland Basic Information

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Mandatory MD question

Important to get the county/city correct

Maryland Returns

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Maryland Basic Information

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Defaults to No, change to Yes if necessary

If taxpayer uses a PO Box, enter street address here

Maryland Returns

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Maryland State Return

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Rarely Used

Occasionally Used

Often Used

Maryland Returns

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Maryland Topics of Interest (in this video)

Tax Exempt Interest/Dividend on the MD return
Forced Itemization on Federal Return to benefit MD
Use of State sales tax on Sch A line 5 vs. state tax withholding
Payments and Estimated Payments

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Other Maryland Topics of Interest (recommended viewing order)

Maryland Pension Exclusions and Subtractions

Watch at (https://youtu.be/l9Dxk-wN0_A)

Maryland State Pick-up

Watch at (https://youtu.be/twCoImxR_Oy)

Maryland Two-Income Subtraction

Watch at (https://youtu.be/96I54T5Ao8o)

Taxability of State tax refunds on the Federal return

Watch the NTTC video: State Tax Refund (https://ta-nttc.tiny.us/State-Tax-Refund-video)

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Maryland Returns

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Tax-exempt Interest and Dividends

Tax-exempt Interest and Dividends

Flow from Federal to MD return (1099-INT and 1099-DIV)
Adjustments may be required on Federal TS entry screens

Savings Bond or U.S. Government Income (Subtraction on MD return)
Non-MD Municipal Bond interest (Addition on MD return)

List of sources taxed and not taxed by MD in the Maryland TaxSlayer Users Guide
Don’t forget to select Maryland as the state!

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Maryland Returns

View the NTTC video: Interest and Dividends – State Treatment

(https://ta-nttc.tiny.us/Interest-Div-State-video)

First I’ll briefly cover tax-exempt interest or dividends that may or may not be taxed by Maryland. [CLICK] You’ll see this type of interest or dividends on a taxpayer’s 1099-INT or 1099-DIV from banks or credit unions, but you’ll also sometimes see 1099-INT and 1099-DIV forms included in a taxpayer’s brokerage statements.

[CLICK] The adjustments to including tax exempt interest or dividends on the Maryland return are made when you do the data entry on the Federal interest and dividend entry screens in TaxSlayer. Interest on Savings bonds or other Treasury obligations are taxed by the Federal Government, but Maryland doesn’t tax them, so they show up as a subtraction on the Maryland return.

Taxpayers with brokerage accounts may have interest on municipal bonds from Maryland and non-Maryland sources. This municipal bond interest is not taxed by the Federal government, but Maryland does tax it if is from a non-MD source. Any municipal bond interest that is taxed in Maryland will show up as an Addition on the MD return. Determining the amount of interest that should be added back onto the Maryland return can be quite complicated, especially from brokerage statements, so ask a more experienced counselor or your local coordinator for help the first time you see it.

You can find a list of bonds that are and are not taxed by MD in the MD Users Guide.

When you are making your entries on the Federal entry screens, you must remember to choose Maryland as the state, so that the Subtractions or Additions show up correctly on the Maryland return.

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[CLICK] You can view the NTTC video Interest and Dividends State Treatment for more information.

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Schedule A considerations – Why?

Consider Itemized vs. Standard Deduction

Itemized deductions > 70% of Federal Standard Deduction
May benefit taxpayer to itemize even if Federal Standard Deduction not reached

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Maryland Returns

Referred to as “forced itemization”

Over the past several years, the Federal Standard deduction has risen significantly and most taxpayers, up to 80-90% our taxpayers, are better off on their Federal returns by choosing the Standard Deduction. If a taxpayer takes the Standard Deduction on the Federal return, Maryland law requires them to also take the Standard deduction on the Maryland return. However, the Maryland Standard Deduction has not risen at the same rate, so in some cases, this results in a large tax bill, or a smaller refund than the taxpayer expects, on the Maryland return.

To try and mitigate the impact that this disparity has, we’ve determined over several years that if a taxpayer’s itemized deductions total about 70% or more of the Federal Standard deduction, we should consider what we call “forced itemization.” This means that the taxpayer chooses to itemize on their Federal return even though the deduction amount is less than the Federal Standard Deduction, because they can then also itemize on their Maryland return and get a better overall result.

TaxSlayer does have a calculator on the Federal Itemized deductions page that allows you to compare these scenarios. It also displays a Refund Calculator on the right of the screen that helps you make this decision, and it updates as you apply each scenario.

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Using State Sales Tax vs. State Tax Withholding

Consider whether it is more advantageous to include State Sales tax rather than State Income Tax withheld on line 5a, Schedule A

NTTC Training – TY2019

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Maryland Returns

If you do decide that itemizing is more advantageous for the taxpayer, you can then have a look at line 5a on Schedule A. This line normally reflects the amount of State tax withheld from a taxpayers’ wages and retirement income. In many cases, especially with retired taxpayers, this amount is small or zero, so it may be more advantageous for the taxpayer to use the state sales tax on this line.

The amount of state sales tax is a calculated amount based on the taxpayers’ AGI. On the Taxes You Paid entry screen for Itemized deductions in the Federal section, you can choose to enter the state and the number of days the taxpayer lived in the state and the program will figure out the amount to put on this line. If the state sales tax is greater than the withholding, TaxSlayer will use it and put an X in the box on line 5A in schedule A to indicate that the state sales tax was used.

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Using State Sales Tax vs. State Tax Withholding

When figuring MD Itemized Deductions:

State Income tax is subtracted from Federal Itemized Deductions (line 17b)
State Sales Tax is not subtracted from Federal Itemized Deductions

NTTC Training – TY2019

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Other Subtractions from Maryland Income

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Maryland �Other Subtractions

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Use the MD Taxpayer Checklist to help you determine which additional Subtractions may need to be entered

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Other MD Subtractions

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Maryland Credits – In Scope

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Requires Certificate

Reciprocity with DC, VA, PA, and WV

Max $1500

Age-based

1 time only

Requires Certificate

Maryland Returns

In addition to subtractions, Maryland also has several Credits. We don’t see most of these on a regular basis and [CLICK] some of them require the taxpayer to send in certificate to the Comptroller’s office to qualify for them.

We can e-file a return that has these credits, but the taxpayer should immediately send the certificate in, because if the Comptroller doesn’t see one, they’ll deny the credit and send the taxpayer a letter adjusting their return. We don’t have any capability to upload the certificate with the return.

[CLICK] For taxpayers who live near a neighboring state and work in that state, they may qualify for the Credit for Taxes paid to another state, if Maryland has reciprocity with that state. If you are preparing taxes in a District that does see this, consult your local instructors on how to handle it.

[CLICK] The Quality Teacher Incentive Credit provides a credit of up to $1,500 of the unreimbursed cost of tuition for graduate level courses to maintain certification (per teacher)

To qualify for the Quality Teacher Incentive, the taxpayer must teach in a MD school or qualified facility, already have a have standard or advanced professional certificate, and complete the course with B or better

[CLICK[ The Long-Term Care Insurance Credit is a one-time credit for laxpayers who have a long-term care insurance policy but only applies to policies that were started after 7/1/2001. This is a one-time credit, so check to make sure the taxpayer hasn’t already applied it on a prior year’s return.

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Non-refundable “Senior Tax Credit”

Non-refundable credit for taxpayers 65 and over:

Single:

Federal AGI that does not exceed $100,000
Up to $1,000 non-refundable credit

MFJ, Qualifying Surviving Spouse or HOH:

Federal AGI that does not exceed $150,000
Up to $1,750 (modified for couples where one is <65) non-refundable credit

Can reduce Maryland tax obligation to $0.
Enters automatically based on age and AGI

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Income Modification�Use of vehicle for charitable purposes

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TP used vehicle for charitable purposes in MD in service as:

Volunteer for fire company
Volunteer for a charitable organization whose principal purpose is to provide medical, health or nutritional care
Aid for handicapped students at Maryland community college (but not providing transportation to / from college)

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Maryland Estimated Payments

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Federal Section 🡪 Payments and Estimates 🡪 State Estimated Payments

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Other Payments

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If underpayment appears on MD line 49, go to 502UP and choose “NO”

Apply this year’s refund to next year’s taxes

State Section 🡪 Maryland Return 🡪 Payments

Miscellaneous Forms

Maryland Returns

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Taxability of Maryland State Tax Refunds

Watch the NTTC State Tax Refund video

https://ta-nttc.tiny.us/State-Tax-Refund-video

Read the Maryland State Refund on Federal Return

Does a refund from a taxpayer’s prior year Maryland tax return, which they would have received during the current tax year, need to be declared on this year’s Federal return? And if it is declared, is it taxable? The answer is “sometimes.”

If a taxpayer didn’t itemize in the prior year, we “force itemized” for them in that year (so their itemized deductions were less than the Federal Standard Deduction), the answer is no, we don’t report the refund on this year’s return.

If they did itemize in the prior year, the refund might be fully or partially taxable, especially if they were subject to the State and Local Tax (or SALT) limitation of $10,000 in that year. [CLICK] Watch the detailed video or [CLICK] read the information sheet linked above for more information.

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From Federal Return:

Taxpayer’s personal info
Filing Status/# of exemptions
Most figures

Entered on MD Basic screen:

Physical address if Federal return has a PO Box
County and City (if any)

Completed MD 502

Maryland Returns

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From Federal Return:

Adjusted Gross Income (line 1)
Tax Exempt Interest addition (line 2)
Md State Pickup addition (line 3)

From MD Additions screen:

All other additions (line 5)

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Completed MD 502

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From Federal Return:

Savings Bonds/Govt obligations interest

From MD Subtractions entries:

Pension Exclusions
Social Security
Other Subtractions
Two Income Subtraction

Deductions (SD vs ID) from Federal return

Maryland Returns

Completed MD 502

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Local Tax Rate is based on the MD county entered on MD Basic screen
Balance due (line 45)
Overpayment (line 46)

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Completed MD 502

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From Federal entry screen:

Banking information

Maryland Returns

Completed MD 502

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Other Maryland Videos (recommended viewing order)

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Maryland Pension Exclusions and Subtractions

https://youtu.be/nwMCJdoihSY

Maryland State Pickup

https://youtu.be/twCoImxR_oY

Maryland Two Income Subtraction

https://youtu.be/96I54T5Ao8o

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Maryland Returns

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