TY - 2020 - MARYLAND RESIDENT BOOKLET

1 Peter Franchot, ComptrollerRevised Effective 4/15/2021In 1964, the Chesapeake Bay Retriever, named after the famous Bay region of the breed s origin, was declared the official dog of MarylandScan to check your refund status after STATE & LOCAL TAX FORMS & INSTRUCTIONSFor filing personal state and local income taxes for full or part-year MARYLAND residentsDear MARYLAND Taxpayers:Since I took office as your Comptroller in 2007, our agency has become a national model for efficiency, effectiveness and customer service. We continue to deliver first-class customer service while tackling emerging threats such as tax fraud and identity year 2020 delivered challenges not seen in generations. It tested our resolve and its impact will reverberate for years. From a fiscal standpoint, the COVID-19 pandemic rattled our state s economy, but did not shatter it. MARYLAND has a strong economic base that should help accelerate our it all, our 1,100-person agency remains committed to our core mission: being respectful, being responsive and getting results for MARYLAND year, we disbursed $ billion in refunds, with most electronic payments issued in less than three business days.

2 Our agency s state-of-the-art fraud detection system has been widely lauded, and combined with the investigative and prosecutorial powers granted to my office via the 2017 Taxpayer Protection Act, we are keeping Marylanders safe from criminals engaging in identity theft and tax fraud. Since 2007, our office has suspended the processing of returns from more than 230 preparers at 250 total, during my tenure, nearly 120,000 fraudulent returns worth $225 million have been Comptroller, I also understand that while we stress the importance of consistency and predictability in the tax code, small changes occur each are a few bills that became law following the 2020 General Assembly session: SB523 authorizes a pass-through entity to elect to be taxed at the entity level on RESIDENT members shares of income. HB980 increases to $150,000 the maximum tax credit that may be claimed for installing an energy storage system on commercial property.

3 SB751 extends the termination date of the apprenticeship income tax credit under the More Jobs for Marylanders Program to June 30, 2025, and increases the credit from $1,000 to $3,000 for each eligible apprentice. HB276 expands eligibility for a subtraction modification to law enforcement officers of the MARYLAND -National Capital Park Police and Washington Suburban Sanitary Commission Police Force. HB1326 exempts the following parts and equipment for an artificial hearing device from sales and use tax: custom-made earmolds, battery chargers and receivers. SB843 creates a sales and use tax exemption for the sale of materials, equipment or supplies used by a caterer to perform a contract for catering services and intended for resale by the caterer and used directly or predominantly in performing the catering , it has been determined that MARYLAND is automatically decoupled from provisions of the Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act) related to tax year 2020.

4 However, conforms to the provisions of the CARES Act for certain tax years prior to whose federal taxes for tax years prior to 2020 are impacted by provisions of the CARES Act related to net operating losses, business interest expense deductions, or loss limitations may need to file amended MARYLAND returns for those prior you have questions about these changes or anything else regarding your returns, do not hesitate to call my office at 1-800-MD-TAXES or email us at we begin the 2021 Tax Filing Season with these changes in effect, our agency will continue to provide the level of service that you expect and deserve. As always, I will continue to promote policies that benefit the long-term fiscal health of the State of ,Peter FranchotComptrollerA Message from Comptroller Peter FranchotiTABLE OF CONTENTSF iling Information ..iiAssembling your return ..iiiFive Fast FAQs ..iiiINSTRUCTION ..PAGE1. Who must file?

5 12. Use of federal return ..23. MARYLAND Healthcare Coverage ..24. Name and address ..25. Social Security Number(s) ..26. MARYLAND Political Subdivision information ..37. Filing status ..48. Special instructions for married filing separately..49. Part-year residents ..510. Exemptions ..511. Income ..512. Additions to income ..513. Subtractions from income ..714. Itemized Deductions ..1115. Figure your MARYLAND Adjusted Gross Income 1216. Figure your MARYLAND taxable net income ..1217. Figure your MARYLAND tax ..1218. Earned income credit, poverty level credit, credits for individuals and business tax credits 1319. Local income tax and local credits ..1520. Total MARYLAND tax, local tax and contributions ..1621. Taxes paid and refundable credits..1622. Overpayment or balance due ..1723. Telephone numbers, code number, signatures and attachments..1824. Electronic filing, mailing and payment instructions, deadlines and extension.

6 1825. Fiscal year..1926. Special instructions for part-year residents..1927. Filing return of deceased taxpayer ..2028. Amended returns ..2129. Special instructions for military taxpayers ..21 Tax Tables ..22-28 Forms and other information included in this BOOKLET : Form 502 Form PV Form 502B Form 502R Form 502SU Form 502UP Privacy act information MARYLAND Payment Voucher Worksheet (PVW) for Estimated Tax and Extension Payments State Department of Assessments and Taxation InformationNEW FOR 2020 Form 502: Direct Deposit of Refund section on page 4 of Form 502 and its Instruction 22 were expanded for taxpayers to authorize the State of MARYLAND to disclose to their bank and to National Automated Clearing House Association (NACHA) any tax return information necessary to make the deposit, such as their name and the name(s) (Line 51d.) as it appears on the bank account, in order for the Comptroller s office to deposit the refund directly into their account at a bank or other financial institution in the United Tax Income Tax Rate: For a complete list of counties and city local tax rates, see Instruction 19 or visit Subtraction Modifications: There are two subtraction modifications that have been updated and two new subtraction modifications.

7 For more information, see Instruction 13 (Line 13., Code Letters oo., uu., va., and vv.).Tax Credits (individual/business): There are no new tax credits available. Refundable Tax Credits: There is one new tax credit available. See Instruction CARES Act of 2020: In response to the COVID-19 pandemic, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. The Act temporarily altered several tax provisions enacted under the Tax Cuts and Jobs Act (TCJA) intended to increase cash flow and reduce the income tax burden on corporations, partnerships, and individuals. Relief includes: the temporary and retroactive reinstatement of Net Operating Loss (NOL) carryback provisions for tax years 2018, 2019, and 2020 previously repealed under the TCJA in Internal Revenue Code (IRC) 172; a decreased limitation on business interest expenses subject to deduction in tax years 2019 and 2020 under IRC 163(j); and the elimination of loss limitations imposed on non-corporate taxpayers by the TCJA under IRC 461(l) for tax years 2018, 2019, and 2020.

8 The CARES Act also provided a technical correction giving qualified business improvements (QIP) a 15-year recovery period, thereby making those assets eligible for 100% bonus depreciation under IRC 168. For more information on MARYLAND s conformity to the CARES Act, see the Tax Alert issued July 24, 2020 at Bill 987, Acts of 2020: This bill passed by MARYLAND General Assembly provides for the redevelopment of Laurel Park in Anne Arundel County and Pimlico Race Course in Baltimore City, by allowing a subtraction modification of a RESIDENT for gain recognized as a result of the direct or indirect transfer or conveyance of any property located, or used, at or within Laurel Park and Pimlico sites; and any portion of the Bowie Race Course Training Center Property; and the amount of income recognized as a result of any expenditure of funds directly or indirectly by the State investment in the Bill 523, Acts of 2020: This is a result of Senate Bill 523 (Acts of 2020), adding a definition of pass-through entity s taxable income, which requires pass-through entities to pay the tax imposed on distributive or pro rata shares of nonresident and nonresident entity members, and gives pass-through entities the option to pay the tax imposed on distributive or pro rata shares of income of RESIDENT Bill 276, Acts of 2020: This bill modifies the definition of law enforcement officers to include members of the MARYLAND -National Capital Park Police (MNCPP) or The Washington Suburban Sanitary Commission Police Force (WSSCPF) who live in MARYLAND -Washington Regional district with crime rates higher than the State s crime rate.

9 These officers are now eligible for the subtraction of $5,000 of Bill 1510, Acts of 2020: This bill adds as a subtraction of the value of a subsidy for rental expenses received by a RESIDENT of Howard County under the Live Where You Work program of the Downtown Columbia Plan. iiSenate Bill 496, The RELIEF Act of 2021: The purpose of the Recovery for the Economy, Livelihoods, Entrepreneurs, and Families Act, referred to as RELIEF Act, is to relieve some of the effects of the coronavirus pandemic. The RELIEF Act authorizes economic impact payments to certain MARYLAND residents, as well as separately providing for adjustments to both individual and business tax filings. The RELIEF Act includes direct economic impact payments for low to moderate income MARYLAND taxpayers who filed for and received the Earned Income Tax Credit (EITC) on their 2019 MARYLAND State Tax Return. These economic impact payments are issued by the MARYLAND Comptroller to all qualified taxpayers.

10 The RELIEF Act provides assistance to Marylanders whose UI claims have been in adjudication for at least 30 days. For Marylanders who received or currently receive UI benefits, the RELIEF Act provides an income tax subtraction for Tax Years 2020 and Bill 218, Acts of 2021: The purpose of the Income Tax - Child Tax Credit and Expansion of the Income Credit is to expand the numbers of taxpayers to whom the Earned Income Credit (EIC) is available and to provide for a new MARYLAND Child Tax Credit. This bill created a refundable credit available to certain individual and joint married filers with one or more dependent, disabled children under the age of seventeen. Such filers with a federal adjusted gross income of $6,000 or less may claim a credit for each qualifying child in the amount of $ due date to file and pay:Legislative changes were enacted during the 2021 legislative session that required changes to 2020 tax year forms subsequent to their initial publication.