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Tax Institutes 2009

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Tax Institutes 2009 Powered By Docstoc
					Peter Franchot
Changes in
Maryland Income
Tax Forms
           Christopher J. Kolb, CPA
  Manager – RLDP, Forms and Training
Maryland Tax Forms
Fill-in forms and Package X available on
 CD-ROM and www.marylandtaxes.com
 Web site.
Beginning this year, we
 will no longer offer a
 paper version of the
 Nonresident Tax
 Booklet.
Maryland Tax Forms
Spanish versions are also available
 on Web site.

   English version will
    prevail when questions
    arise as to the meaning
    of instructions.
Form 502
Resident Income
Tax Return

In the
Part-Year
Resident/
Military area,
we direct
military
taxpayers to
Instruction
Form 502 and
Form 503
DHMH Checkbox

Authorizes release
of tax info to the
Medical Assistance
Program to help
locate health
insurance for
dependent children.
Form 502
US Obligations

We have removed the
subtraction for Income
from U.S. Obligations
from the face of the
Form 502.
This subtraction will now   Form 502SU
appear on new
Maryland Form 502SU.
Form 502
More line changes
We have removed the
“Subtotal” from line
15. This line was
used in the
calculation of the
subtraction when
both spouses receive
income. We have
updated the
Two-Income
Worksheet
accordingly.
Form 502
Missing lines
We have intentionally
removed lines 21 and
22 from Form 502 to
keep the line
numbers on page 2 of
form unchanged.
Form 502 and 503
New Contribution
Fair Campaign
Financing Fund
removed from line 38
of Form 502 and
replaced with
Developmental
Disabilities Waiting
List Equity Fund.
Same change has been
made on line 14 of
Form 503.
Form 502
MW506NRS
Modified line 42 to
allow a resident to
claim a credit for taxes
withheld as a result of
a nonresident real
estate transaction. and
reported on Form
506NRS.
Form 502 and 503
New Option
New Form 588 is
referenced in the
Direct Deposit of
Refund area of Form
502 and 503
Form 502 and 503
1099G Checkbox
Taxpayers are asked
if they would prefer
to receive their
income tax refund
statement,
Form 1099G,
electronically.
  Form 502
 Instructions
 Instruction 13




Maximum pension
 exclusion now
   $26,100
Form 502
Instructions
Instruction 13

Letter code “ab” is
now used for
“Income from U.S.
Obligations”.
Form 502
Instructions
Instruction 13
– letter code
“ff” for
unrecovered
cost for
nitrogen
removal
technology
502 Instructions –
         Instruction 14
 – We have removed the
   Itemized Deduction
   Worksheet for High
   Income Taxpayers as a
   result of the removal
   of the income
   limitations on itemized
   deductions on the
   2010 federal Form
   1040.
Form 502D
Maryland
Declaration of
Estimated Income
Tax


The highest 2011
tax rate is 5.5%
on net taxable
income over
$1,000,000.
Form 502D
Maryland
Declaration of
Estimated Income
Tax

Baltimore City’s
County local tax rate
raised to .0320 for
2011.
 Form 502S
 Sustainable
 Communities
 Tax Credit
Form 502S provides a:
 20% credit for the
  rehabilitation of historic
  structures;
 25% credit for the
  rehabilitation of historic
  structures which are also
  high-performance
  buildings; or
 10% credit for the
  rehabilitation of a qualified
  rehabilitation structure.
Form 502S
Sustainable
Communities Tax
Credit
This credit replaces the
Heritage Structure
Rehabilitation Tax
Credit and is available
for applications received
by the Maryland
Historical Trust as of
June 1, 2010.
Form 502SU
Maryland
Subtractions from
Income
Form 502SU will be
used by Maryland
resident taxpayers to
identify and claim
specific subtractions that
are not enumerated on
the face of Form 502.
Form 502X
Amended Return

2010 Form 502X is
year-specific and bar
coded. We plan to
extend this practice
into future years.
Form 502X
Amended Return
 Another Net Operating
  Loss (NOL) checkbox
  was added to Form
  502X to have
  taxpayers inform us as
  to whether they are
  filing to claim an NOL
  carryback -- or
  carryforward.
 We have also added
  language for Form
  502S on line 19.
 Form 588
 Direct Deposit to
 Multiple Accounts

 We now provide the
  option for taxpayers to
  split the direct deposit
  of their refund into two
  or three separate
  accounts by
  completing and
  attaching Form 588.
Form 505
Nonresident Return

Checkbox added to
 right of the Residence
 Information area of
 Form 505 to indicate
 that the filing is solely
 to claim a full refund
 of Maryland tax
 withheld in error.
Form 505NR
Nonresident Tax
Calculation
 Line 6b -- This line
  reflects any non-Maryland
  income from Form 505 or
  515 that was not included
  in lines 5 or 6a. We refer
  taxpayers to the
  instructions on page 2 of
  Form 505. Instructions to
  clarify line 6b have been
  added to Form 505NR.
Form 500
Corporation Income
Tax Return
Lines 10c and 10d –
 updated lines to
 reference changes on
 Form 500CR,
 Business Income Tax
 Credits.
Form 500
Corporation Income
Tax Return
Line 10e – We added
 a reference to new
 Form 502S,
 Sustainable
 Communities Tax
 credit.
Form 500
Instructions
Corporation Return

 Line 2g—Other
  additions, letter H,
  we have added a
  new addition for a
  positive adjustment
  from Form 500A.
Form 500
Instructions
Corporation Return

 Line 4e—Other
  subtractions, letter
  O, we have created
  a new subtraction
  for a negative
  adjustment from
  Form 500A.
Form 500A – Calculation of
Corporation Modified Income
                  New Form 500A is now a
                    required attachment for
                    corporations who have
                    any of the following
                    items:
                   Section 10-306.1 Related
                    Party Transactions,
                   Any items of federal
                    income from which the
                    State of Maryland has
                    decoupled, OR …
Form 500A – Calculation of
Corporation Modified Income
                  New Form 500A is now a
                    required attachment for
                    corporations who have
                    any of the following
                    items:
                   Dividends for domestic
                    corporations claiming
                    foreign tax credits, OR
                   Dividends from related
                    foreign corporations.
Form 500CR
Business Income Tax Credits
                  Part N – Line 5 of the
                   Clean Energy Incentive
                   Tax Credit computation
                   now directs taxpayers
                   to Part W, Refundable
                   Business Tax Credits.
Form 500CR
Business Income Tax Credits
                   Parts P-I and P-II of the
                     One Maryland
                     Economic Development
                     Tax Credit have been
                     reformatted, to clarify
                     the calculations for
                     “qualified business
                     entities” which are
                     PTEs, and for members
                     of such qualified PTEs.
Form 500CR
Business Income Tax Credits
                   Part P-III updated to
                     clarify that the credit
                     against project and non-
                     project income must
                     both be subtracted from
                     Maryland withholding
                     from qualified
                     employees to determine
                     the amount of project
                     costs allowable as a
                     refund (line 29).
Form 500CR
Business Income Tax Credits
                     Part T- Reflects the
                       calculation of the
                       new refundable
                       Job Creation &
                       Recovery Tax
                       Credit.
Form 500CR
Business Income
Tax Credits
Part W -- the Clean
 Energy Incentive
 Tax Credit and the
 Job Creation and
 Recovery Tax
 Credit are new to
 the line-up of
 Refundable Credits.
Form 500DP and 510 DP –
Discontinued Forms
We have discontinued the pre-
 printed vouchers for
 Corporation and Pass-
 Through Entity Estimated
 Tax. Businesses that need
 to make estimated tax
 payments and are not
 paying electronically, would
 use Form 500D for
 corporations, or Form 510D
 for pass-through entities.
Form 500X
Corporation Amended Return
                 New checkbox on the
                  back of Form 500X
                  for corporations to
                  indicate that they
                  authorize their tax
                  preparer to discuss the
                  amended return with
                  the Revenue
                  Administration
                  Division.
Form 510, Schedule B
PTE Members’
Information
 We have modified
  Schedule B of Form
  510, Maryland Pass-
  Through Entity
  Income Tax Return, to
  include a column to
  reflect the distributive
  or pro rata share of a
  tax credit.
Form 510D
PTE Estimated Tax
Return
 We have removed the
  checkbox from the
  face of the form, to
  request coupons for
  future payments.
  Taxpayers are directed
  to use another Form
  510D for each
  remaining payment.
Form 510D
PTE Estimated Tax
Return
In addition, the 2011 tax
   rate on line 2 has been
   changed to 5.5%.
Maryland Schedule K-1
(Form 510)
                 We have developed a
                  Maryland-Modified
                  Schedule K-1, which may
                  be used in place of the
                  federal Schedule K-1
                  when filing with a
                  member’s return.
                 We have standardized the
                  placement of
                  modifications and credits
                  on this new schedule.
Maryland Schedule K-1
(Form 510)
                 This schedule may not
                  be used in place of the
                  Maryland Form 504,
                  Schedule K-1.
Form 504
Fiduciary Tax
Return

New contribution on
line 34.

Form 502CR credit
available for
Resident Fiduciaries
on line 39.
Split Direct Deposit
Option.
Form 504
Fiduciary Tax
Return

  Choice of two
   methods to
   allocate
   modifications.
  Lines 14
   through 20
   have been
   reserved for
   future use.
Form 504
Fiduciary Tax
Return

  Lines 14
  through 20
  have been
  reserved for
  future use.
Form 504NR
Nonresident Fiduciary
Tax Calculation
We have
 restructured the
 Form 504NR to
 allow for a more
 precise calculation
 of the tax for a
 nonresident
 fiduciary.
Employer Withholding
Updated to reflect
 change in 2011
 tax rates on
 incomes
 over
 $1,000,000
 as well as for
 bonuses paid
 as a lump sum.
Withholding on Nonresident
Real Estate Transactions
2011 withholding rate falls to 6.75% on
 nonresident individuals selling property
 in Maryland.
Form CRA
Combined
Registration
Application



Application has been
reformatted entirely to
take full advantage of
image technology.
2010 Tax Year
Procedures
        Lewis Koenig
        Assistant Manager
        Electronic Processing
New for the
Filing Season
             “Going Green”
In an effort to “Go Green”, we are
 encouraging taxpayers to file electronically
 to help us
  reduce costs
 and process more
 efficiently.
 We are discontinuing
 the mailing of
 Employer Withholding
 and Sales & Use coupon books unless the
 taxpayer has elected to receive one.
            “Going Green”

Included in more than 50,000 Sales & Use
 tax coupon books mailed this past summer
 was an insert informing taxpayers of our
 new policy.
To continue receiving coupons, the insert
 had to be returned or an email sent to:
 IwantmySUTcoupons@comp.state.md.us
             “Going Green”

Over 90,000 post cards were sent to active
 Employer Withholding accounts that do not
 currently file electronically informing them
 of the change.
To continue receiving coupons, they also
 had to either return the postcard or email us
 at: IwantmyWHcoupons@comp.state.md.us
           “Going Green”

New accounts will also not receive
 coupons unless it is requested on the
 Combined Registration Application.
           Efile Mandate
In 2011 preparers were required to file
 electronically if more than 200
 qualified returns were filed in 2010.
 For 2012, the threshold is decreased to
 100 returns filed in 2011.
            Efile Mandate
For those filing paper returns in excess of
 these thresholds, the Comptroller can
 impose a $50 per return penalty not to
 exceed $500 per preparer.
The taxpayer may elect to opt out of efiling
 by checking the box on the return. These
 returns will not be counted when
 determining efile requirements.
MeF – Modernized Efile
We will implement MeF for 2010
 personal income tax in the upcoming
 filing season for those software
 companies that will be supporting
 MeF.
Updates
and Reminders
            Filing Deadline
Due to the celebration of Emancipation Day
 by on Friday, April 15 by Washington DC,
 personal tax returns will be due on Monday,
 April 18.
For returns filed electronically by April 18
 and pay using direct debit or credit card for
 the balance due, the payment due date is
 April 30.
Social Security Number Validation

All taxpayer’s social security numbers
 are validated through the Internal
 Revenue Service before the processing
 of the return is complete.
Filings with invalid social security
 numbers may result in processing
 delays and denial of any credits.
Balance Due Electronic Returns
Revised tax notices for balance due
 electronic returns that did not request
 direct debit
 will not be
 sent until after
 the payment
 is due.
Returns Filed Without W-2s
Returns claiming MD tax withheld and
 filed without a W-2 or 1099 will be
 returned to taxpayer before processing.
Threshold for W-2 Submissions
For calendar year 2010, the threshold
 requiring employers to submit W-2s
 electronically or in a machine readable
 format is 100.
Forms Mailing
Forms and Booklets
To cut costs, resident tax booklets only
 will only be mailed to those taxpayers
 that filed using the booklet forms last
 year.
Spanish forms are available only on
 our Web site.
Forms and Booklets cont’d
Forms CD will
 continue to be
 available to tax
 preparers.
All forms are
 available on our Web site.
E-mail orders for brown envelopes to
 taxprohelp@comp.state.md.us.
Mailing Dates
Employer withholding coupon books
 will be mailed by the end of December,
 except for accelerated filers, which will
 be mailed mid-November.
Personal estimated tax vouchers will be
 mailed mid-January.
Errors
Most Common Errors
Incorrect banking
 account and routing
 numbers for direct
 deposit of refunds.

Local income tax
 miscalculated or
 missing.
Most Common Errors cont’d
State and local earned income tax
 credits.
Poverty
 level credit.
Incomplete
 502CR
 and 500CR.
Most Common Errors cont’d
Special nonresident tax not computed.
Personal tax returns submitted without
 W-2s or 1099s when withholding is
 claimed.
Standard deduction or itemized
 deduction box not checked.
Total exemption box not completed.
Taxpayer Service
Taxpayer Service
Lines will be open February 1 - April 18,
 Monday - Friday, 8:00 a.m. – 8:00 p.m.
Important Information
Web site www.marylandtaxes.com
Tax practitioner hotline: 410-260-7424
Tax practitioner e-mail:
 taxprohelp@comp.state.md.us
E-file tax practitioner hotline:
 410-260-7753
Important Information cont’d
E-file tax practitioner e-mail:
 efil@comp.state.md.us
Tax forms e-mail:
 taxforms@comp.state.md.us
Questions?

				
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