Tax Deductions in Maryland

502 or 503

All taxpayers can use Form 502 when preparing their taxes, particularly if they want to maximize their deductions. This form allows for itemized deductions and also additions and subtractions to income. It is also the form that must be filed if you moved into or out of Maryland during the tax year. You can use Form 503 if you plan on taking the standard deduction and you have no additions or subtractions to your income.

Standard Deduction

Maryland allows a standard deduction from your income of 15 percent of your Maryland adjusted gross income. It will be no less than $1,500 for single taxpayers and $3,000 for married taxpayers in 2009. It can also be no more than $2,000 for single taxpayers and $4,000 for married taxpayers in 2009. A worksheet for calculating the deduction is contained in the Maryland income tax instruction booklet.

Itemized Deductions

Maryland uses most of the itemized deductions that the federal government allows on Schedule A of Form 1040. You enter the amount of the itemized deductions from that form and subtract the amount of state and local taxes from that amount. Also if you deduct a contribution for Preservation and Conservation Easements on your federal return, you need to add it back for your Maryland itemized deductions. Maryland allows you to claim that amount on Form 502CR.

Married Filing Separately

Taxpayers who are married filing separate tax returns in Maryland are not required to take the same type of deductions. If one spouse takes the standard deduction, the other spouse can still itemize deductions. The spouse who itemizes can take the full amount of any deduction that is attributable exclusively to that spouse (i.e., medical payments for that spouse) and a proportional amount of the remaining deductions based on how much of the couple's income that spouse earned.