Understanding
MARYLAND TAXES
TAX YEAR 2013
Comptroller of Maryland
January, 2014
Understanding Maryland Taxes is an online publication prepared by the Maryland Comptroller’s
Office to help you understand Maryland state and local taxes, gain competence in math and social
studies, and develop financial responsibility.
The material is designed to be used as the state and local tax module for Understanding Taxes
material provided by the Internal Revenue Service.
You can download copies of the Understanding Maryland Taxes course on our Web site
www.marylandtaxes.com, where you can learn about our online services and explore other helpful
information about personal and business taxes.
Feel free to e-mail your comments or questions to [email protected].
Editor:
Michael Abii
Revenue Administration Division
Comptroller of Maryland
Annapolis, Maryland
E-mail:
[email protected]
1
Table of Contents
Understanding Maryland Taxes
………………………………………………………
3
History of Taxes
………………………………………………………
4
Timeline of Maryland Taxes
………………………………………………………
6
State and Local Taxes
………………………………………………………
9
State Taxes
………………………………………………………
10
Local Taxes
………………………………………………………
18
Activity #1
………………………………………………………
20
Activity #2
………………………………………………………
22
Activity #3
………………………………………………………
30
Where the Money Comes From
………………………………………………………
40
Where the Money Goes
………………………………………………………
41
2
Understanding Maryland Taxes
Purpose:
To help students understand that state and local governments need revenue to
provide goods and services for their citizens.
Objectives:
Students will learn about the history of taxes in Maryland, and the kinds of taxes
collected by Maryland state and local governments.
Students will also learn how to complete simple state tax forms, and to determine
if they are exempt from employer withholding of income tax.
Content:
This course material is presented in three sections: Maryland tax history, state
and local taxes, and activities that include class projects regarding tax policy, as
well as practical skills while completing tax forms.
Activity #1:
This activity is designed to help students explore economic principles that affect
government policy.
Activities #2 and #3: These activities can help students to develop mathematical skills and
financial responsibility. Students who have part-time jobs may find the section
regarding the “exemption from withholding” especially useful.
Note:
The materials are designed to help students become more successful in
mathematics and social studies.
3
History of Taxes
How do you think people paid for goods and services in earlier times?
Almost anything you can imagine has been used as “money” at one time or another—from salt
and shells to furs and fish. As time went on, people found a more practical and durable kind of
money—namely coins made of gold and silver.
When did people start using paper money?
Paper money became popular in Europe during the 1600s. It didn’t show up in North America
until 1685, when playing cards began to be used as currency in Canada.
How did the currency system develop in Maryland?
After Maryland was settled on March 25, 1634, tobacco soon became the most important currency
in the growing colony. Official salaries, payments to members of the clergy, the cost of public
buildings, and other obligations were fixed in pounds of tobacco.
In 1733, the Maryland legislature passed a paper currency bill, which provided for coins and paper
money to be used as a substitute for tobacco. Tobacco remained as a legal means to pay debts until
1776.
When did Maryland impose an income tax?
Although the state of Maryland imposed an income tax law as early as 1777. (later to be repealed
and followed by another income tax law in 1840), it did not become a regular tax until 1937.
The lingering Depression of the 1930s prompted Maryland’s legislature to pass several social and
welfare laws to ease hardships. To increase revenue, Maryland’s state income tax was proposed by
a state constitutional amendment in 1937.
Maryland started collecting the modern income tax in 1939. The law set the income tax rate at
one-half of one percent.
During the first filing season, 110,240 taxpayers paid approximately $1 million in state income
taxes. Today, the state income tax is Maryland’s largest single source of general fund revenue.
When did Maryland impose a sales tax?
In 1947, faced with a desperate need for revenue to pay for services and projects delayed by
World War II, the General Assembly imposed a 2 percent tax on retail sales. During the first year,
the sales tax generated $23.6 million.
The sales and use tax is the second largest source of general fund revenue.
Are social changes reflected in tax policy?
Maryland began taxing motor fuel with a gasoline tax of one cent per gallon in 1922, when
automobiles began rolling towards their dominant role in the transportation scene. Alcoholic
beverages became subject to state taxation after the repeal of Prohibition in 1933.
Suburban growth in the decades that followed set the stage for a greater role for local
governments, and the creation of a local income tax in 1968.
The digital age opened the door for a host of computerized services allowing people and
businesses to file and pay their taxes online over the Internet. The rapid growth of Internet
4
shopping has also prompted many states to consider changing their local laws and procedures
affecting taxation of retail sales.
Comptroller Franchot continues to fight for Maryland students by pushing for a high school
graduation requirement in personal finance.
5
Timeline of Maryland Taxes
1852 Lotteries become a major revenue source.
Clerks of Circuit Court collected license fees for billiard tables, wood hucksters,
marriages and oyster houses.
1860
Lotteries discontinued.
Bounty tax created to pay volunteers who served in the Civil War.
1880
Bounty tax repealed.
Oysters become a fruitful revenue source.
1914
State Tax Commission established.
1922
Motor fuel tax enacted - 1 cent per gallon.
1924
Motor fuel tax increased to 2 cents per gallon.
1933 Alcoholic beverage tax enacted on distilled spirits up to 100 percent proof; tax rate set at
$1.10 per gallon.
Motor vehicle titling tax of 1 percent enacted.
1936
Unemployment insurance tax enacted, with a rate of 2.7 percent of covered wages.
1937
Individual income tax of 5 percent enacted.
Corporation income tax of 0.5 percent enacted.
Recordation tax of 0.1 percent enacted.
1947 Sales and use tax of 2 percent enacted.
Motor fuel tax rate increased to 5 cents per gallon.
1953 Franchise tax on savings and loan institutions enacted.
1955
Employer withholding of income tax from wages began.
Corporation income tax raised to 5 percent.
1958 Income tax rate decreased to 3 percent.
Cigarette tax enacted at a rate of 3 cents per pack.
1959
Sales and use tax increased to 3 percent.
1968
Corporation income tax raised to 7 percent.
Sales and use tax increased to 4 percent.
Income tax changed to graduated tax with a 5 percent maximum rate.
Local income tax created; calculated at 20 - 50 percent of state tax.
1970
Transfer tax imposed on title conveyance to real property.
1973
Lottery re-enacted.
Cigarette tax increased to 10 cents per pack.
1977
Sales and use tax increased to 5 percent.
Motor vehicle titling tax increased to 5 percent.
6
1981
Agricultural land transfer tax created.
Motor fuel tax increased to 11 cents per gallon.
Cigarette tax increased to 13 cents per pack.
1984
Motor fuel tax increased to 13.5 cents per gallon.
1987
Motor fuel tax increased to 18.5 cents per gallon.
1992
Cigarette tax increased to 36 cents per pack.
Motor fuel tax on gasoline increased to 23.5 cents per gallon.
1998
Income tax rate reduced to 4.875 percent.
1999
Cigarette tax increased to 66 cents per pack.
Income tax reduced to maximum rate of 4.85 percent.
Local income tax calculated at 1 - 3 percent of taxable income.
2000 Local inheritance tax for spouses and lineal descendants repealed.
Franchise taxes on savings and loan, financial institutions eliminated.
2001 Income tax rate reduced to maximum rate of 4.80 percent.
2002
Cigarette tax increased to $1.00 per pack.
Income tax rate reduced to maximum rate of 4.75 percent.
2004
Bay restoration fee enacted to help upgrade wastewater treatment facilities.
Nonresidents who derive income from Maryland source are subject to a special 1.25
percent nonresident income tax rate, in addition to the regular 4.75 percent tax rate.
2006
Estate tax limited to 16 percent of the amount that the estate value exceeds $1 million.
2007 State income tax rate increased to a maximum of 5.5 percent.
Corporation income tax rate increased to 8.25 percent.
Sales and use tax rate increased to 6 percent.
Cigarette tax increased to $2.00 per pack.
New state admissions and amusement tax of 20 percent is levied on electronic bingo and
electronic tip jars.
2008
State income tax rate amended to start at 2 percent on the first $1,000 of taxable income
and increase up to a maximum of 6.5 percent on incomes exceeding $1 million. The 6.5
percent rate is no longer in effect after January 1, 2011.
Personal exemption amount increased from $2,400 to $3,200 but is subject to a partial
phase out depending on the taxpayer’s adjusted gross income.
2009
State admissions and amusement tax levied on electronic bingo and electronic tip jars
increased from 20 cents to 30 cents.
2010
Local income tax rate increase for Baltimore City to 3.20 percent for tax year 2011.
2011
Local income tax rate increase for Queen Anne’s County to 3.20 percent, and a decrease
in local income tax rate for Anne Arundel County to 2.49 percent for tax year 2012.
7
The sales and use tax for alcoholic beverages increases to 9 percent.
Legislation passes to not allow the renewal of driver’s licenses or vehicle registrations if
Maryland tax obligations are not satisfied, whether individual or business.
The state income tax rate on taxable income in excess of $1,000,000 returns to 5.5
percent.
2012
State income tax rate increased to a maximum of 5.75%. Personal exemption amount can
be completely phased out depending on taxpayer’s adjusted gross income.
Local income tax rate increase for Anne Arundel County to 2.56%, for Wicomico County
to 3.2%, and for Talbot County to 2.4% for tax year 2013.
2013
New addition modification for an individual to determine Maryland taxable income, by
adding the amount of any income of an electing small business trust (ESBT).
The Town of Edmonston, Maryland increased the Admissions and Amusement tax within
the Town of Edmonston to 5%, effective March 1, 2014.
The City of Frederick, Maryland changed the Admissions and Amusement tax within the
City of Frederick so that the tax is not levied on certain recreational activities, retroactive
to January 1, 2009.
8
State and Local Taxes
When do you pay taxes?



April 15th for tax year 2013.
Every payday.
When you buy a DVD or gasoline.
Federal and state income tax forms are due to be filed by April 15th for tax year 2013. If the 15th
falls on a Saturday, Sunday, or legal holiday, the tax returns are due on the next business day.
If you have a part-time job, you may notice that your employer withholds taxes from your
paycheck.
You pay Maryland sales tax when you buy a retail item, you pay Maryland’s motor fuel tax
when you buy gasoline at a service station, and you pay a tobacco tax when you buy tobacco
products. .
Can you name some examples of state and local taxes?
State Taxes
State income tax
Sales and use tax
Motor vehicle titling tax
Motor fuel tax
Alcoholic beverage tax
Tobacco tax
Tire recycling fee
Bay restoration fee
Estate tax
Business taxes:
 Corporation income tax
 Gross receipts tax on utilities
 Personal property tax
 Insurance company premium
Local Taxes
Local income tax
Property tax
Admissions and amusement tax
Cable TV tax
Trailer park tax
Recordation tax
Impact fee
Emergency 911 fee
Inheritance tax
Solid waste fee
Can you name some services that are supported by state and local tax dollars?
Education
Public safety
Fire protection
Roads
Parks
Courts
Jails
Health services
Nature preservation
9
State Taxes
Personal Income Tax
In most states, including Maryland, the earnings of both individuals and corporations are taxed.
Maryland’s graduated personal income tax rates start at 2 percent on the first $1,000 of taxable
income, and increase up to a maximum of 5.75 percent on taxable income exceeding $250,000 or
$300,000 depending on the filing status of the taxpayer. Nonresidents who derive income from a
Maryland source are subject to a special nonresident tax rate of 1.25 percent, in addition to the
state income tax rate.
A taxpayer earns income during the year from many sources, including wages, interest from
bank accounts, stock dividends and tips. This income is subject to tax.
Most personal income tax is withheld from an employee’s pay and sent to the State
Comptroller’s Office regularly by the employer.
The state income tax is Maryland’s largest single source of general fund revenue.
Estimated Income Tax
The filing of a declaration of estimated Maryland income tax is a part of the pay-as-you-go plan
of income tax collection adopted by the state.
If you have any income such as business income, lottery, capital gains, interest, dividends, etc.,
from which no tax is withheld, or wages from which not enough Maryland tax is withheld, you
may have to pay estimated taxes.
How do you know if you are exempt from having to file a Maryland income tax return?
Maryland income tax law is based on federal law, with some important exceptions. State tax
law treats students as single individuals, which means you are subject to the same filing
requirements as a single individual. If you earned less than $10,000 in calendar year 2013, you
generally are not required to file a Maryland tax return.
If you are not required to file but you had state and local income taxes withheld from your
paycheck, you can get a refund of state and local taxes paid by filing short Form 503.
Complete all of the information at the top of Form 503, as well as the following lines: 1, 7a, 10a,
13-19 and 21.
Sign the form, and attach your withholding statement, or withholding statements (all W-2, 1099,
and K-1 forms).
10
MARYLAND
FORM
503
$
See Page 2 before beginning this form.
Social Security Number
Print Using Blue or Black Ink Only
2013
RESIDENT INCOME
TAX RETURN
Spouse's Social Security Number
Your First Name
Initial Last Name
Spouse's First Name
Initial Last Name
Present Address (Number and street)
City or Town
State
ZIP code
Name
of county and incorporated city, town or special
Maryland county
taxing
area in which you were a resident on the last
day of the taxable period. (See Instruction 6.)
FILING STATUS
See Instruction 1 to
determine if you are
required to file.
CHECK ONE BOX
City, town or taxing area
4.
Head of household
2.
Married filing joint return or spouse had no income
5.
Qualifying widow(er) with dependent child
3.
Married filing separately
6.
Dependent taxpayer (Enter 0 in Exemption Box (A). See Instruction 7.)
1.
Single (If you can be claimed on another person’s tax return, use Filing Status 6.)
Spouse's Social Security Number
EXEMPTIONS
(A)
Yourself
(B)
65 or over
See Instruction 10
(C) Dependents
(1)
First Name
Last Name
Spouse
Blind
Blind
65 or over
(2)
(3)
(4)
Social Security Number
Relationship
Check if Dep
under age 19.
(5)
If (4) is checked,
does child have health
insurance now?
YES
NO
YES
NO
(6)
(7)
Regular
65 or over
Check here
if you authorize us to share your tax information with the Medical Assistance Program for help finding health insurance.
NOTE: If you are claiming more than two dependents, you must use Form 502.
(C) Enter No. Checked
(A) Enter No. Checked . . . x $3,200. . . . . . . $______________
in Columns 6 & 7 . . . . x $3,200. . . . . . . $______________
(B) Enter No. Checked.
x $1,000. . . . . . . $______________
(D) Enter Total Exemptions
(Add A, B and C.). . Total Amount. . . $_____________
1. Adjusted gross income from your federal return (See Instruction 11.) (If amount is $100,000 or more,
stop and use Form 502.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1a. Wages, salaries and/or tips (See Instruction 11.) . . . . . . . . . . . . . .
1b. Earned income (See Instruction 11.) . . . . . . . . . . . . . . . . . . . . . .
|
1. __________________________
|
1a. ________________________
|
1b.________________________
2.Standard deduction (See Instruction 16.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
2. __________________________
|
3.Net income (Subtract line 2 from line 1.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. __________________________
Place
CHECK
or
MONEY
ORDER
on top of
your W-2
wage and
tax
statements
and
ATTACH
HERE
with ONE
staple.
|
4.Exemption amount as computed above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. __________________________
|
5.Taxable net income (Subtract line 4 from line 3. See Tax Table in Resident Instructions.). . . . . . . . . . . . . . . . . . . . 5. __________________________
|
6.Maryland tax from Tax Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. __________________________
7.Earned income credit
7a
Poverty level credit
7b
|
(See Instruction 18.) Total. 7. __________________________
|
8.Maryland tax after credits (Subtract line 7 from line 6.) If less than 0, enter 0.. . . . . . . . . . . . . . . . . . . . . . . . . . 8. __________________________
0
|
9.Local tax (See Instruction 19 for tax rates and worksheet.) Multiply line 5 by your local tax rate .___ ___ ___ ___
.9. __________________________
10.Local: Earned income credit 10a
Poverty level credit 10b
(See Instruction 19.)
|
Total . 10. __________________________
|
11. Local tax after credits (Subtract line 10 from line 9.) If less than 0, enter 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. __________________________
|
12.Total Maryland and local tax (Add lines 8 and 11.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. __________________________
13.Contributions to Chesapeake Bay and Endangered Species Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
13. __________________________
14.Contributions to Developmental Disabilities Waiting List Equity Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
14. __________________________
15.Contributions to Maryland Cancer Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
15. __________________________
|
16. Total Maryland income tax, local income tax and contributions (Add lines 12 through 15.). . . . . . . . . . . . . . 16. __________________________
|
17. Total Maryland and local tax withheld (Enter total from and attach your W-2 and 1099 forms if MD tax is withheld.). 17. __________________________
18.Refundable earned income credit (from worksheet in Instruction 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
18. __________________________
|
19.Total payments and credit (Add lines 17 and 18.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. __________________________
20.Balance due (If line 16 is more than line 19, subtract line 19 from line 16.). . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
20. __________________________
|
REFUND
21. Overpayment (If line 16 is less than line 19, subtract line 16 from line 19.) See line 24 . . This is your21.
__________________________
22.Interest charges from Form 502UP
or for late filing
(See Instruction 22.) Total. .
|
22. __________________________
|
23. TOTAL AMOUNT DUE (Add lines 20 and 22.). IF $1 OR MORE, PAY IN FULL WITH THIS RETURN . . . . . . . . . 23. __________________________
COM/RAD-02013-49
Complete and Submit Page 2
MARYLAND
FORM
503
RESIDENT INCOME
TAX RETURN
Page 2
2013
NAME___________________________________ SSN _______________________ DIRECT DEPOSIT OF REFUND (See Instruction 22.) Please be sure the account information is correct. For Splitting Direct
Deposit, see Form 588.
To comply with banking rules, please check here
Instruction 22.
if this refund will go to an account outside the United States. If checked, see
24. For the direct deposit option, complete the following information clearly and legibly.
24a. Type of account:
24b.
Checking
Routing Number (9-digits)
Savings
24c.
Daytime telephone no.
-
Account
number
-
-
049
CODE NUMBERS (3 digits per box)
Home telephone no.
Check here
if you authorize your paid preparer not to file electronically. Check here
if you agree to receive
your 1099G Income Tax Refund statement electronically. Under penalties of perjury, I declare that I have examined this
return, including accompanying schedules and statements and to the best of my knowledge and belief it is true, correct and
complete. If prepared by a person other than taxpayer, the declaration is based on all information of which the preparer has
any knowledge. Check here
if you authorize your preparer to discuss this return with us.
Make checks payable and mail to:
Comptroller of Maryland
Revenue Administration Division
110 Carroll Street, Annapolis, Maryland 21411-0001
(It is recommended that you include your Social
Security Number on check.)
Your signature
Date
Preparer’s PTIN (required by law)
Signature of preparer other than taxpayer
Spouse’s signature
Date
Address and telephone number of preparer
WHO MAY USE THIS FORM?
You may use this short form (Form 503) if you answer “NO” to ALL of these questions:
YES NO
YES NO
1.
Is your federal adjusted gross income $100,000
or more?
8.
Are you claiming a tax credit on Maryland Form
500CR or Form 502CR?
2.
Are you claiming more than two dependents? If
so, you must use Form 502.
9.
Were you a nonresident of Maryland?
3.
Do you have a state pickup amount on your Form
W-2? If so, you must use Form 502.
10.
Were you a part-year resident of Maryland?
11.
4.
Do you and your spouse both have income subject
to Maryland tax and are filing a joint return? If
yes, you are eligible for the two-income subtraction
modification and must use Form 502.
Does your return cover less than a 12-month
period?
12.
Were or are you a fiscal year taxpayer?
13.
Will you want part or all of your refund credited to
next year’s estimated account?
14.
Do you have income from an estate or trust or
a pass-through entity from a K-1 or other
statement? If yes, you must use Form 502.
5.
Do you have any other Additions to Income or
Subtractions from Income on your Maryland
return? For example, if you are eligible to take the
pension exclusion, you must use Form 502.
6.
Do you want to itemize deductions?
7.
Did you make estimated payments in 2013; have
part or all of your 2012 refund applied to your
2013 estimated account; or make a payment with
an extension request, Form 502E?
COM/RAD-02013-49
How can you avoid having state taxes withheld this year?
If you expect to earn less than $10,000 in 2013, and you had no state and local tax liability in
2012, you may be able to avoid having state and local tax withheld from your paycheck. This
means you’ll get a larger paycheck and no Maryland tax forms to file next year.
To avoid having taxes withheld unnecessarily, ask your employer for a copy of Maryland
Withholding Exemption Certificate Form MW507 (shown below). Complete boxes 3a and 3b
and enter “exempt” on line 3. Sign and date the form and return it to your employer. You may
also be able to use federal Form W-4 to claim your exemption, to avoid having federal income
tax withheld from your paycheck. Both forms are available from your employer.
FORM
Employee’s Maryland Withholding Exemption Certificate
MW507
Print full name
Social Security Number
Street Address, City, State, ZIP
County of residence (Nonresidents enter Maryland county (or Baltimore City) where you are employed.)
Single
Married (surviving spouse or unmarried Head of Household) Rate
1. Total number of exemptions you are claiming not to exceed line f in Personal Exemption Worksheet on page 2. . . . . . . . . . . . . . . . . . . . . . 1. _________________
2. Additional withholding per pay period under agreement with employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. _________________
3. I claim exemption from withholding because I do not expect to owe Maryland tax. See instructions above and check boxes that apply.
a. Last year I did not owe any Maryland Income tax and had a right to a full refund of all Income tax withheld and
b. This year I do not expect to owe any Maryland income tax and expect to have the right to a full refund of all income tax withheld.
(This includes seasonal and student employees whose annual income will be below the minimum filing requirements).
If both a and b apply, enter year applicable _____________ (year effective) Enter “EXEMPT” here . . . . . . . . . . . . . . . . . . . . . . . . 3. _________________
4. I claim exemption from withholding because I am domiciled in one of the following states. Check state that applies.
District of Columbia
Virginia
West Virginia
I further certify that I do not maintain a place of abode in Maryland as described in the instructions above. Enter “EXEMPT” here. . . . . . . . . 4. _________________
5. I claim exemption from Maryland state withholding because I am domiciled in the Commonwealth of Pennsylvania and I do not
maintain a place of abode in Maryland as described in the instructions on Form MW507. Enter “EXEMPT” here. . . . . . . . . . . . . . . . . . . . . . .
6. I claim exemption from Maryland local tax because I live in a local Pennysylvania jurisdiction within York or Adams counties.
Enter “EXEMPT” here and on line 4 of Form MW507. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. I claim exemption from Maryland local tax because I live in a local Pennsylvania jurisdiction that does not impose an earnings or income
tax on Maryland residents. Enter “EXEMPT” here and on line 4 of Form MW507. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. I certify that I am a legal resident of the state of ____________ and am not subject to Maryland withholding because l meet the requirements set forth under the Servicemembers Civil Relief Act, as amended by the Military Spouses Residency Relief Act. Enter “EXEMPT” here. .
5. _________________
6. _________________
7. _________________
8. _________________
Under the penalty of perjury, I further certify that I am entitled to the number of withholding allowances claimed on line 1 above, or if claiming exemption from withholding,
that I am entitled to claim the exempt status on whichever line(s) I completed.
Employee’s signature
Date
Employer’s name and address including ZIP code (For employer use only)
Federal Employer Identification Number
COM/RAD-036
13-49
13
Can you file your Maryland tax return electronically?
Yes. There are three methods to choose from for filing your Maryland tax return electronically:

File your Maryland return online for free, using the Comptroller’s iFile service on our
Web site at www.marylandtaxes.com.

Use commercial software to file online.

File electronically through a commercial tax preparer.
Electronic filing is a convenient, safe and fast way to do your taxes. If you have a bank account
and choose direct deposit when you file electronically, your state tax refund can be deposited in
your bank account within several days from the date your return is accepted and processed.
In addition, many people can also file their federal taxes electronically for free, using the
FreeFile service offered on the IRS Web site at www.irs.gov.
Corporation Tax
Most states, including Maryland, impose a corporate income tax based on the earnings and
profits of a company or business.
Maryland’s corporate income tax rate is 8.25 percent.
If the company operates in other states as well as in Maryland, the tax is based on the share of
the company’s business in Maryland. For more information, visit our Web site at
www.marylandtaxes.com and review the Business Taxpayers section.
14
Sales and Use Tax
The Maryland sales and use tax is imposed upon the sale or use of tangible personal property at
the rate of 6 percent unless a specific exemption is provided, and 9 percent on the sale of
alcoholic beverages.
Common taxable items include clothing and computers. All sales of food through vending
machines, and soft drinks are subject to tax. There are exemptions for some food items
purchased in grocery stores, medicine, and energy used for heating or cooling homes.
There are 45 states, including Maryland, which impose a tax on sales, and also have a companion
tax on out-of-state purchases. This companion tax is called a use tax. The use tax is applied to
all taxable property that you use in Maryland, even if you bought it out of state directly, through
mail order, by telephone or on the Internet.
The sales and use tax is a very important source of revenue for Maryland. It is the state’s second
largest source of general fund revenue. Unlike many states, there are no general sales or use
taxes levied by Maryland’s local areas.
How do you know when the use tax applies?
If you would have paid tax on the purchase if you made it in Maryland, you should pay tax on
the same item if it was purchased untaxed outside of Maryland and used in Maryland.
Why does Maryland have a use tax?
The use tax protects Maryland businesses from unfair competition. If tax isn’t paid on items
bought out of state and brought into Maryland, local businesses who levy the 6 or 9 percent sales
tax, as required by law, are at a competitive disadvantage.
Suppose you paid sales tax on an item you bought in another state? Are you going to be
taxed twice?
No. Maryland grants a credit for sales tax paid to another state, up to the amount of Maryland’s
6 or 9 percent sales and use tax liability. For example, if you paid a 4 percent sales tax to
another state, you would be liable only for the difference. To pay this tax, you would use
Maryland Form ST-118A/B (Consumer Use Tax Return).
Motor Fuel Tax
Some taxes place the burden of paying a tax on the producer or wholesaler. One example is the
motor fuel tax. In Maryland, the motor fuel tax rate on gasoline was 23.5 cents per gallon prior
to July 1, 2013. The Transportation Infrastructure Investment Act of 2013 was effective on July
1, 2013, and it increased motor fuel tax in order to increase transportation funding. It increases
motor fuel tax rates by indexing the rates to growth in the Consumer Price Index. It also imposes
a sales and use tax equivalent rate on all motor fuel except for aviation and turbine fuel. The
equivalent rate is not a sales and use tax on motor fuel, but it is an increase to the motor fuel tax.
The motor fuel tax is levied on the producer or wholesaler, and passed on to the consumer at the
gasoline pump. The tax rate on gasoline is 27 cents per gallon, as of July 1, 2013. Trucking
companies are also required to pay a tax based on the miles they drive on Maryland highways.
Most of the revenue collected goes to the Maryland Department of Transportation for state and
local transportation projects, such as roads, bridges and transportation systems.
15
Alcoholic Beverage Taxes
The tax is levied on the producer or wholesaler and is passed on to the consumer. In Maryland,
the distilled spirits tax is $1.50 per gallon. The wine tax is 40 cents per gallon. The beer tax is 9
cents per gallon.
Tobacco Tax
The Maryland tobacco tax on cigarettes is currently $2.00 per pack of 20. It is levied on the
wholesaler and passed on to the consumer. Maryland also imposes a tax at the wholesale level
on other tobacco products, such as premium cigars at 15 percent, and other cigars at 70 percent.
Pipe tobacco, chewing tobacco, and snuff are taxed at 30 percent.
Admissions and Amusement Tax
Electronic bingo machines and electronic tip jars are subject to a state admissions and
amusement tax imposed at a 30 percent rate on the taxable net proceeds, for all counties except
Calvert County. Effective July 1, 2012, the state admissions and amusement tax is imposed on
electronic bingo and electronic tip jars in Calvert County at a 33 percent rate on the taxable net
proceeds.
Estate Tax
The estate tax is imposed on the transfer of a Maryland estate valued at a minimum of $1
million. The tax is based on the difference between the local inheritance tax and the maximum
federal tax credit that IRS allowed before 2001 for state death taxes, and is limited to 16 percent
of the amount that exceeds $1 million.
Motor Vehicle Titling Tax
The motor vehicle titling tax is collected when you sell a car, truck or other motor vehicle. This
is not a sales tax. The revenue goes to the Department of Transportation for state and local
transportation projects.
Tire Recycling Fee
There is an 80-cent fee on each new tire sold in Maryland. The revenue goes to a special fund
administered by the Department of Environment to fund scrap tire removal and recycling.
Bay Restoration Fee
This is a fee that is levied on users of wastewater facilities, sewage disposal systems and holding
tanks to provide funds for upgrading wastewater treatment plants in Maryland. The fee is set at
varying rates and is collected by local governments and other billing authorities. The revenue
goes to the Comptroller of Maryland.
16
Business Taxes
Many businesses must pay the state’s 8.25 percent corporate income tax. Some other businesses,
such as partnerships, pay income taxes on the personal tax return.
Public utilities and insurance companies pay taxes specific to their industries.
Maryland also levies a personal property tax on businesses.
Maryland law requires employers to contribute to the Unemployment Insurance Fund, which
helps to provide unemployment benefits. In addition, employers must also obtain workers’
compensation insurance, to provide benefits to injured or disabled workers.
17
Local Taxes
Are all local taxes in Maryland collected by the local governments?
No. Many local taxes, like property taxes, are collected by local governments. But there are
some important local taxes that are actually collected by the Maryland Comptroller’s Office.
Property Tax
Property taxes are set by local governments and are the most important source of income for
these jurisdictions.
The revenue from property taxes helps to pay for education, police protection, and other local
services.
The amount of tax to be paid is figured on a percentage of the value of the property as
determined by the Maryland Department of Assessments and Taxation.
Admissions and Amusement Tax
Local governments impose a local admissions and amusement tax which is collected by the State
Comptroller’s Office for Maryland’s 23 counties, Baltimore City, the Maryland Stadium
Authority and the state’s incorporated cities and towns.
Local elected officials set the rates, which vary from one-half of 1 percent to 10 percent of the
admission or amusement cost for activities such as movies, athletic events, concerts and golf.
Inheritance Tax
The inheritance tax is a local tax imposed by Maryland’s 23 counties and Baltimore City on the
value of property that passes from a deceased person to certain beneficiaries.
The tax is collected by the local Registers of Wills and is set at a 10 percent rate. Property
passing to a child or other lineal descendant, spouse, parent, grandparent, stepchild or
stepparent, siblings or a corporation having some of these persons as stockholders is exempt from
the tax.
18
5
Local Income Tax
Maryland’s 23 counties and Baltimore City levy a local income tax which is collected on the state
income tax form as a convenience to local governments.
This tax is calculated by multiplying the Maryland net taxable income by a local tax rate ranging
from .0125 to .0320. The local tax rates (shown below) are listed in the state tax booklet, along
with a worksheet. You can use the local tax worksheet, or you can simply multiply the taxable
income by the local tax rate. The Maryland taxable income, used to calculate the local tax, is
reported on line 21 of Form 502, or on line 5 of Form 503.
2013 LOCAL TAX RATE CHART
Subdivision
Baltimore City . . . . . . .
Allegany County . . . . .
Anne Arundel County . .
Baltimore County . . . . .
Calvert County . . . . . .
Caroline County . . . . . .
Carroll County . . . . . . .
Cecil County . . . . . . . .
Charles County . . . . . .
Dorchester County . . . .
Frederick County . . . . .
Garrett County . . . . . .
Harford County . . . . . .
Howard County . . . . . .
Kent County . . . . . . . .
Montgomery County. . .
Prince George’s County
Queen Anne’s County . .
St. Mary’s County . . . .
Somerset County . . . . .
Talbot County . . . . . . .
Washington County . . .
Wicomico County . . . . .
Worcester County . . . .
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Rate
.0320
.0305
.0256
.0283
.0280
.0263
.0305
.0280
.0290
.0262
.0296
.0265
.0306
.0320
.0285
.0320
.0320
.0320
.0300
.0315
.0240
.0280
.0320
.0125
Which local income tax rate should you use - the rate for the county where you live or where
your part-time job is located?
The local income tax is based on where you live, not where you work. Use the local tax rate for
the county (or Baltimore City) in which you lived on the last day of the tax year or during the
period covered by the return.
19
Activity #1
Economics and Government
In Activity #1, you will study economic principles, institutions, and processes required to
formulate government policy.
Discuss the following topics to develop a regional comparison of taxes and services within
and around Maryland:



Different kinds of taxes pay for public services.
State or local governments can decide how taxes are spent—unless legislation has
earmarked them for a particular use.
There are locally imposed taxes in the counties and city of Baltimore.
Recommended reading for Activity #1:


Understanding Maryland Government, R.V. Miller and S.M. Darnley, 1985
Maryland: A History of its People, Suzanne Ellery Greene Chapelle, et al. 1986
Can you name Maryland’s surrounding states?





Delaware
Pennsylvania
Virginia
West Virginia, and
Washington, D.C.
Complete the chart below.
Good starting points for research would be the Comptroller’s Web site www.marylandtaxes.com
and the Federation of Tax Administrators’ Web site www.taxadmin.org.
Regional Tax Rates
Maryland
Delaware
Pennsylvania
Income
Tax
Sales &
Use Tax
Motor
Fuel Tax
20
Virginia
West Virginia
Washington,
D.C.
How would you compare the quality of life between your county and a neighboring
country?
The idea of the quality of life is different from that of standard of living. While the standard of
living mainly concerns monetary wealth such as incomes, the quality of life emphasizes not only
wealth but also factors that affect individuals’ well-being, such as environment, health,
education, leisure, tax burdens, the cost of living, services provided by local governments and
communities, etc.
Conduct research to measure the quality of life by using internet and other resources.
Gather data to complete the chart shown below. Write your conclusion about the quality of life
in your county or city based on your research. Measuring the quality of life is not an easy task.
One simple and reasonable way to measure and analyze it, is to find the quantitative data that
reflects factors to measure the quality of life, such as the items in the chart below.
Quality of Life Comparison
County
Local
Income Tax
Rate
Property
Tax Rate
Amount
spent on
parks and
recreation
per person
Best place to live:
21
Amount
spent on
education
per student
Unemployment
rate
Student
selected
criteria
(optional)
Activity #2
CASE 1—Student Worker Filing Maryland Tax Return
In Activity #2, you will complete a Maryland income tax return for a student with a parttime job. You will use the Form 503 to complete the Maryland income tax return by using
information and instructions provided. After finishing, compare your responses to the
answer keys.
Information:
Francis Scott Key is a senior in a high school. He worked as a part-time office assistant at the
local library during his summer break in 2013.
He made $2,772 from working at the library during the summer, and had $118 of Maryland state
and local income tax withheld from his pay. He also earned $178 by selling a collection of
poems, which he wrote last spring and then sold 178 copies at $1.00 each to his family members,
friends, neighbors and local bookstores. In addition, he received $102 interest income from a
back account his parents opened for him when he started the grade school.
Francis received most of his information from the W-2 form received from his employer, which
stated his total wages, and the Maryland state and local income tax withheld from his wages.
The information on the form 1099, which he received from the bank, stated his interest income.
No tax was withheld from the $178 earned from his poetry sales, and he must report the $178 as
additional income.
He wants to make contributions of $4 for Chesapeake Bay and Endangered Species Fund, and $4
for Maryland Cancer Fund.
He still lives at home, and is supported by his parents, who claim Francis as a dependent on their
tax return.
Additional information needed for Francis Scott Key’s Maryland Tax Return:
Name:
Address
Social Security Number:
Bank Account:
Francis Scott Key
849 Harbor Road
Annapolis, MD 21401
Anne Arundel County
123-45-6789
Checking Account
Bank Routing Number—142257134
Bank Account Number—17210231
22
Questions and Instruction for Activity #2
Q1.
What is Francis’ total income in 2013? ............................................................
Q2.
Does Francis have to file a Maryland tax return? ..........................................

How can Francis get a refund of Maryland taxes withheld from his pay?
First, you need to determine which form(s) you can use. Francis is eligible to use Form
503 (a blank Form 503 is provided in pages 24 and 25 for this activity.) To be eligible
for you to use Form 503, ALL of your answers must be NO to the questions on the back
of Form 503. He must complete Form 503 to get his refund.

Enter Francis’ name, address and Social Security number in the appropriate spaces on
the front of Form 503.

Complete the sections for filing status and exemptions.
Francis is a dependent taxpayer since he claimed as a dependent of his parents return.
Dependents cannot claim an exemption for themselves, so check box number 6,
Dependent taxpayer, and enter 0 in the Exemption Box (A).

Enter Francis’ total income on line 1.
Q3.
Does Francis qualify for an earned income credit
or a poverty level credit on line 7? ....................................................................

Complete lines 13 and 15, and enter the total in line 16.

Enter on line 17 the amount of tax withheld from his wages which are shown in box 16
on his W-2.

Enter on line 19 the same amount on line 17.

Subtract the amount on line 16 from line 19, to determine the amount of Francis’
refund and enter on line 21.

Complete the DIRECT DEPOSIT OF REFUND section to have his refund deposited
directly into his bank account.

Francis must sign and date to complete Form 503.

He completed his tax return on February 28, 2014.
23
MARYLAND
FORM
503
$
See Page 2 before beginning this form.
Social Security Number
Print Using Blue or Black Ink Only
2013
RESIDENT INCOME
TAX RETURN
Spouse's Social Security Number
Your First Name
Initial Last Name
Spouse's First Name
Initial Last Name
Present Address (Number and street)
City or Town
State
ZIP code
Name
of county and incorporated city, town or special
Maryland county
taxing
area in which you were a resident on the last
day of the taxable period. (See Instruction 6.)
FILING STATUS
See Instruction 1 to
determine if you are
required to file.
CHECK ONE BOX
City, town or taxing area
4.
Head of household
2.
Married filing joint return or spouse had no income
5.
Qualifying widow(er) with dependent child
3.
Married filing separately
6.
Dependent taxpayer (Enter 0 in Exemption Box (A). See Instruction 7.)
1.
Single (If you can be claimed on another person’s tax return, use Filing Status 6.)
Spouse's Social Security Number
EXEMPTIONS
(A)
Yourself
(B)
65 or over
See Instruction 10
(C) Dependents
(1)
First Name
Last Name
Spouse
Blind
Blind
65 or over
(2)
(3)
(4)
Social Security Number
Relationship
Check if Dep
under age 19.
(5)
If (4) is checked,
does child have health
insurance now?
YES
NO
YES
NO
(6)
(7)
Regular
65 or over
Check here
if you authorize us to share your tax information with the Medical Assistance Program for help finding health insurance.
NOTE: If you are claiming more than two dependents, you must use Form 502.
(C) Enter No. Checked
(A) Enter No. Checked . . . x $3,200. . . . . . . $______________
in Columns 6 & 7 . . . . x $3,200. . . . . . . $______________
(B) Enter No. Checked.
x $1,000. . . . . . . $______________
(D) Enter Total Exemptions
(Add A, B and C.). . Total Amount. . . $_____________
1. Adjusted gross income from your federal return (See Instruction 11.) (If amount is $100,000 or more,
stop and use Form 502.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1a. Wages, salaries and/or tips (See Instruction 11.) . . . . . . . . . . . . . .
1b. Earned income (See Instruction 11.) . . . . . . . . . . . . . . . . . . . . . .
|
1. __________________________
|
1a. ________________________
|
1b.________________________
2.Standard deduction (See Instruction 16.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
2. __________________________
|
3.Net income (Subtract line 2 from line 1.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. __________________________
Place
CHECK
or
MONEY
ORDER
on top of
your W-2
wage and
tax
statements
and
ATTACH
HERE
with ONE
staple.
|
4.Exemption amount as computed above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. __________________________
|
5.Taxable net income (Subtract line 4 from line 3. See Tax Table in Resident Instructions.). . . . . . . . . . . . . . . . . . . . 5. __________________________
|
6.Maryland tax from Tax Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. __________________________
7.Earned income credit
7a
Poverty level credit
7b
|
(See Instruction 18.) Total. 7. __________________________
|
8.Maryland tax after credits (Subtract line 7 from line 6.) If less than 0, enter 0.. . . . . . . . . . . . . . . . . . . . . . . . . . 8. __________________________
0
|
9.Local tax (See Instruction 19 for tax rates and worksheet.) Multiply line 5 by your local tax rate .___ ___ ___ ___
.9. __________________________
10.Local: Earned income credit 10a
Poverty level credit 10b
(See Instruction 19.)
|
Total . 10. __________________________
|
11. Local tax after credits (Subtract line 10 from line 9.) If less than 0, enter 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. __________________________
|
12.Total Maryland and local tax (Add lines 8 and 11.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. __________________________
13.Contributions to Chesapeake Bay and Endangered Species Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
13. __________________________
14.Contributions to Developmental Disabilities Waiting List Equity Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
14. __________________________
15.Contributions to Maryland Cancer Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
15. __________________________
|
16. Total Maryland income tax, local income tax and contributions (Add lines 12 through 15.). . . . . . . . . . . . . . 16. __________________________
|
17. Total Maryland and local tax withheld (Enter total from and attach your W-2 and 1099 forms if MD tax is withheld.). 17. __________________________
18.Refundable earned income credit (from worksheet in Instruction 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
18. __________________________
|
19.Total payments and credit (Add lines 17 and 18.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. __________________________
20.Balance due (If line 16 is more than line 19, subtract line 19 from line 16.). . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
20. __________________________
|
REFUND
21. Overpayment (If line 16 is less than line 19, subtract line 16 from line 19.) See line 24 . . This is your21.
__________________________
22.Interest charges from Form 502UP
or for late filing
(See Instruction 22.) Total. .
|
22. __________________________
|
23. TOTAL AMOUNT DUE (Add lines 20 and 22.). IF $1 OR MORE, PAY IN FULL WITH THIS RETURN . . . . . . . . . 23. __________________________
COM/RAD-02013-49
Complete and Submit Page 2
MARYLAND
FORM
503
RESIDENT INCOME
TAX RETURN
Page 2
2013
NAME___________________________________ SSN _______________________ DIRECT DEPOSIT OF REFUND (See Instruction 22.) Please be sure the account information is correct. For Splitting Direct
Deposit, see Form 588.
To comply with banking rules, please check here
Instruction 22.
if this refund will go to an account outside the United States. If checked, see
24. For the direct deposit option, complete the following information clearly and legibly.
24a. Type of account:
24b.
Checking
Routing Number (9-digits)
Savings
24c.
Daytime telephone no.
-
Account
number
-
-
049
CODE NUMBERS (3 digits per box)
Home telephone no.
Check here
if you authorize your paid preparer not to file electronically. Check here
if you agree to receive
your 1099G Income Tax Refund statement electronically. Under penalties of perjury, I declare that I have examined this
return, including accompanying schedules and statements and to the best of my knowledge and belief it is true, correct and
complete. If prepared by a person other than taxpayer, the declaration is based on all information of which the preparer has
any knowledge. Check here
if you authorize your preparer to discuss this return with us.
Make checks payable and mail to:
Comptroller of Maryland
Revenue Administration Division
110 Carroll Street, Annapolis, Maryland 21411-0001
(It is recommended that you include your Social
Security Number on check.)
Your signature
Date
Preparer’s PTIN (required by law)
Signature of preparer other than taxpayer
Spouse’s signature
Date
Address and telephone number of preparer
WHO MAY USE THIS FORM?
You may use this short form (Form 503) if you answer “NO” to ALL of these questions:
YES NO
YES NO
1.
Is your federal adjusted gross income $100,000
or more?
8.
Are you claiming a tax credit on Maryland Form
500CR or Form 502CR?
2.
Are you claiming more than two dependents? If
so, you must use Form 502.
9.
Were you a nonresident of Maryland?
3.
Do you have a state pickup amount on your Form
W-2? If so, you must use Form 502.
10.
Were you a part-year resident of Maryland?
11.
4.
Do you and your spouse both have income subject
to Maryland tax and are filing a joint return? If
yes, you are eligible for the two-income subtraction
modification and must use Form 502.
Does your return cover less than a 12-month
period?
12.
Were or are you a fiscal year taxpayer?
13.
Will you want part or all of your refund credited to
next year’s estimated account?
14.
Do you have income from an estate or trust or
a pass-through entity from a K-1 or other
statement? If yes, you must use Form 502.
5.
Do you have any other Additions to Income or
Subtractions from Income on your Maryland
return? For example, if you are eligible to take the
pension exclusion, you must use Form 502.
6.
Do you want to itemize deductions?
7.
Did you make estimated payments in 2013; have
part or all of your 2012 refund applied to your
2013 estimated account; or make a payment with
an extension request, Form 502E?
COM/RAD-02013-49
Answer Keys and Instruction for Activity #2
Q1.
What is Francis’ total income in 2013?
..........................................................
$3,052
Wage from the local Library $2,772
Sales of poems
$178
Interest income
$102
Total income
$3,052
Q2.
Does Francis have to file a Maryland tax return? ..........................................
No
Francis is not required to file a Maryland tax return because his income is less than the
minimum filing requirement of $10,000 for the tax year 2013.

How can Francis get a refund of Maryland taxes withheld from his pay?
First, you need to determine which form(s) you can use. Francis is eligible to use Form
503 (a blank Form 503 is provided in pages 24 and 25 for this activity.) To be eligible
for you to use Form 503, ALL of your answers must be NO to the questions on the back
of Form 503. He must complete Form 503 to get his refund.

Enter Francis’ name, address and Social Security number in the appropriate spaces on
the front of Form 503.
Please see the completed Form 503 for Francis on page 28.

Complete the sections for filing status and exemptions.
Francis is a dependent taxpayer since he is a dependent of his parents return. Dependents
cannot claim an exemption for themselves, so check box number 6, Dependent taxpayer,
and enter 0 in the Exemption Box (A).

Enter Francis’ total income on line 1.
Francis’ total income is $3,052.
$2,772 from W-2 form and line 1 of federal Form 1040 EZ + $178 in extra income +
$102 in interest income from line 2 of Form 1040EZ = $3,052.
Q3.
Does Francis qualify for an earned income credit
or a poverty level credit on line 7?....................................................................
NO
The federal earned income credit is not available to dependent taxpayers like Francis.
Only those who qualify for a federal earned income credit on the federal tax return can be
eligible for the Maryland earned income credit. Maryland’s poverty level credit is also
unavailable to dependent taxpayers.

Complete lines 13 and 15 and enter the total in line 16.
Enter $4 on line 13, and enter $4 on line 15, because Francis wants to make a donation to
Chesapeake Bay and Endangered Species Fund, and a donation to Maryland Cancer
Fund. Enter $8 on line 16.
26

Enter on line 17 the amount of tax withheld from his wages which are shown in box 16
on his W-2.
His employer withheld Maryland state and local taxes of $118 from his pay.
Note: Some employers withhold state and local taxes separately on the W-2. If your
employer did so, be sure to add them together on line 17.

Enter on line 19 the same amount on line 17.

Subtract the amount on line 16 from line 19, to determine the amount of Francis’
refund. Then enter the overpayment amount on line 21.

Complete the DIRECT DEPOSIT OF REFUND section to have his refund deposited
directly into his bank account.
Use Francis’ bank account information from the additional information provided. He
must use line 24a to select the type of account (checking or savings) where he would like
to have his refund deposited. He should enter his bank routing number 142257134 on
line 24b and his bank account number 17210231 on line 24c.

Francis must sign and date to complete Form 503.

He completed his tax return on February 28, 2014.
27
Activity #2 Answer Key
29
Activity #3
CASE—Student Worker with Higher Income Filing Maryland Tax
Return
In Activity #3, you will complete a Maryland income tax return for a student who earned
more money from a part-time job than the student in Activity #2. Again, you will use the
Form 503 to complete the Maryland income tax return by following the instructions below.
After finishing, compare your responses to the answer keys.
Information:
Ann Ella Carroll is a senior in high school. During 2013, she worked part-time in the evenings
during semesters, and full-time during school breaks, as an assistant to a political lobbyist. She
earned $9,850 during 2013, and had $298 in bank interest on money she saved. Her employer
withheld Maryland income tax of $623.
Anna wants to contribute $3 to the Chesapeake Bay and Endangered Species Fund, and $3 to the
Maryland Cancer Fund when she files her Maryland tax return.
She still lives with her parents. They provide more than half of her support and claim her as a
dependent on their tax return.
Additional information needed for Anna Ella Carroll’s Maryland Tax Return:
Name:
Address
Social Security Number:
Bank Account:
Anna Ella Carroll
503 Main Avenue
Parkton, MD 21120
Baltimore County
906-84-2957
Saving Account
Bank Routing Number—138227514
Bank Account Number—17420524
30
Questions and Instruction for Activity #3
Q1.
What is Anna’s total income in 2013? ..........................................................
Q2.
Does Anna have to file a Maryland tax return? ..............................................

What form should Anna use?
First, you need to determine which form(s) you can use. Anna is eligible to use Form
503 (a blank Form 503 is provided in page 33 and 34 for this activity.) To be eligible to
use Form 503, ALL of your answers must be NO to the questions on the back of Form
503. She must complete Form 503 to get her refund.

Enter Anna’s address and Social Security number in the appropriate spaces on the
front of Form 503.

Complete the sections for filing status and exemptions.
Anna is a dependent taxpayer since she is claimed as a dependent on her parents return.
Dependents cannot claim an exemption for themselves, so check box number 6,
Dependent taxpayer, and enter 0 in the Exemption Box (A).

Enter Anna’s total income on line 1.
Q3.
Figure Anna’s standard deduction by using Worksheet 1 (shown below) from page 9
of the state tax instruction booklet. Enter result on line 2.............................
Q4.
Figure Anna’s net income. Enter result on line 3.....................................
Q5.
Is Anna eligible for an exemption amount? ......................

Enter Anna’s taxable net income on line 5
31

Find Anna’s Maryland tax from the tax table in page 35. Enter Anna’s Maryland tax
on Line 6.

Enter her adjusted Maryland tax on line 8.

What is Anna’s local tax?
Using the worksheet shown below (you can find the detail information on page 12 of the
Maryland Resident Tax booklet), the chart indicates that Anna is subject to a local
income tax rate of .0283 since she lives in Baltimore County. Multiply the amount on
line 5 (taxable net income) by the rate for Baltimore Country (.0283) and enter her local
tax on line 9. Carry this amount to line 11.
LOCAL TAX WORKSHEET (19A)
Multiply the taxable net income by your local tax rate from the LOCAL
TAX RATE CHART for the county in which you were a resident on the
last day of the tax year. Enter the result on line 29 of Form 502 or line
9 of Form 503. This is your local income tax.
1. TAXABLE net income from line 21 of Form
502 or line 5 of Form 503. . . . . . . . . . . . 1. $ ___________
2. LOCAL tax rate from chart above. The first
digit has been entered for you. . . . . . . . . . 2.
3. LOCAL income tax (Multiply line 1 by line 2.)
Enter this amount on line 29 of Form 502
or line 9 of Form 503 rounded to the
nearest cent or whole dollar. . . . . . . . . . . 3. $ ___________

Add line 8 and line 11. Enter her total Maryland state and local income tax on line 12.

Complete lines 13 and 15, and enter the total in line 16.

Enter on line 17 the amount of tax withheld from her wages, which are shown in box 16
on her W-2.

Enter on line 19 the same amount as on line 17.

Determine whether Anna has to pay additional income tax, or she receives her refund.
o If line 16 is more than line 19, subtract line 19 from line 16, and then enter the
Balance Due amount on line 20.
o If line 16 is less than line 19, subtract line 16 from line 19, and then enter the
Overpayment amount on line 21.

Complete the DIRECT DEPOSIT OF REFUND section to have her refund deposited
directly into her bank account, if she will receive her refund.

Anna must sign and date to complete Form 503.
 She completed her tax return on March 1,322014.
MARYLAND
FORM
503
$
See Page 2 before beginning this form.
Social Security Number
Print Using Blue or Black Ink Only
2013
RESIDENT INCOME
TAX RETURN
Spouse's Social Security Number
Your First Name
Initial Last Name
Spouse's First Name
Initial Last Name
Present Address (Number and street)
City or Town
State
ZIP code
Name
of county and incorporated city, town or special
Maryland county
taxing
area in which you were a resident on the last
day of the taxable period. (See Instruction 6.)
FILING STATUS
See Instruction 1 to
determine if you are
required to file.
CHECK ONE BOX
City, town or taxing area
4.
Head of household
2.
Married filing joint return or spouse had no income
5.
Qualifying widow(er) with dependent child
3.
Married filing separately
6.
Dependent taxpayer (Enter 0 in Exemption Box (A). See Instruction 7.)
1.
Single (If you can be claimed on another person’s tax return, use Filing Status 6.)
Spouse's Social Security Number
EXEMPTIONS
(A)
Yourself
(B)
65 or over
See Instruction 10
(C) Dependents
(1)
First Name
Last Name
Spouse
Blind
Blind
65 or over
(2)
(3)
(4)
Social Security Number
Relationship
Check if Dep
under age 19.
(5)
If (4) is checked,
does child have health
insurance now?
YES
NO
YES
NO
(6)
(7)
Regular
65 or over
Check here
if you authorize us to share your tax information with the Medical Assistance Program for help finding health insurance.
NOTE: If you are claiming more than two dependents, you must use Form 502.
(C) Enter No. Checked
(A) Enter No. Checked . . . x $3,200. . . . . . . $______________
in Columns 6 & 7 . . . . x $3,200. . . . . . . $______________
(B) Enter No. Checked.
x $1,000. . . . . . . $______________
(D) Enter Total Exemptions
(Add A, B and C.). . Total Amount. . . $_____________
1. Adjusted gross income from your federal return (See Instruction 11.) (If amount is $100,000 or more,
stop and use Form 502.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1a. Wages, salaries and/or tips (See Instruction 11.) . . . . . . . . . . . . . .
1b. Earned income (See Instruction 11.) . . . . . . . . . . . . . . . . . . . . . .
|
1. __________________________
|
1a. ________________________
|
1b.________________________
2.Standard deduction (See Instruction 16.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
2. __________________________
|
3.Net income (Subtract line 2 from line 1.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. __________________________
Place
CHECK
or
MONEY
ORDER
on top of
your W-2
wage and
tax
statements
and
ATTACH
HERE
with ONE
staple.
|
4.Exemption amount as computed above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. __________________________
|
5.Taxable net income (Subtract line 4 from line 3. See Tax Table in Resident Instructions.). . . . . . . . . . . . . . . . . . . . 5. __________________________
|
6.Maryland tax from Tax Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. __________________________
7.Earned income credit
7a
Poverty level credit
7b
|
(See Instruction 18.) Total. 7. __________________________
|
8.Maryland tax after credits (Subtract line 7 from line 6.) If less than 0, enter 0.. . . . . . . . . . . . . . . . . . . . . . . . . . 8. __________________________
0
|
9.Local tax (See Instruction 19 for tax rates and worksheet.) Multiply line 5 by your local tax rate .___ ___ ___ ___
.9. __________________________
10.Local: Earned income credit 10a
Poverty level credit 10b
(See Instruction 19.)
|
Total . 10. __________________________
|
11. Local tax after credits (Subtract line 10 from line 9.) If less than 0, enter 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. __________________________
|
12.Total Maryland and local tax (Add lines 8 and 11.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. __________________________
13.Contributions to Chesapeake Bay and Endangered Species Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
13. __________________________
14.Contributions to Developmental Disabilities Waiting List Equity Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
14. __________________________
15.Contributions to Maryland Cancer Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
15. __________________________
|
16. Total Maryland income tax, local income tax and contributions (Add lines 12 through 15.). . . . . . . . . . . . . . 16. __________________________
|
17. Total Maryland and local tax withheld (Enter total from and attach your W-2 and 1099 forms if MD tax is withheld.). 17. __________________________
18.Refundable earned income credit (from worksheet in Instruction 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
18. __________________________
|
19.Total payments and credit (Add lines 17 and 18.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. __________________________
20.Balance due (If line 16 is more than line 19, subtract line 19 from line 16.). . . . . . . . . . . . . . . . . . . . . . . . . . . .
|
20. __________________________
|
REFUND
21. Overpayment (If line 16 is less than line 19, subtract line 16 from line 19.) See line 24 . . This is your21.
__________________________
22.Interest charges from Form 502UP
or for late filing
(See Instruction 22.) Total. .
|
22. __________________________
|
23. TOTAL AMOUNT DUE (Add lines 20 and 22.). IF $1 OR MORE, PAY IN FULL WITH THIS RETURN . . . . . . . . . 23. __________________________
COM/RAD-02013-49
Complete and Submit Page 2
MARYLAND
FORM
503
RESIDENT INCOME
TAX RETURN
Page 2
2013
NAME___________________________________ SSN _______________________ DIRECT DEPOSIT OF REFUND (See Instruction 22.) Please be sure the account information is correct. For Splitting Direct
Deposit, see Form 588.
To comply with banking rules, please check here
Instruction 22.
if this refund will go to an account outside the United States. If checked, see
24. For the direct deposit option, complete the following information clearly and legibly.
24a. Type of account:
24b.
Checking
Routing Number (9-digits)
Savings
24c.
Daytime telephone no.
-
Account
number
-
-
049
CODE NUMBERS (3 digits per box)
Home telephone no.
Check here
if you authorize your paid preparer not to file electronically. Check here
if you agree to receive
your 1099G Income Tax Refund statement electronically. Under penalties of perjury, I declare that I have examined this
return, including accompanying schedules and statements and to the best of my knowledge and belief it is true, correct and
complete. If prepared by a person other than taxpayer, the declaration is based on all information of which the preparer has
any knowledge. Check here
if you authorize your preparer to discuss this return with us.
Make checks payable and mail to:
Comptroller of Maryland
Revenue Administration Division
110 Carroll Street, Annapolis, Maryland 21411-0001
(It is recommended that you include your Social
Security Number on check.)
Your signature
Date
Preparer’s PTIN (required by law)
Signature of preparer other than taxpayer
Spouse’s signature
Date
Address and telephone number of preparer
WHO MAY USE THIS FORM?
You may use this short form (Form 503) if you answer “NO” to ALL of these questions:
YES NO
YES NO
1.
Is your federal adjusted gross income $100,000
or more?
8.
Are you claiming a tax credit on Maryland Form
500CR or Form 502CR?
2.
Are you claiming more than two dependents? If
so, you must use Form 502.
9.
Were you a nonresident of Maryland?
3.
Do you have a state pickup amount on your Form
W-2? If so, you must use Form 502.
10.
Were you a part-year resident of Maryland?
11.
4.
Do you and your spouse both have income subject
to Maryland tax and are filing a joint return? If
yes, you are eligible for the two-income subtraction
modification and must use Form 502.
Does your return cover less than a 12-month
period?
12.
Were or are you a fiscal year taxpayer?
13.
Will you want part or all of your refund credited to
next year’s estimated account?
14.
Do you have income from an estate or trust or
a pass-through entity from a K-1 or other
statement? If yes, you must use Form 502.
5.
Do you have any other Additions to Income or
Subtractions from Income on your Maryland
return? For example, if you are eligible to take the
pension exclusion, you must use Form 502.
6.
Do you want to itemize deductions?
7.
Did you make estimated payments in 2013; have
part or all of your 2012 refund applied to your
2013 estimated account; or make a payment with
an extension request, Form 502E?
COM/RAD-02013-49
2013 MARYLAND TAX TABLE
INSTRUCTIONS:
1. Find the income range that applies to the taxable net income you reported on line 21 of your Form 502 or line 5 of Form 503.
2. Find the Maryland tax corresponding to your income range.
3. Enter the tax amount on line 22 of Form 502 or line 6 of Form 503.
4. This table does not include the local income tax.
5. If your taxable income is $100,000 or more, use the Maryland Tax Computation Worksheet Schedules (17A) at the end of the tax table.
If your taxable
If your taxable
If your taxable
If your taxable
If your taxable
net income is. . .
net income is. . .
net income is. . .
net income is. . .
net income is. . .
Your
Your
Your
Your
Your
At
But
At
But
At
But
At
But
At
But
Maryland
Maryland
Maryland
Maryland
Maryland
least
less
least
less
least
less
least
less
least
less
than tax is . . .
than tax is . . .
than tax is . . .
than tax is . . .
than tax is . . .
$0 $ 50$10
3,000
6,000
9,000
12,000
50
75
100
150
200
75
100
150
200
250
1
2
3
4
5
3,000
3,050
3,100
3,150
3,200
3,050
3,100
3,150
3,200
3,250
91
94
96
98
101
6,000
6,050
6,100
6,150
6,200
6,050
6,100
6,150
6,200
6,250 234
236
238
241
243
9,000
9,050
9,100
9,150
9,200
9,050
9,100
9,150
9,200
9,250
376
379
381
383
386
12,000
12,050
12,100
12,150
12,200
12,050
12,100
12,150
12,200
12,250
519
521
523
526
528
250
300
350
400
450
300
350
400
450
500
6
7
8
9
10
3,250
3,300
3,350
3,400
3,450
3,300
3,350
3,400
3,450
3,500
103
105
108
110
113
6,250
6,300
6,350
6,400
6,450
6,300
6,350
6,400
6,450
6,500
246
248
250
253
255
9,250
9,300
9,350
9,400
9,450
9,300
9,350
9,400
9,450
9,500
388
390
393
395
398
12,250
12,300
12,350
12,400
12,450
12,300
12,350
12,400
12,450
12,500
531
533
535
538
540
500
550
600
650
700
550
600
650
700
750
11
12
13
14
15
3,500
3,550
3,600
3,650
3,700
3,550
3,600
3,650
3,700
3,750
115
117
120
122
124
6,500
6,550
6,600
6,650
6,700
6,550
6,600
6,650
6,700
6,750
257
260
262
265
267
9,500
9,550
9,600
9,650
9,700
9,550
9,600
9,650
9,700
9,750
400
402
405
407
409
12,500
12,550
12,600
12,650
12,700
12,550
12,600
12,650
12,700
12,750
542
545
547
550
552
750
800
800
850
850
900
900
950
950 1,000
1,000
16
17
18
19
20
3,750 3,800
3,800 3,850
3,850 3,900
3,900 3,950
3,950 4,000
4,000
127
129
132
134
136
6,750 6,800
6,800 6,850
6,850 6,900
6,900 6,950
6,950 7,000
7,000
269
272
274
276
279
9,750 9,800
9,800 9,850
9,850 9,900
9,900 9,950
9,950 10,000
10,000
412
414
417
419
421
12,750 12,800
12,800 12,850
12,850 12,900
12,900 12,950
12,950 13,000
13,000
554
557
559
561
564
424
426
428
431
433
13,000
13,050
13,100
13,150
13,200
566
569
571
573
576
1,000
1,050
1,100
1,150
1,200
1,050
1,100
1,150
1,200
1,250
21
22
24
25
27
4,000
4,050
4,100
4,150
4,200
4,050
4,100
4,150
4,200
4,250
139
141
143
146
148
7,000
7,050
7,100
7,150
7,200
7,050
7,100
7,150
7,200
7,250
281
284
286
288
291
10,000
10,050
10,100
10,150
10,200
1,250
1,300
1,350
1,400
1,450
1,300
1,350
1,400
1,450
1,500
28
30
31
33
34
4,250
4,300
4,350
4,400
4,450
4,300
4,350
4,400
4,450
4,500
151
153
155
158
160
7,250
7,300
7,350
7,400
7,450
7,300
7,350
7,400
7,450
7,500
293
295
298
300
303
10,250 10,300
10,30010,350
10,35010,400
10,40010,450
10,450 10,500
436
438
440
443
445
13,250 13,300
13,30013,350
13,35013,400
13,40013,450
13,450 13,500
578
580
583
585
588
1,500
1,550
1,600
1,650
1,700
1,550
1,600
1,650
1,700
1,750
36
37
39
40
42
4,500
4,550
4,600 4,650
4,700 4,550
4,600
4,650
4,700
4,750
162
165
167
170
172
7,500
7,550
7,600
7,650
7,700
7,550
7,600
7,650
7,700
7,750 305
307
310
312
314
10,500
10,550
10,600
10,650
10,700
10,550 10,600
10,650
10,700 10,750 447
450
452
455 457
13,500
13,550
13,600
13,650
13,700
13,550
13,600
13,650
13,700
13,750
590
592
595
597
599
1,750
1,800
1,850
1,900
1,950
1,800
1,850
1,900
1,950
2,000
43
45
46
48
49
4,750
4,800
4,850
4,900
4,950
4,800 4,850
4,900
4,950
5,000
174 177
179
181
184
7,750
7,800
7,850
7,900
7,950
7,800
7,850
7,900
7,950
8,000
317
319
322
324
326
10,750 10,800
10,800 10,850 10,850 10,900
10,900 10,950
10,950 11,000
459
462
464 466
469
13,750
13,800
13,850
13,900
13,950
13,800
13,850
13,900
13,950
14,000 602
604
607
609
611
2,000
2,000 2,050
2,050 2,100
2,100 2,150
2,150 2,200
2,200 2,250
51
53
55
57
59
5,000
5,000 5,050
5,050 5,100
5,100 5,150
5,150 5,200
5,200 5,250
186
189
191
193
196
8,000
8,000 8,050
8,050 8,100
8,100 8,150
8,150 8,200
8,200 8,250
329
331
333
336
338
11,000
11,000 11,050
11,050 11,100
11,100 11,150
11,150 11,200
11,200 11,250
471
474
476
478
481
14,000
14,000 14,050 14,050 14,100
14,100 14,150
14,150 14,200
14,200 14,250
614
616
618
621
623
2,250
2,300
2,350
2,400
2,450
2,300 2,350
2,400
2,450
2,500
61
63
65
67
69
5,250
5,300
5,350
5,400
5,450
5,300
5,350
5,400
5,450 5,500
198
200
203
205
208
8,250
8,300
8,350
8,400
8,450
8,300
8,350
8,400
8,450
8,500
341
343
345
348
350
11,250
11,300
11,350
11,400
11,450
11,300
11,350
11,400
11,450
11,500
483
485
488
490
493
14,250
14,300
14,350
14,400
14,450
14,300
14,350
14,400
14,450
14,500
626
628
630
633
635
2,500
2,550
2,600
2,650
2,700
2,550
2,600
2,650
2,700
2,750
71
73
75
77
79
5,500
5,550
5,600
5,650
5,700
5,550
5,600
5,650
5,700
5,750
210
212
215
217
219
8,500
8,550
8,600
8,650
8,700
8,550 8,600
8,650 8,700
8,750
352
355
357
360 362
11,500
11,550
11,600
11,650
11,700
11,550
11,600
11,650 11,700
11,750
495
497
500
502
504
14,500
14,550
14,600
14,650
14,700
14,550
14,600
14,650
14,700
14,750
637
640
642
645
647
2,750
2,800
2,850
2,900
2,950
2,800
2,850
2,900
2,950
3,000
81
83
85
87
89
5,750
5,800
5,850
5,900
5,950
5,800
5,850
5,900
5,950
6,000
222
224
227
229
231
8,750
8,800
8,850
8,900
8,950
8,800
8,850
8,900
8,950
9,000 364 367
369
371
374
11,750
11,800
11,850
11,900
11,950
11,800
11,850
11,900
11,950
12,000
507
509
512
514
516
14,750 14,800
14,800 14,850
14,850 14,900
14,900 14,950
14,950 15,000
649
652
654
656
659
18
10,050
10,100 10,150
10,200
10,250
13,050
13,100
13,150
13,200
13,250
Answer Keys and Instruction for Activity #3
Q1.
What is Anna’s total income in 2012? .............................................................. $10,148
$9,850 in wages from her W-2, and $298 in interest income from her 1099.
Q2.
Does Anna have to file a Maryland tax return? ..............................................
Yes
Her income exceeds the $10,000 filing requirement for tax year 2013.
What form should Anna use?

First, you need to determine which form(s) you can use. Anna is eligible to use Form
503 (a blank Form 503 is provided in pages 38 and 39 for this activity.) To be eligible
for you to use Form 503, ALL of your answers must be NO to the questions on the back
of Form 503. She must complete Form 503 to get her refund.

Enter Anna’s address and Social Security number in the appropriate spaces on the
front of Form 503.
See Anna’s completed From 503 on page 38.

Complete the sections for filing status and exemptions.
Anna is a dependent taxpayer since she is a dependent on her parents return. Dependents
cannot claim an exemption for themselves, so check the check box number 6, Dependent
taxpayer, and enter 0 in the Exemption Box (A).

Enter Anna’s total income on line 1.
Anna’s total income is $10,148.
$9,850 from line 1 of federal Form 1040EZ and $298 from line 2 of Form 1040EZ. Her
wage income $9,850 should all be entered on line 1a of Maryland Form 503.
Q3.
Figure Anna’s standard deduction by using Worksheet 1 (shown below) from page 9
of the state tax instruction booklet. Enter result on line 2............................. $1,522
36
Q4.
Figure Anna’s net income. Enter result on line 3.....................................
$8,626
Q5.
Is Anna eligible for an exemption amount on Exemption? ......................
NO
She is not eligible for an exemption because she checked the dependent box under filing
status.

Enter Anna’s taxable net income on line 5.

Find Anna’s Maryland tax from the tax table on page 35 in the booklet. Enter Anna’s
Maryland tax on Line 6.

Enter her adjusted Maryland tax on line 8.

What is Anna’s local tax?
Using the worksheet shown on page 32 of the course material (you can find the detail
information on page 12 of the Maryland Resident Tax booklet), the chart indicates that
Anna is subject to a local income tax rate of .0283 since she lives in Baltimore County.
Multiply the amount on line 5 (taxable net income) by the rate for Baltimore Country
(.0283) and enter her local tax on line 9. Carry this amount to line 11.

Add line 8 and line 11. Enter her total Maryland state and local income tax on line 12.

Complete lines 14 and 15, and enter the total in line 16.

Enter on line 17 the amount of tax withheld from her wages, which are shown in box 16
on her W-2.

Enter on line 19 the same amount on line 17.

Determine whether Anna has to pay additional income tax, or she receives her refund.
o If line 16 is more than line 19, subtract line 19 from line 16, then enter the
Balance Due on line 20.
o If line 16 is less than line 19, subtract line 16 from line 19, then enter the
Overpayment amount on line 21.

Complete the DIRECT DEPOSIT OF REFUND section to have her refund deposited
directly into her bank account, if she will receive a refund.

Anna must sign and date to complete Form 503.

She completed her tax return on March 1, 2014.
37
Where the Money Comes From
Other Special
Funds
11%
Federal Fund
Revenue
27%
Other General
Funds
5%
Fund Transfers
0%
Higher Education
Revenues
11%
Transportation
Revenues
6%
Fuel Tax
2%
Individual Income
Tax
22%
Lottery
2%
Sales Tax
12%
40
Corporate Income
Tax
3%
Where the Money Goes
Public Safety
Related
5%
Natural Resources
and Environment Higher Education
16%
2%
Public Debt
3%
Human Resources
7%
Other
6%
Reserve Fund - all but
Sunny Day
1%
Transportation
10%
Legislative,
Judicial, Legal
2%
Health
28%
Elementary &
Secondary Education
20%
41