The CARES Act of 2020: In response to the COVID-19 pandemic, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. The Act temporarily altered several tax provisions enacted under the Tax Cuts and Jobs Act (TCJA) intended to increase cash flow and reduce the income tax burden on corporations, partnerships, and individuals. Relief includes: the temporary and retroactive reinstatement of Net Operating Loss (NOL) carryback provisions for tax years 2018, 2019, and 2020 previously repealed under the TCJA in Internal Revenue Code (IRC) § 172; a decreased limitation on business interest expenses subject to deduction in tax years 2019 and 2020 under IRC § 163(j); and the elimination of loss limitations imposed on non-corporate taxpayers by the TCJA under IRC § 461(l) for tax years 2018, 2019, and 2020. The CARES Act also provided a technical correction giving qualified business improvements (QIP) a 15-year recovery period, thereby making those assets eligible for 100% bonus depreciation under IRC § 168. For more information on Maryland’s conformity to the CARES Act, see the Tax Alert issued July 24, 2020 at MD taxes
Form 502 Changes
- Direct Deposit of Refund section on page 4 of Form 502 and its Instruction 22 were expanded for taxpayers to authorize the State of Maryland to disclose to their bank and to National Automated Clearing House Association (NACHA) any tax return information necessary to make the deposit, such as their name and the name(s) (Line 51d.) as it appears on the bank account, in order for the Comptroller’s office to deposit the refund directly into their account.
- Local Tax Income Tax Rate: For a complete list of counties and city local tax rates visit the Maryland State website.
Subtractions and Credits
- Law Enforcement Officer Deduction - Up to $5,000 of income earned by a law enforcement officer residing in the Maryland political subdivision in which the officer is employed if the crime rate in that political subdivision is higher than the State’s crime rate.
- Live Where You Work Deduction - The value of a subsidy for rental expenses received by a resident of Howard County under the “Live Where You Work” program of the Downtown Columbia Plan.
- PTE Tax paid on resident member's distributive or pro rata shares of income credit - if you are a Maryland resident and you are the beneficiary of a trust or a Qualified Subchapter S Trust which elected to pay the tax imposed with respect to resident members’ distributive or pro rata shares, you may be entitled to a credit for your share of that tax. See Form 502CR Instructions
and attach the Maryland Schedule K-1 (504) for the trust.
Senate Bill 987, Acts of 2020: This bill passed by Maryland
General Assembly provides for the redevelopment of Laurel Park in
Anne Arundel County and Pimlico Race Course in Baltimore City, by
allowing a subtraction modification of a resident for gain recognized
as a result of the direct or indirect transfer or conveyance of any
property located, or used, at or within Laurel Park and Pimlico sites;
and any portion of the Bowie Race Course Training Center Property;
and the amount of income recognized as a result of any expenditure
of funds directly or indirectly by the State investment in the sites.
Senate Bill 523, Acts of 2020: This is a result of Senate Bill
523 (Acts of 2020), adding a definition of “pass-through entity’s
taxable income,” which requires pass-through entities to pay the
tax imposed on distributive or pro rata shares of nonresident and
nonresident entity members, and gives pass-through entities the
option to pay the tax imposed on distributive or pro rata shares of
income of resident members.
House Bill 276, Acts of 2020: This bill modifies the definition
of law enforcement officers to include members of the Maryland-
National Capital Park Police (MNCPP) or The Washington Suburban
Sanitary Commission Police Force (WSSCPF) who live in Maryland-
Washington Regional district with crime rates higher than the State’s
crime rate. These officers are now eligible for the subtraction of
$5,000 of income.
House Bill 1510, Acts of 2020: This bill adds as a subtraction of
the value of a subsidy for rental expenses received by a resident of
Howard County under the “Live Where You Work” program of the
Downtown Columbia Plan.