Maryland Military Filing Information
MILITARY MEMBERS WORKING OUTSIDE OF MARYLAND
Military and other individuals whose domicile is in Maryland, but who are stationed or work outside of Maryland, including overseas, retain their Maryland legal residence. Such persons do not lose Maryland residence just because of duty assignments outside of the State.
MILITARY PERSONNEL WHO ARE LEGAL RESIDENTS OF MARYLAND:
Without overseas pay: Must file a resident return (Form 502 or Form 503) and report all income from all sources, wherever earned. You must calculate the local portion of the tax regardless of whether you were stationed in Maryland or not. The location of your legal residence determines which county should be entered on your return.
With overseas pay: Same as above, may subtract up to $15,000 in military pay earned outside U.S. boundaries or possessions, depending upon total military income.
PART-YEAR RESIDENTS AND MILITARY
You must prorate your exemptions based on the percentage of your income subject to Maryland tax. Your return must show all income reported on the federal return, regardless of when or where earned. However, you are permitted to subtract income received when not a resident of Maryland. You must adjust your standard or itemized deductions and exemptions.
If you are a nonresident military member filing a joint return with your civilian spouse, see Administrative Release 1.
MILITARY SERVICEMEMBER'S CIVILIAN SPOUSE
1. Under the Act, a military servicemember’s civilian spouse who is domiciled in a state other than Maryland and who is in this State solely to be with the servicemember serving in compliance with military orders is a nonresident of the State regardless of how long the civilian spouse has resided in the State, and:
a. Is not subject to Maryland taxation on income for services performed within this State (e.g. wages, salaries or tips) — the civilian spouse must timely, and annually, submit Maryland Form MW507 to the employer asserting and attesting to the civilian spouse’s exempt status from withholding requirement; and
b. Is subject to Maryland taxation on that portion of federal adjusted gross income derived from tangible property, real or personal, permanently located in this State, non-service income from a business, trade, or profession or occupation carried on in this State (e.g. partnership income), and income from Maryland lottery prizes.
2. If a nonresident civilian spouse who relocated to Maryland solely to be with the military servicemember serving in compliance with military orders as set forth in Paragraph 1, voluntarily remains in the State after the servicemember has relocated elsewhere, the civilian spouse will become subject to Maryland income tax law either as a resident or as a nonresident of the State (see below) with respect to income from salary, wages or compensation received for services performed in this State.
a. A servicemember’s civilian spouse is generally deemed to be staying in the State voluntarily if the servicemember has relocated to another state, the District of Columbia, or a non-combat zone country.
b. A civilian spouse who is domiciled in a state other than Maryland and who has resided within Maryland for less than 183 days of the taxable year, is a nonresident of Maryland and is only taxable on that portion of federal adjusted gross income derived from tangible property, real or personal, permanently located in this State, income from a business, trade, profession or occupation carried on in this State and income from Maryland lottery prizes.
c. A civilian spouse who is domiciled in a state other than Maryland and who has resided in this State for 183 days or more of the taxable year, is a statutory resident and is taxable as a resident of Maryland on all income derived from sources both within and outside this State.
3. A civilian spouse subject to Maryland income tax law may be entitled to a credit on the home-state return for income subject to tax by both states. See Administrative Release No. 3, and Maryland Form 502CR and instructions
Up to $15,000 of military pay included in your federal adjusted gross income that you received while in the active service of any branch of the armed forces and which is attributable to service outside the boundaries of the U.S. or its possessions. To compute the subtraction, follow the directions on the MILITARY OVERSEAS INCOME WORKSHEET. If your total military pay exceeds $30,000, you do not qualify for the subtraction. Up to $5,000 of military retirement income received by a qualifying individual during the tax year. To qualify, you must have been a member of an active or reserve component of the armed forces of the United States, an active duty member of the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey, a member of the Maryland National Guard, or the member’s surviving spouse or ex-spouse.
COMBAT ZONE EXTENSION
Maryland allows the same six-month extension for filing and paying personal income taxes for military and support personnel serving in a designated combat zone or qualified hazardous duty area and their spouses as allowed by the IRS. For more detailed information visit www.irs.gov. If you are affected by the extension enter 912 in one of the code number boxes to the right of the telephone number area.
KILLED IN ACTION
Maryland will abate the tax liability for an individual who is a member of the U.S. Armed Forces at death, and dies while in active service in a combat zone or at any place from wounds, disease, or injury incurred while in active service in a combat zone. To obtain an abatement, a return must be filed. The abatement will apply to the tax year in which death occurred, and any earlier tax year ending on or after the first day the member served in a combat zone in active service. Maryland will also abate the tax liability of an individual who dies while a military or civilian employee of the United States, if such death occurs as a result of wounds or injury incurred outside the United States in a terrorist or military action. In the case of a joint return, Maryland applies the same rules for these taxpayers as does the IRS. For more information on filing a return, see Publication 3 Armed Forces Tax Guide available at www.irs.gov. Place code number 915 in one of the boxes marked “code numbers” to the right of the telephone number area, if you are filing a return for a taxpayer who was killed in action meeting the above criteria.
Up to $5,000 of military retirement income received by a qualifying individual during the tax year if the taxpayer has not yet attained the age of 65; or up to $10,000 of military retirement income received by a qualifying individual if the taxpayer is age 65 or over. To qualify, you must have been a member of an active or reserve component of the armed forces of the United States, an active duty member of the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, the Coast and Geodetic Survey, a member of the Maryland National Guard, or the member’s surviving spouse or ex-spouse.