Historically, Maryland has allowed a state tax credit on a Maryland resident income tax return for taxes paid to other states; however, this credit has not been available to offset the local county tax calculation. In a decision issued last month, the United States Supreme Court declared that Maryland’s refusal to grant a credit for taxes paid to nonresident states against the local county tax violates the dormant commerce clause of the Constitution of the United States. What does this mean for Maryland taxpayers? If you are a Maryland resident that earned income outside of the state, you may be able to amend your Maryland income tax returns to claim a Maryland tax credit for the local county taxes paid. We have created a list of clients effected by this case and will be sending out letters to those clients within the next week. The state of Maryland does not expect to finalize the amended return process until mid-August but we will be able to amend the returns as soon as they complete their updates. Going forward, Maryland residents may be entitled to a higher income tax credit based on their out of state taxable income. As always, we are more than happy to look at your specific situation to help maximize your benefits or discuss any questions you may have.
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