The General Instructions for Maryland form 502UP state:
"Section 10-815 of the Tax-General Article of the Annotated Code of Maryland requires every individual, or individuals filing jointly, who receives taxable income which is not subject to Maryland withholding, or from which not enough Maryland tax is withheld to file a Declaration of Estimated Tax, if the income can be expected to develop a tax of more than $500 in excess of the Maryland withholding. Furthermore, Sections 13-602 and 13-702 stipulate that any individual so required to file, who either (1) fails to file on the date or dates prescribed; (2) fails to pay the installment or installments when due or (3) estimates a tax less than ninety (90) percent of the developed tax shown on the return for the current tax year and less than 110% of the tax that was developed for the prior year, shall be subject to penalty and interest."
Did you pay at least within $500 of the eventual tax due? Did you pay these taxes quarterly? The IRS and the states run a pay-as-you-go system - you have to pay through the year, not just at the end.
Were your doing withholding on a W-2? or paying estimate taxes?
Does anything in the paragraph from the state give you pause?
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