MD Form 502 Line 17b

[megempryor]

Token #1087080 submitted to TurboTax

On TurboTax, MD Form 502b Line 17b the figure is $7,847 which I am guessing is calculated in the following manner:  $10,000 MD Limitation minus my Property Taxes $2,153 = $7,847 (amount entered by Turbo Tax on Line 17b).

I've read MD Tax instructions on how to calculate Line 17b and is kind of confusing and on MD's Tax website actually has this phrase "Maryland will accept in reasonable interpretation of limitation reported on line 17b".

Last year (2021) I compared TurboTax MD Form 502 Line 17b with a tax preparer from a local MD Comptroller Office. The MD Comptroller actually put in $10,000 rather than what TurboTax had ($7,782; $10,000 minus property tax).

What is the proper way to calculate MD 502 Line 17b?

Any assistance or clarification on calculating MD Form Line 17b would be greatly appreciated.

[AnnetteB6]

The 2022 Maryland Individual Income Tax Instructions explained Form 502 line 17b this way:

Certain items of federal itemized deductions are not eligible for State purposes and must be subtracted from line 17a. State and local income taxes used as a deduction for federal purposes must be entered on line 17b (there are certain limitations on the deduction amount of state and local tax. For more information, visit www.marylandtaxes.gov). Also, any amounts deducted as contributions of Preservation or Conservation Easements for which a credit is claimed must be added to line 17b. 

This is saying that If you used itemized deductions on your Federal return and part of your deductions were from state and local income taxes (which is the total of state and local income tax plus real estate tax plus personal property tax -- Schedule A line 5d), then an adjustment must be made on the Maryland return because state and local income taxes are not a deduction for Maryland purposes.  

Additionally, this category of deduction is limited to $10,000 on the Federal return for a Married Filing Joint filing status.  Therefore, line 17b takes the maximum of $10,000 that was deducted from the Federal return and subtracts the real estate tax amount and any personal property tax amounts.  The leftover portion of the $10,000 is attributed to state and local income tax.  That leftover amount is reported on line 17b and subtracted from the itemized deduction allowed on the Maryland return.

If you are using one of the CD/downloaded versions of TurboTax, click Forms in the upper right corner of the screen and highlight Maryland Form 502 to see the detailed calculation in the Itemized Deduction Smart Worksheet just above line 17b.