Maryland

[hschetrompf]

I filled my taxes through TurboTax Thursday. On Friday, Maryland Governor Passed the relief act 

“The RELIEF Act provides $500 for low-income families and $300 for individuals who filed for the earned income tax credit in 2019. The money would be available for the next three years in the form of tax refunds.”

Do I need to amend my Maryland taxes to ensure I get this? 

[DawnC]

You may need to file the amendment, but only if the change in the credit affects you.  If you qualify for the federal earned income tax credit, you also qualify for the Maryland earned income tax credit. The credit is equal to 50% of the federal tax credit.   The additional payments will be sent out like the IRS sent stimulus payments.  They are not claimed on your tax return, but the change in the refundable part of the credit may change your tax return.  

However, if the law was just passed, the credit is not updated in TurboTax, so you will need to wait to file the amendment until the credit has been modified.  

This relief begins with immediate payments of $500 for families and $300 for individuals who filed for the Earned Income Tax Credit.  Similar to federal stimulus payments, no application for relief is necessary.

Marylanders would qualify for these payments who annually earn: 

• $50,954 ($56,844 married filing jointly) with three or more qualifying children
• $47,440 ($53,330 married filing jointly) with two qualifying children
• $41,756 ($47,646 married filing jointly) with one qualifying child
• $15,820 ($21,710 married filing jointly) with no qualifying children

The payments provide $178 million in relief to 400,000 Marylanders.  In addition, the legislation increases the refundable Earned Income Tax Credit to 45% for families and 100% for individuals.   If this change will increase your refund amount, you will want to amend, but later, after the change has been made in TurboTax.  

[Murt]

Are the one-time economic impact payments of $300 to individuals and $500 to joint filers under the Maryland Relief Act of 2021 considered income for federal income tax purposes? Below link says they could be.
https://www.marylandtaxes.gov/RELIEFAct/docs/Maryland-Economic-Impact-Payment-FAQs-FINAL.pdf

Relevant quote from the link (emphasis mine):

"Your Maryland economic impact payment is not taxable on your Maryland state tax return. However, unless exempted, it will be included as income at the federal level. The amount, if any, included in your federal adjusted gross income would then be eligible for a subtraction modification at the state level."

State of Maryland did not provide a 1099 or any other form for this payment.

So I have three questions:

1) Is this $300 or $500 payment considered income for federal tax purposes?

2) If it is considered income for federal tax purposes, how do we report this income in Turbo Tax, and what form will we use?

3) After adding it in federal portion, how do we subtract it from Maryland state return?

Thank You

@DawnC 

[RobertB4444]

1.  The Maryland Relief Payment is considered income for federal tax purposes. 

2.  It is entered as 'Other Income' on the federal return.  In 'Wages and Income' scroll down to 'Less Common Income' and 'Miscellaneous Income.'  Enter the description 'Maryland Relief Act' and the amount that you received.

3. In your Maryland return, under 'Here's the Income that Maryland Handles Differently' scroll down to 'Miscellaneous' and look for 'Coronavirus Relief Payment Subtraction' and put in the amount you received and that it was received from the state of Maryland.

That'll do it.