How does the two income marriage deduction work?

[ladydebs85]

Hello,

could someone please explain in detail what the two income marriage deduction is? While doing our taxes the following came up:

Allocate Federal Amounts to my husband (what does that even mean?)

Taxable State Refunds - Total $0 - husband (with a blank space to enter $ amount)

Child and Dependent Care Expenses -  Total $3,000 - husband (with a blank space to enter $ amount)

I am not sure what to enter, or should I even enter anything or leave blank and move on with the automatically calculated dollar amount of $1,200 on the previous page regarding the two income marriage deduction?

Any insight would be super helpful - thank you!

[JohnB5677]

We'd love to help you complete your tax return but need more information. Can you please clarify your question?

What state do you live in?

Is it a community property state?

[ladydebs85]

Maryland

[ThomasM125]

The two income deduction is a tax deduction on the Maryland return when both spouses have income. You need to enter the amount of each item listed that belongs to each spouse. If you share an item equally, you can just divide it by two.

[ladydebs85]

Thanks for that information, but I am still not understanding what to enter exactly for my husbands part for the taxable state refund and the childcare expense or leave that blank? It never asked for my info, just if there is anything to input for my husband. If we leave those two spots blank it automatically goes to the $1,200 deduction amount. Should we leave this as is? 

[GeorgeM777]

Your husband's taxable state refund refers to whether your husband received a refund last year (tax year 2021) from Maryland.   Such refund, if it exists, would likely have been reported to you on Form 1099-G.  If a taxpayer itemizes deductions on their tax return, rather than taking the standard deduction, and receives a state refund, then it is possible that the state refund my be taxable on their federal return.  

Did your husband receive a refund from Maryland for tax year 2021?  If yes, include that amount in the box.  If not, you can leave that box blank.  

@ladydebs85

[ladydebs85]

Thank you for your input. We always file jointly, so yes, we did receive a Maryland tax refund in 2021 and I will enter that amount. What about the childcare expense portion? This is so new to me as I have never heard of the two income marriage deduction before. 

[AbrahamT]

You can claim two separate tax breaks for child or dependent care costs on your Maryland return. The first benefit is a state tax deduction (or subtraction) which reduces your taxable income. If you have eligible child or dependent care expenses, first determine your federal tax credit by completing the calculation on federal Form 2441. Transfer the amount of child or dependent care expenses (not the federal tax credit) claimed on the federal form to line 9 of Maryland Form 502. You can subtract actual expenses up to the legal maximums of $3,000 for one child or $6,000 for two or more children.