Maryland and Military Retirement Credit

[KREC]

Does the $15000 military retirement pay deduction for over 55 years of age, in Maryland, need to be pro-rated by the number of months of residency? I was a resident for 9 months (the first three in FL, last 9 in Maryland).  The Maryland tax forms have applied the full deduction in Turbo Tax. The language in the instructions is as follows:

If you receive or the spouse of a military retiree receives military retirement income, you will be able to subtract up to $5,000, with an increase to the first $15,000 for individuals who are at least 55 years old on the last day of the taxable year, of your military retirement income from your federal adjusted gross income before determining your Maryland tax.  The retirement income must have been received as a result of any of the following military service:

• Induction into the U.S. Armed forces for training and service under the Selective Training and Service Act of 1940 or a subsequent Act of similar nature
• Membership in a reserve component of the U.S. armed forces
• Membership in an active component of the U.S. armed forces
• Membership in the Maryland National Guard

[DMarkM1]

Yes you will get a deduction for 15,000 or the amount of military retirement whichever is less if you are age 55 or older and the retirement was earned by you or your spouse's military service.  

[KREC]

Thanks for the response. My question has to do with whether or not the 15,000 needs to be prorated based on the number of months I was a Maryland resident in 2021?

[JohnW152]

There is no indication in the Maryland instructions of the need for pro-rating this subtraction for a part-year resident.

According to Special Instructions for Part-Year Residents in the 2021 state & local tax forms & instructions, You may include only subtractions from

income that apply to income subject to Maryland tax.

Part-year residents include a subtraction for income received while a  nonresident.

[wasimoni]

I am not getting the maryland state military retirement credit

[DMarkM1]

First, verify in the "My Info" section that you have indicated you are "Military" and "Retired."  Next verify in the "Retirement...1099R" topic that in the follow page titled "Where is this distribution from?" you have indicated it is "Military Retirement".  Also, for the follow on page asking what type of retirement, you should indicate "Non-qualified."  

If you are using a TurboTax desktop version you can check the MD form 502R line 10 to see the exclusion (5000 or 15,000 depending on your age) and also on the form 502 line 13.

In TurboTax online versions the exclusion will show up as part of the subtractions in the MD tax summary.  

1. "Tax Tools" in the left hand menu
2. "Tools"
3. "View Tax Summary" in the main screen
4. "MD Tax Summary" in the left hand menu

You might also see the exclusion in the "Income" section of the MD state interview.  "Edit" the "Income" section and at the top of the page titled "Here's Income that MD handles differently" you will see the pension exclusion.