CORRECTION: A Tax Answer last Thursday gave the wrong amount for the exemption retirees who are 65 or older or disabled can claim for pension benefits on their Maryland return. The correct figure for 1993 is $13,100.
Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Sun will publish answers through April 15.
Q: Are military pensions subject to taxation by the state of Maryland?
A: It depends. For retirees 65 years or older, or any age if totally disabled, there is a $12,300 exemption for pension benefits on your Maryland return. But note that this exemption is reduced by any Social Security benefits. If you receive military income as a retiree, were an enlisted member of the military at the time of retirement and were at least 55 years old on the last day of the taxable year, you are allowed to subtract up to $2,500 more on your return. However, this $2,500 subtraction is reduced by half the amount of your federal adjusted gross income (AGI) over $17,500. So, if your federal AGI is $20,500, you would reduce the $2,500 subtraction to $1,000 as follows:
$20,500 - $17,500 = $3,000
$3,000/2 = $1,500
$2,500 - $1,500 = $1,000
Q: I have a question that I think a lot of people might be interested in, given the declining real estate market. If I sell my house for less than I paid for it, can I take the loss as a deduction?
A: There is no tax relief when you experience a loss on the sale of your principal residence.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.
Readers may submit questions by phone, mail or fax. Selected questions will be answered in The Sun and The Evening Sun.
To ask a tax question by phone, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after the greeting.
Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore 21278. Fax questions to The Sun's Business News Department at (410) 783-2517. Callers are encouraged to leave their names and phone numbers. Questions will not be answered by phone.