Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
Q: Are there any major changes in the Maryland 1994 tax return compared to 1993?
A: There are a couple of significant changes to the 1994 Maryland tax return. The most apparent is Form 502, which now more closely resembles that of the federal 1040.
The state also has reversed its position on the reporting of cents. Last year's attempt to eliminate the cents column was too confusing, so the form will again have a cents column. Also now, married couples who file a joint federal return but who are not both residents of Maryland may file separately. Other situations where separate returns may be filed include when the couple has different tax periods or the spouses live in different counties.
There is a new form 502PE for taxpayers age 65 and over, or who are totally disabled, and who are able to claim the pension exclusion. In prior years, the pension exclusion was computed on the bottom of Page 2 of Form 502. Form 502PE is now used to compute the exclusion, which can be a maximum of $13,600 for 1994.
And four counties raised their local piggy-back rates for the 1994. Queen Anne's rate is now 55 percent; St. Mary's, Somerset and Wicomico each increased the local tax rate to 60 percent. It is important to remember the local income tax rate to use depends on where taxpayers live, not where they work. Additionally, the local tax rate is limited to 50 percent of the state tax on any income subject to the maximum 6 percent tax rate.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
Members of the Maryland Association of Certified Public Accountants will answer tax questions from readers until April 15 and also offer a Tax Tip of the Week.
To submit a question, 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 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear the tax tip. Selected questions will be answered in the Business section.