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The Maryland RELIEF Act was signed on Tuesday, February 16th, creating new individual and business tax changes. Among those listed in the MD Comptroller’s Tax Alert, were some relevant provisions for our clients:
MD Subtractions for 2020 and 2021
• Coronavirus Relief Payments: To the extent included in federal taxable income, taxpayers (businesses and individuals) may subtract Coronavirus relief payments including grants or loans applied for after March 5, 2020 on their Maryland tax return.
• Unemployment Benefits: To the extent included in federal adjusted gross income, taxpayers may subtract the amount of unemployment benefits received during the taxable year on their Maryland return. This subtraction is only available to taxpayers with a filing status of single, married filing separate, or dependent with a federal adjusted gross income (FAGI) of less than $75,000, and filers with married filing joint, head of household, or surviving spouse status with a FAGI of less than $100,000.
Changes to the New Pass-Through Entity Tax Election
Pass-through entities can now elect to pay the tax imposed with respect to certain shares of ALL members of the pass-through entity, rather than only resident members. Each member can then claim a credit against the income tax for their proportionate share of the tax paid by the pass-through entity.
Sales and Use Tax Credit
• Credit is available for each of the 3 following months: March, April and May 2021
• Available if gross amount of sales and use tax required to be paid does not exceed $6,000
Credit amount is equal to the lesser of $3,000 or the sales and use tax collected during the month for which the vendor qualifies for the credit
Business Unemployment Contributions
• Employer’s 2021 tax rate will be calculated based on their non-pandemic experience by excluding the 2020 fiscal year and instead by using the last three fiscal years of 2017, 2018 and 2019.
• Small businesses and nonprofits with fewer than 50 employees can defer unemployment insurance tax payments in calendar year 2021 to January 2022.
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As always, Lanigan, Ryan, Malcolm & Doyle will continue to monitor the evolving business landscape and add updates to our COVID-19 resource center as they become available. As an “essential” business in the state of Maryland, we will continue to work for clients to meet upcoming deadlines, while emphasizing the safety of both our clients and our team. Please know that your Lanigan, Ryan team members are always available for questions.