Maryland State Taxes/Retired Military

[Benjismom]

FYI for those of you who pay Maryland State Taxes and receive a military retirement check, you may be able to "write off" $5,000 this year. I'm not too sure of the particulars but I qualify and it's cutting my state taxes considerably this year. On the Comptrollers website, click on whats new for 2006 and it will give you the form that needs to be filled out

[marianne]

It occurred to me this may be part of a MD initiative to exempt military retirement income from state income tax. I found this link http://www.afsa.org/congress/FSRetir...background.cfm which implies that is the case.
"Currently, the bills only allow military retirees with 20 years of active-duty service to exempt 100 percent of their military retirement income. Language in the legislation provides for a gradual phase-in over a five-year period of this exemption. Therefore, 20 percent of military retirement income would be exempt in 2006, 40 percent in 2007, etc."
I hadn't heard anything about this until you posted the link - thanks! That's one more reason to live in Maryland.

[Pete (Premo)]

I thought it was only for veterans who are over 60.

[marianne]

Originally Posted by Pete

I thought it was only for veterans who are over 60.

It used to be that the subtraction was only for people over 55. The new law repeals the age requirement.

Under the old law, this subtraction phased-out beginning at only $17,500 in federal gross income and no subtraction was allowed for federal adjusted gross income over $22,500. Again, the new law seems to repeal any phase-out.

Here's a link to the Senate bill mlis.state.md.us/2006rs/fnotes/bil_0002/sb0022.pdf.
Apparently Gov Ehrlich has been lobbying for this since 2002. I had no idea.

[itsbob (Premo)]

Originally Posted by marianne

It used to be that the subtraction was only for people over 55. The new law repeals the age requirement.

Under the old law, this subtraction phased-out beginning at only $17,500 in federal gross income and no subtraction was allowed for federal adjusted gross income over $22,500. Again, the new law seems to repeal any phase-out.

Here's a link to the Senate bill mlis.state.md.us/2006rs/fnotes/bil_0002/sb0022.pdf.
Apparently Gov Ehrlich has been lobbying for this since 2002. I had no idea.

Only problem is O'Malley is Governor now, I'm betting we won't make it to the 40%..

So last year you had to be over 55, and Pete qualifed with like 6 or 7 years to spare, and this year now I'll qualify?? It's cool when us young retirees qualify for some kind of benefit too!!

[Dixie]

Not sure Pete - I'm only in a medium range salary. Here's what they had on Comptrollers website last year:

Military Retirement Income
If you or the spouse of military retiree receives military retirement income, you will be able to subtract up to $5,000 of your military retirement income from your federal adjusted gross income before determining your Maryland tax for tax year 2007. 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.
The benefit also applies to persons separated from active duty employment with the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey.

To claim the benefit, complete Form 502 and follow the instructions included in the resident tax booklet for line 14. Be sure to indicate code letter u on line 14.

Pension exclusion

If you are a retired military member 65 years of age or older, you may also qualify for Maryland's pension exclusion.




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[marianne]

[quote=Dixie;2638241]Not sure Pete - I'm only in a medium range salary. Here's what they had on Comptrollers website last year:
[quote]

Here's what's on the Comptrollers website now
Maryland Tax Tip Brochures - Income Tax Tips

Is there a subtraction for military retirees?

If you or the spouse of a military retiree receives military retirement income, you may be able to subtract up to $5,000 of your military retirement income from your federal adjusted gross income before determining your Maryland tax for tax year 2007. To qualify, you must have been a member of an active or reserve component of the U.S. armed forces, a member of he Maryland National Guard, or you must have retired after from active duty with the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey. To claim the benefit, complete Form 502 and follow the instructions included in the resident tax booklet for line 14. Be sure to indicate code letter u on line 14.

The instructions for line 14 code u state:
Up to $5,000 of military retirement
income received by a qualifying individual
during the tax year. To qualify, you
must have been a member of an active
or reserve component of the armed
forces of the United States, an active
duty member of the commissioned
corps of the Public Health Service, the
National Oceanic and Atmospheric
Administration, or the Coast and Geodetic
Survey, a member of the Maryland
National Guard, or the member’s surviving
spouse or ex-spouse.

Without actually filing, I'm not seeing an age minimum for this tax credit. But I'm not seeing the 40% phase out either