(STL.News) Maryland has a new set of tax laws on the books. The Maryland General Assembly passed HB 1, which took effect at the beginning of 2021. This bill contains many changes to how Marylanders file and pay their taxes. Here are four things you need to know about the future of tax law in Maryland:
- There is a new flat-tax rate for income below $150k per year
- The amount that can be deducted from adjusted gross income (AGI) increases from $3,000 to $4,400
- For those filing as head of household or single filer without dependents, there is an additional deduction for unreimbursed job expenses
- Income earned by nonresidents who work in Maryland is taxable in the state
The Child Tax Credit
Since the Covid-19 pandemic struck, there have been ongoing concerns on how economies will survive. There is much focus on how best to cushion the financial capacity of families. One way is through the stimulus provision. The government’s issuing of the monthly payment emanates from tweaking the federal child tax law. These efforts aim at preventing the shrinkage of the temporary, more comprehensive tax credit.
This is the first time we see the distribution of half of the tax credits as monthly payments. Previously, families only benefitted as they were filing their returns. Nowadays, for every child between six and seventeen years, a family will receive $250. For the children below six years, they will get $300. Which families are eligible for full credit? Any household with an income, not more than $75000 (Single filer), $150000 (married couples filing together), and $115500 (head-of-household filers). The knowledge on child tax credit helps in avoiding scammer’s traps.
Make Sure You Have Relevant Forms to Hand
When filing for returns, having the correct documents is critical. Different taxpayers use different forms depending on various aspects. One example is the W-2 form. Before knowing what it is, let’s first note that you can create W2 online forms online. This makes you save a lot of time as compared to visiting the county or federal tax departments. If you are an employer in Maryland, running a business and paying remunerations, you need this form.
This includes those paying workers in noncash payments ($600 and above). It would help if you filed for every staff member. Note that the filing is mandatory regardless of whether you, as the employer, are related to the employee. The tax law focuses on withholding the medicare tax, social security, and income concerning the worker.
How Do the Credits and Deductions Work?
As a taxpayer, the credits and deductions are there to save you money. Generally, they bring about changes in what you owe the government, which means you end up paying less. What deductions do is reduce the taxable income, which automatically implies payment of lesser tax. Know that when it comes to deductions and credits, there are two main categories. These are the individual and business types. The same case applies to reliefs.
What happens when I make a charitable donation, and I have a standard deduction? In this situation, you cannot file for a deduction in any way. Even so, there is an Act (CARES Act) that gives you a shot through claiming for a limited deduction. Ahead of taking part in a donation, the IRS advises checking if the organization is subject to tax-deductible donations.
Special Tax Law Provisions
There are special tax law provisions for natural calamities such as floods, hurricanes, and wildfires. They help taxpayers survive the loss of property—the same case to businesses as they get a cushion to avoid being financially unstable. If you are in Maryland and get affected by any catastrophe, you need to have the relevant possession or ownership documents, and the government will do the rest.
Tax payment is an obligation to everyone. As a taxpayer in Maryland, there is a need to understand the different tax payment and filing procedures. At the same time, understand the trends and tips as this makes you follow the right techniques. Consider having the proper documents as well.