Can I Deduct Federal Taxes From My Maryland Return?
You cannot claim federal income taxes as a deduction on your Maryland state income tax return. You can, however, claim state income tax as a deduction on your federal taxes. When you calculate your Maryland income tax, the starting point will be your taxable federal income. The state then requires you to adjust that figure for Maryland taxable income.
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Adjusted Gross Income
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The first step in calculating your Maryland state income tax is to take the adjusted gross income you calculate on the front of your federal 1040 form. If you're married and filed a joint federal return but choose to file separately at the state level, you must first recalculate your AGI as if you'd filed separate federal forms. You then add to that figure any sums exempt from federal, but not state taxes, such as interest on bonds from other states.
More Adjustments
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Once you've made the additions to your federal AGI, you continue to make further adjustments. If you earned income outside Maryland, for example, you subtract the out-of-state paychecks from your AGI. While you claim the same number of exemptions on your state tax form as the federal, they're worth less: For the 2010 tax year, for example, each Maryland state exemption was only $3,200. If you only resided in the state for part of the year, Maryland only lets you claim part of the exemption.
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Deductions
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If you itemize deductions on your federal Schedule A, you can still choose to take the standard deduction on your Maryland state tax form. If you took the standard federal deduction, however, you cannot itemize deductions for state taxes. The state standard deduction is lower than the one you claim on federal taxes, and unlike the federal standard, varies according to your income. Even if you choose to deduct Maryland state income tax on Schedule A, you cannot claim them as a deduction when paying state taxes.
State Tax Deduction
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You can only deduct Maryland state tax if you itemize deductions on your federal forms. You can deduct amounts you paid to the state during the tax year, including money withheld from your paycheck; estimated tax payments on self-employment income; and any state income taxes you paid for prior years. You can also claim a deduction for Maryland property taxes on your Schedule A, and state taxes on personal property such as boats or cars.
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