Determine which additions to income apply to you. Write the correct amounts on lines 2-5 of Form 502. Instructions for each line:
Line 2. TAX EXEMPT STATE OR LOCAL BOND INTEREST.
Enter the interest from non-Maryland state or local bonds or other obligations (less related expenses). This includes interest from mutual funds that invest in non-Maryland state or local obligations. Interest earned on obligations of Maryland or any Maryland subdivision is exempt from Maryland tax and should
not be entered on this line.
Line 3. STATE RETIREMENT PICKUP.
Pickup contributions of a State retirement or pension system member. The pickup amount will be stated separately on your W-2 form. The tax on
this portion of your wages is deferred for federal but not for state purposes.
Line 4. LUMP SUM DISTRIBUTION FROM A QUALIFIED RETIREMENT PLAN.
If you received such a distribution, you will receive a Form 1099R showing the amounts distributed. You must report part of the lump sum distribution as an addition to income if you file federal Form 4972. Use the LUMP SUM DISTRIBUTION WORKSHEET (12A) to determine the amount of your addition.
OTHER ADDITIONS TO INCOME.
If one or more of these apply to you, enter the total amount on line 5 and identify
each item using the code letter: CODE LETTER
a. Part-year residents: losses or adjustments to federal income that were realized or paid when you were a nonresident of
b. Net additions to income from pass-through entities not attributable to decoupling.
c. Net additions to income from a trust as reported by the fiduciary.
d. S corporation taxes included on line 8 of Maryland Form 502CR, Part A, Tax Credits for Income Taxes Paid to Other
States. (See instructions for Part A of Form 502CR.)
e. Total amount of credit(s) claimed in the current tax year to the extent allowed on Form 500CR for the following
Business Tax Credits: Enterprise Zone Tax Credit, Maryland Disability Employment Tax Credit, Small Business Research
& Development Tax Credit, Maryland Employer Security Clearance Costs Tax Credit (do not include Small Business First-Year Leasing Costs Tax Credit), and Cellulosic Ethanol Technology Research and Development Tax Credit. Also, the amount of carryover claimed in the current tax year for the expired Maryland Employment Opportunity Tax Credit is added to income.
f. Oil percentage depletion allowance claimed under IRC Section 613.
g. Income exempt from federal tax by federal law or treaty that is not exempt from Maryland tax.
h. Net operating loss deduction to the extent of a double benefit. See Administrative Release 18 at www.marylandtaxes.
i. Taxable tax preference items from line 5 of Maryland Form 502TP. The items of tax preference are defined in IRC Section 57. If the total of your tax preference items is more than $10,000 ($20,000 for married taxpayers filing joint returns) you must complete and attach Maryland Form 502TP, whether or not you are required to file federal Form 6251 (Alternative Minimum Tax) with your federal Form 1040.
j. Amount deducted for federal income tax purposes for expenses attributable to operating a family day care home or a child care center in Maryland without having the registration or license required by the Family Law Article.
k. Any refunds of advanced tuition payments made under the Maryland Prepaid College Trust, to the extent the payments
were subtracted from federal adjusted gross income and were not used for qualified higher education expenses, and any refunds of contributions made under the Maryland College Investment Plan or the Maryland Broker-Dealer College Investment Plan, to the extent the contributions were subtracted from federal adjusted gross income and were not used for qualified higher education expenses. See Administrative Release 32.
l. Net addition modification to Maryland taxable income when claiming the federal depreciation allowances from which
the State of Maryland has decoupled. Complete and attach Form 500DM. See Administrative Release 38.
m. Net addition modification to Maryland taxable income when the federal special 5-year carryback period was used for a net operating loss under federal law compared to Maryland taxable income without regard to federal provisions. Complete and attach Form 500DM. See Administrative Release 38.
n. Amount deducted on your federal income tax return for domestic production activities (line 35 of Form 1040).
o. Amount deducted on your federal income tax return for tuition and related expenses. Do not include adjustments to income for Educator Expenses or Student Loan Interest
cd. Net addition modification to Maryland taxable income resulting from the federal deferral of income arising from
business indebtedness discharged by reacquisition of a debt instrument. See Form 500DM and Administrative Release
dm. Net addition modification from multiple decoupling provisions. See the table at the bottom of Form 500DM for
the line numbers and code letters to use.
dp. Net addition decoupling modification from a pass-through entity. See Form 500DM.