On May 27, 2014, the US Supreme Court granted the Comptroller of Maryland’s petition of certiorari in Comptroller of the Treasury of Maryland v. Brian Wynne, et ux (No. 13-485). The hearing is scheduled for the October 2014 term. The court will decide whether the Constitution prohibits a state from taxing all income earned by its residents by mandating or limiting a credit for taxes paid to other jurisdictions.
Historically, Maryland has allowed a state tax credit on a Maryland resident income tax return for taxes paid to other states; however, this credit has not been available to offset the local county tax calculation. This treatment was challenged in the Maryland courts and held as unconstitutional by the Maryland Court of Appeals, a taxpayer victory. The Comptroller of Maryland appealed the decision to the Supreme Court last year.
Since the specific hearing date is not yet known or when a decision will be rendered, we recommend you continue filing protective claims for open years.
By 2019, Maryland’s estate tax exemption will match the federal exemption. On May 15, 2014, the governor signed legislation recoupling Maryland to the federal unified credit over a five-year period. Since 2002, the state has been decoupled from the federal exemption, limiting the exemption from state estate tax to $1 million. Beginning in 2015, this $1 million exemption will gradually increase as follows, providing relief to Maryland taxpayers.
$5.9 million (projected federal exemption indexed for inflation)
In a given year, estates valued below the exemption amounts will not have an estate tax liability in Maryland. However, Maryland is one of the few states that also assesses an inheritance tax. Plan carefully to maximize the value of assets transferred from one generation to another.
For more information on this topic, or to learn how Baker Tilly tax specialists can help, contact our team.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.