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25 Cards in this Set
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101. Betty and John, a husband and wife, file a joint Federal income tax return. They may file separate Marylandincome tax returns if which of the following apply? A. John and Betty maintain their principle place of abode in the same Maryland county on December 31stof the current year B. John is a Maryland resident and Betty is a Virginia resident and therefore a nonresident of Maryland C. John and Betty are both Maryland residents but John only works in Virginia and not in Maryland D. John and Betty both live in Maryland and are residents but both work only in Virginia |
B. John is a Maryland resident and Betty is a Virginia resident and therefore a nonresident ofMaryland A husband and wife who file a joint Federal income tax return may file separate Maryland income tax returns if: One spouse is a resident and the other spouse is a nonresident. The spouses are domiciled, or maintain principal places of abode, in different counties on the last day of the taxable year The spouses have different tax periods. The Comptroller determines that the specific circumstances are such that filing a separate return is acceptable. |
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102. Julie lives in Florida. She takes a one year assignment with her same company to work in Maryland in 2014.Julie flies to Maryland each Monday and back home to Florida each Friday during the year, staying in acompany apartment during the week. She continues to be paid from the Florida office, stays registered to vote inFlorida, keeps her Florida driver’s license, and maintains her permanent home there during this assignment.Based on this information, how does Maryland view Julie in terms of residency? A. Julie is a resident of Maryland for 2014 by virtue of the total number of days she spent in Maryland B. Julie is a resident of Maryland for 2014 because she maintained a place of abode for more than 6 months during the year C. Julie is a not a resident of Maryland based on domicile and the fact that her time in Maryland was temporary and transitory in nature and that she kept her Florida residence, driver’s license, and voting registration D. Julie is a resident of Maryland because she worked there in 2014 for more than 180 days |
C. Julie is a not a resident of Maryland based on domicile and the fact that her time in Maryland was temporary and transitory in nature and that she kept her Florida residence, driver’s license, and voting registration A domicile and an abode are not the same thing. An individual may have several places of abode, but only onedomicile. The Maryland Court of Appeals defined “domicile” as “that place where a person has his or her true, fixed,permanent home, habitation, and principal establishment without any present intention of removing therefrom, andto which place he or she has, whenever he or she is absent, the intention of returning”. Factors considered indetermining whether domicile is established include: Where homes are located. Where business is conducted. Where cars are registered and driver’s license is issued. Where bank accounts are maintained. Where the taxpayer registers to vote. Terms of employment contracts. Where personal belongings are stored. |
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103. Henry sold his home and ended his Maryland residence on April 1st, 2014 by moving to New York. He earned asalary in Maryland. Which of the following is true regarding his 2014 Maryland tax return? A. Henry does not have to file a Maryland return because he maintained a residence for less than 6months B. Henry should file Form 515 - Nonresident Local Return based on the fact that he earned wages inMaryland C. Henry should file Form 505 - Nonresident Return based on the fact that he earned wages in Marylandand that his permanent home is now in a state other than Maryland D.Because he started the year as a resident, Henry must file Form 502 - Resident Return, for the portionof the year during which he maintained Maryland residence, even if less than six months |
D. Because he started the year as a resident, Henry must file Form 502 Resident Return, forthe that portion of the year during which he maintained Maryland residence, even if less than six months An individual who began or ended legal residence in Maryland during the tax year, must file as a resident for thatportion of the year during which he or she maintained Maryland residence, even if less than six (6) months. |
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104. Up to a maximum of what amount per taxable year of the advance payments made by a purchaser to eachprepaid tuition contract with Maryland Prepaid College Trust may be subtracted from Federal AGI? A. $1,500B. $2,000C. $2,500D. $3,000 |
C. $2,500 Up to a maximum of $2,500 per taxable year of the advance payments made by a purchaser to each prepaid tuitioncontract with Maryland Prepaid College Trust or by a contributor to an investment account under the MarylandCollege Investment Plan or the Maryland Broker-Dealer College Investment Plan may be subtracted from FederalAGI. Both the Comptroller and the Maryland Attorney General have taken the position that the $2,500 annual limitapplies to each beneficiary, regardless of whether contributions are spread among one or more of the investmentportfolios that are part of the Investment Plan. |
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105. A subtraction may be taken for unreimbursed automobile travel expenses for all of the following except: A. With a charitable organization whose principle purpose is to provide medical care B. With a nonprofit volunteer fire company C. To provide assistance to a handicapped individual who is enrolled as a student in a Maryland community college D. To take a child to a public elementary school |
D. To take a child to a public elementary school A subtraction may be taken for unreimbursed automobile travel expenses for the following volunteer serviceactivities: With a volunteer fire company. As a volunteer for a charitable organization whose principal purpose is to provide medical, health or nutritional care. To provide assistance (other than providing transportation to and from the school) for handicapped students at a Maryland community college. |
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106. Ben and Jennifer have taxable income and are filing a joint Federal return. Ben earned $1,200 and Jenniferearned $35,000 in 2014. What is the amount they may be able to subtract as a family with two incomes on theirMaryland income tax return? A. $0B. $550C. $1,200D. $1,500 |
C. $1,200 If the taxpayer and his or her spouse have taxable income and are filing a joint Federal return, they may be able tosubtract up to $1,200, or the income of the spouse with the lower income (whichever is less) on the Marylandincome tax return. |
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107. Sam contributes $27,500 in 2014 to one account in the College Investment Plan for his daughter Rachel. Samalso contributed $27,500 in 2014 to one account in the College Investment Plan for his son Alex. Sam candeduct a total of what amount from his Federal adjusted gross income, which he uses to calculate his Marylandtaxable income? A. $0B. $2,500C. $5,000D. $27,500 |
C. $5,000 Sam can deduct $2,500 per tax year for each of Years 1 through 11 (11 x $2,500 = $27,500) for the contribution tohis daughter’s account. Since he also contributed $27,500 in 2014 to one account for his son Alex, he can deduct anadditional $2,500 per tax year for each of Years 1 through 11, for a total subtraction of $5,000 per tax year from hisFederal adjusted gross income, which is used to calculate his Maryland taxable income. |
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108. In 2014, Olivia had $4,000 of qualified capital expenses, approved by the Department of Business andEconomic Development, incurred in connection with the establishment of a new winery. What amount of creditcan she claim on her 2014 return? A. $250B. $500C. $750D. $1,000 |
D. $1,000 Businesses and individuals may claim a credit of 25% of qualified capital expenses, approved by the Department ofBusiness and Economic Development, made in connection with the establishment of new wineries or vineyards orcapital improvements to existing wineries or vineyards. |
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109. All of the following are refundable business tax credits in Maryland except: A. One Maryland Economic Development Tax Credit B. Biotechnology Investment Incentive Tax Credit C. Clean Energy Incentive Tax Credit D. Enterprise Zone Tax Credit |
D. Enterprise Zone Tax Credit One Maryland Economic Development Tax Credit Biotechnology Investment Incentive Tax Credit Clean Energy Incentive Tax Credit Health Enterprise Zone Hiring Tax Credit Film Production Activity Tax Credit Small Business Research and Development Tax Credit |
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110. Nonresidents of Maryland are still subject to tax of which of the following sources of income? A. All gambling winnings regardless of the source B. Any income derived from a business, trade, profession or occupation carried on in the state of Maryland C. The portion of Federal adjusted gross income that is derived from tangible real or personal property temporarily located in Maryland D. All nonresident sources of income are taxed by Maryland if the individual spent more than 30 days in the state during the taxable year |
B. Any income derived from a business, trade, profession or occupation carried on in thestate of Maryland Nonresidents are subject to tax on all gambling winnings derived from Maryland sources so answer A is incorrect.They are also subject to tax on that portion of Federal adjusted gross income that is derived from tangible real orpersonal property permanently located in Maryland. Since Answer C indicates the property is temporary it isincorrect. Answer D is incorrect because it stipulates the length of time spent in the state as being the definingcriteria. The correct answer is B as this income is taxable since it was derived in the state of Maryland. |
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111. Maryland has a reciprocal tax agreement with all of the following states except:
A. New Jersey B. Pennsylvania C. Virginia D. West Virginia |
A. New Jersey If the taxpayer lives in Maryland and work in Washington, D.C., Pennsylvania, Virginia or West Virginia he or sheshould file his or her state income tax return with Maryland. Maryland has a reciprocal agreement with these states. |
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112. Tanya, a single filing taxpayer, can be claimed as a dependent on her parent's Federal tax return. She earned$8,050 for the tax year. What filing status should she use when considering her Maryland tax return? A. Single taxpayer B. Dependent taxpayer C. Head of household D. Joint Return |
B. Dependent taxpayer Any person who can be claimed as a dependent on his or her parent's (or another person's) Federal return shoulduse the Dependent taxpayer filing status. Single Dependent taxpayers, regardless of whether income was earned orunearned, are not required to file a Maryland income tax return unless their gross income is $10,150 or more. |
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113. Mary Jones, age 67, had a $9,964 income in 2014 and she paid $245 per month in rent. She also paid all herown utilities. Since her income is close to $10,000 and if her rent is more than what amount per month, MaryJones should apply for the Renters’ Tax Credit? A. $117B. $147C. $178D. $219 |
A. $117 Mary Jones, age 67, had a $9,964 income in 2014 and she paid $245 per month rent. She also paid all her ownutilities. With an income close to $10,000, if she paid rent that is more than $117 per month, Mary Jones shouldapply for the credit. |
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114. Andrew and Darlene are both 67 years old, file a joint return and had a combined income of $55,000. Based ontheir situation which of the following is applicable? A. They are only eligible for the $3,200 Maryland exemption amount B. They can claim an additional $1,000 exemption on their Maryland return for being 65 years of age orolder C. They can claim an additional $1,600 exemption on their Maryland return for being 65 years of age orolder D. They are only eligible for the $3,950 Federal exemption amount |
B. They can claim an additional $1,000 exemption on their Maryland return for being 65 yearsof age or older In addition to the exemptions allowed on the taxpayer’s Federal return, the taxpayer and his or her spouse arepermitted to claim exemptions for being age 65 or over or for blindness. These additional exemptions are in theamount of $1,000 each. |
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115. Brian and Ashley are married taxpayers, filing joint tax returns. They have decided to use the Standard Deduction for their Maryland tax return. Their income for the tax year is $52,500. What is the amount of theirStandard Deduction? A. $1,500B. $2,000C. $3,000 D. $4,000 |
D. $4,000 Heads of households, surviving spouses, and married taxpayers filing jointly deduct $3,000 if their income is$20,000 or less; 15% of their income if their income is $20,000 to $26,666; and $4,000 if their income is $26,667and over. |
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116. A subtraction may be taken from Maryland adjusted gross income for reasonable and necessary adoption fees,court costs, attorney fees, and other expenses not exceeding what amount, assuming the child does not havespecial needs? A. $4,000B. $5,000C. $6,000D. $7,000 |
B. $5,000 A subtraction may be taken for reasonable and necessary adoption fees, court costs, attorney fees, and otherexpenses not exceeding $5,000 ($6,000 for a special needs child adopted through a public or nonprofit adoptionagency) that a parent incurs in the adoption of a child who is a Maryland resident at the time of the adoption. |
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117. In 2009, Holly paid $9,000 to the Prepaid College Trust for the purchase of a single year of future tuition for herson, Michael, in the year 2015. When the benefit is used in 2015 a year of tuition and mandatory fees at TowsonUniversity, where Michael is enrolled, costs $13,000. Neither Holly nor Michael will include the $4,000 increasein their Federal taxable income that year. However, Holly requests a reduced refund in 2014, and receives$10,000. What amount will Holly include in her Federal taxable income in 2014? A. $0B. $500C. $1,000D. $4,000 |
C. $1,000 If a Section 529 program account, such as the Prepaid College Trust and the College Investment Plan, is refundedor distributed to the account holder and not used for qualified higher education expenses, the account holder will berequired to include any earnings realized in his or her Federal taxable income. Generally, any earnings on amountsnot used for qualified higher education expenses will also be subject to a 10% Federal surtax. In this case, Holly willinclude $1,000 ($10,000 - $9,000) in her Federal taxable income that year. |
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118. Which of the following obligations has the Comptroller’s office defined as subject to Maryland income tax? A. Interest on US obligations that is exempt under Federal law B. Government mortgage agency securities (from Freddie Mac for example) C. Small Business Administration (SBA) debentures D. Maryland municipal and state obligations |
B. Government mortgage agency securities (from Freddie Mac for example) Interest and dividends, less related expenses, attributable to an obligation or security of another state is added toFederal AGI. This includes interest from mutual funds that invest in non-Maryland state or local obligations. Intereston U.S. and foreign government obligations is exempt if also exempt under Federal law or treaties. |
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119. Shonda is a resident of Maryland. She won $10,000 from a lottery game during 2014. What amount of incometax will automatically be withheld from her winnings? A. $0B. $700C. $875D. $1,000 |
C. $875 Income tax will automatically be withheld, just as it is from a paycheck, if the taxpayer’s winnings total more than$5,000. According to Maryland law, prize winnings of more than $5,000 are subject to withholding for both Federaland state income tax purposes. Maryland taxes will be withheld at a rate of 8.75% on a resident's winnings. For anonresident, the withholding rate is 7.00%. |
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120. Which of the following statements is true regarding the Maryland itemized deduction method? A. To use the itemized deduction method a taxpayer can use the standard deduction on his or her Federal return B. Maryland has recoupled with the Federal 2014 itemized deduction threshold limiting itemized deductions C. A taxpayer is required to itemize deductions on his or her Maryland return simply because he or she itemized on his or her Federal return D. High-income taxpayers are not required to reduce their Federal itemized deductions |
B. Maryland has recoupled with the Federal 2014 itemized deduction threshold limitingitemized deductions Maryland has recoupled with the Federal 2014 itemized deduction threshold limiting itemized deductions. Certainhigh-income taxpayers are required to reduce their Federal itemized deductions. If the taxpayer had to reduce his orher total Federal itemized deductions, he or she use the Itemized Deduction Worksheet (14A) in the 2014 State &Local Tax Forms & Instructions to calculate the amount of state and local income taxes to enter on line 17b of Form502. |
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121. When considering residency status, if the taxpayer’s permanent home is or was in Maryland or his or herpermanent home is outside of Maryland, but the taxpayer maintained a place of abode in Maryland for morethan six months of the tax year and the taxpayer was physically present in the state for how many days or more,he or she must file a full-year resident return? A.100 days B. 175 days C. 183 days D. 200 days |
C. 183 days The taxpayer is a resident if his or her permanent home is or was in Maryland (the law refers to this as domicile) orthe taxpayer’s permanent home is outside of Maryland, but he or she maintained a place of abode (that is, a place tolive) in Maryland for more than six months of the tax year. If this applies to the taxpayer and he or she wasphysically present in the state for 183 days or more, he or she must file a full-year resident return. |
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122. Tiana’s job required her to go away from Maryland for three years, and she was not sure if she was comingback. Which of the following in true regarding Tiana’s Maryland tax obligation? A. Her domicile has changed simply because her job assignment sent her out of Maryland B. Temporary absences from Maryland constitute a change of domicile C. She will not have to pay tax in Maryland D. She will have to pay tax in Maryland |
D. She will have to pay tax in Maryland Tiana’s domicile has not changed simply because her job assignment sent her out of Maryland. Temporaryabsences from Maryland do not constitute a change of domicile. She will have to pay tax in Maryland. |
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123. Maryland’s taxation of pay and benefits received by members of the U.S. Armed Forces is generally the sameas Federal because the starting point for Maryland taxable income is Federal taxable income. However,Maryland provides a subtraction up to what amount of military retirement income received by qualifiedindividuals? A. $5,000B. $7,500C. $10,000D. $15,000 |
A. $5,000 Maryland provides a subtraction up to $5,000 of military retirement income received by a qualifying individual duringthe tax year. |
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124. Nonresident taxpayers who are not subject to the local income tax are subject to a special nonresident tax rateof what percent in addition to the regular state tax rate for their income level? A. 1.00%B. 1.25%C. 2.50%D. 3.20% |
B. 1.25% Nonresident taxpayers who are not subject to the local income tax are subject to a special nonresident tax rate of1.25%, in addition to the regular state tax rate for their income level. Other nonresident taxpayers may be subject tothe local tax, if the jurisdiction in which they reside imposes a local tax on Maryland residents. |
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125. Carlos receives his 2014 Form W-2 and sees and an entry labeled as "STPICKUP" appears on the first line inbox 14 in the amount of $500. Carlos must include what amount of this $500 on his Maryland Form 502 taxreturn? A. $0B. $100C. $250D. $500 |
D. $500 The pickup amount is the mandatory retirement deductions that a taxpayer paid during the year that are not subjectto Federal tax, but are subject to Maryland state and local tax. If the taxpayer is due a refund on his or her Marylandtax, failure to add the "state pickup amount" on his or her 502 Maryland tax return may result in his or her refundbeing delayed. |
