Earned Income Tax Credit
If you qualify for the federal earned income tax credit and claim it on your federal return, you may be entitled to a Maryland earned income tax credit on the state return equal to 50 percent of the federal tax credit. The Maryland earned income tax credit will either reduce or eliminate the amount of the state and local income tax that you owe.
For tax year 2007, the earned income credit is allowed if your earned and adjusted gross income is:
- Less than $12,590 ($14,590 for married filing jointly), you have no children and you are 25-64 years of age.
- Less than $33,241($35,241 for married filing jointly) and you maintained a home for a child for at least six months of the year.
- Less than $37,783 ($39,783 for married filing jointly) and you have two or more children.
To calculate the amount of your tax credit, complete the State Earned Income Credit Worksheet included in Instruction 18 of the Maryland tax booklet.
You may qualify for the Maryland earned income tax credit even if you're not required to file a Maryland tax return. However, you must file a return to claim the state tax credit, using Form 502 or 503 (or Form 505 or 515 if you are a nonresident).
Refundable Earned Income Tax Credit
If the earned income tax credit exceeds your Maryland tax liability, you may be entitled to a refund, if you have at least one dependent that can be claimed as an exemption. Complete the Refundable Earned Income Credit Worksheet in Instruction 21 of the tax booklet.
The refundable earned income credit is calculated as 20 percent of your federal earned income credit, less your state income tax liability. If this amount is zero or less, no refund is due. The refundable amount of the credit may not be carried forward to any other tax year.
Local Earned Income Tax Credit
If you are a Maryland resident who qualifies for the state earned income credit, you may also qualify for a local earned income tax credit. Complete the Local Earned Income Credit Worksheet included in Instruction 19 of the tax booklet. The unused local income tax credit may not be refunded or carried forward to any other tax year.
Nonresidents, part-year residents
Nonresidents and part-year residents must prorate their earned income credits on Form 505 or 515, based on the ratio of Maryland adjusted gross income to federal adjusted gross income.
Free tax preparation
Free tax preparation services are available at Volunteer Income Tax Assistance (VITA) sites to help low- and moderate-income taxpayers file their federal and Maryland income tax returns free of charge. Trained volunteers will prepare your returns, make sure you claim all the tax credits to which you are entitled, and even file your returns electronically - for free.
To find a VITA site in your area, call 410-685-0525 or 1-800-492-0618. Hearing impaired individuals can call TTY 410-685-2159. When calling, please indicate if you plan to file for a prior tax year.
Maryland taxpayer service offices
In addition, if you bring a completed copy of your federal return and all related documents to any of our taxpayer service offices, we will complete your Maryland income tax return and even file it electronically for you for free. Our offices are open Monday - Friday, 8:00 a.m. - 5:00 p.m.
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Our Services
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Maryland Committee for Children
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Baltimore Cash Campaign
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Volunteer Income Tax Assistance
