How to File Your Maryland Tax Return for 2020: A Step-by-Step Guide

Filing your Maryland tax return for the 2020 tax year required careful preparation, a clear understanding of the correct forms, and strict attention to deadlines. Whether you are an individual taxpayer or a small business owner, following the proper process is essential to ensure your return is accurate and submitted on time. Doing so helped you avoid penalties, interest charges, and delays in receiving your refund.

This guide is designed to help Maryland residents and small business owners file their 2020 income tax return correctly. It explains who needs to file, which forms to use, essential deadlines, payment options, and how to track your refund or balance due. It also includes step-by-step filing instructions and a checklist to ensure your return is complete before submission.

All information in this article applies to the 2020 tax year only. Tax laws, rates, and filing rules may have changed in later years. If you are filing for any year other than 2020, visit the Maryland Comptroller’s Office website or contact their customer assistance line to confirm current requirements.

Understanding the 2020 Maryland filing process was necessary to comply with state tax laws and maximize eligible deductions and Maryland tax credits. By accurately preparing and submitting your state return, you could reduce the risk of costly mistakes, make full use of available tax benefits, and avoid unnecessary correspondence from state agencies.

Overview of Maryland State Income Tax for 2020

Maryland residents, part-year residents, and certain nonresidents were required to file a Maryland income tax return for the 2020 tax year if they met specific residency and income requirements. Knowing whether you were required to file was the first step toward meeting your state tax obligations. This section outlines who must file, critical special situations, filing deadlines, and key tax changes applied in 2020.

Who Needs to File a Maryland Tax Return

You needed to file a Maryland return for 2020 if you were a Maryland resident and were required to file a federal income tax return. Your Maryland gross income was equal to or greater than the minimum filing levels for your status. The minimum filing levels for taxpayers under age 65 in 2020 were:

Single (including dependent taxpayers): You must file if your annual gross income was at least $12,400. This applied even if someone else claimed you as a dependent, which means many students and part-time workers still had to file.
Married Filing Jointly: You must file if your combined gross income with your spouse was at least $24,800. This ensured that all household income was reported together, which could affect your tax rate and eligibility for Maryland tax credits.
Married Filing Separately: You must file if your gross income was $12,400. This threshold matched the single filer amount, so married individuals who chose this status still had the exact income requirement.
Head of Household: Filing was required if your gross income was $18,650. This status typically applies if you were single and supported qualifying dependents, giving you higher thresholds than single filers.
Qualifying Widow(er): You must file if your gross income was $24,800 or higher. This status allowed certain widows or widowers with dependent children to use joint filer tax benefits for two years after a spouse’s death.

For taxpayers aged 65 or older in 2020, the filing thresholds increased slightly to reflect additional standard deduction amounts:

Single, age 65 or over: You had to file if your gross income was $14,050. The higher threshold recognized increased deductions available to older taxpayers.
Married Filing Jointly (one spouse 65 or over): Filing was required if your combined income was at least $26,100. The added amount accounted for one spouse’s age-based deduction.
Married Filing Jointly (spouses 65 or over): You must file if your combined income reaches $27,400. This was the highest threshold, reflecting deductions for spouses aged 65 or older.
Married Filing Separately, age 65 or over: You had to file if your gross income was $12,400. The threshold remained the same for younger filers under this status, so age did not increase the limit.
Head of Household, age 65 or over: Filing was required if your gross income was $20,300 or higher. This reflected the higher deduction available for older household heads.
Qualifying Widow(er), age 65 or over: You had to file if your gross income was at least $26,100. The increased limit accounted for the age-based deduction available to surviving spouses.

Special Situations

Part-Year Residents: If you moved into or out of Maryland at any time during 2020, you were required to file a Maryland resident income tax return for the part of the year you lived in the state. Special instructions for part-year residents were included in the 2020 Form 502 instructions.
Military Personnel: If your legal residence was in Maryland in 2020, you had to file a Maryland return even if stationed outside the state. Certain military pay qualified for specific exemptions, and instructions for military taxpayers were provided in the 2020 Form 502 guidelines.

Key Filing Deadlines for 2020

The deadline for the 2020 tax year to file your Maryland income tax return was April 15, 2021. If you were granted a filing extension, your deadline moved to October 15, 2021. An extension to the filing did not extend the deadline to pay any taxes owed; late payments after April 15, 2021, could result in penalties and interest.

Key Changes for the 2020 Tax Year

Several essential tax changes applied to Maryland taxpayers in 2020:

Maryland Decoupling from Certain CARES Act Provisions: The state did not adopt specific federal tax changes, including business interest expense deduction limitations, excess business loss limitations for non-corporate taxpayers, and net operating loss provisions.
Pass-Through Entity Tax Changes: Under Senate Bill 523, pass-through entities could choose to pay tax on distributive or pro rata shares of income for resident members.
Expanded Law Enforcement Officer Subtraction: Maryland-National Capital Park Police and Washington Suburban Sanitary Commission Police Force officers are now eligible for the $5,000 income subtraction.
Howard County Rental Subsidy Subtraction: A new subtraction was introduced for Howard County residents receiving rental expense subsidies under the “Live Where You Work” program.

Required Forms for Filing

Choosing the correct Maryland tax forms for the 2020 tax year was essential to ensure your return was processed accurately. The forms you needed depended on whether you were an individual taxpayer, sole proprietor, or pass-through entity owner. Using the wrong form could result in delays, missing credits, or incorrect tax calculations.

For Individual Taxpayers

The main form for Maryland residents in 2020 was Form 502 (Maryland Resident Income Tax Return). Depending on your income, deductions, and credits, you might also need one or more supporting schedules and forms:

Form 502: This was the primary Maryland resident income tax return form. Most individuals used it to report their yearly income, deductions, credits, and tax payments.
Form 502B (Dependents Information): You used this form to list all dependents you claimed, along with their identifying information. It was essential to determine your eligibility for certain Maryland tax credits.
Form 502R (Retirement Income Subtraction): This form helped you calculate the pension and retirement income exclusion, which reduced taxable income for eligible retirees.
Form 502CR (Tax Credits for Individuals): This form allowed you to claim various Maryland tax credits, such as credits for child care, earned income, or business-related incentives.
Form 502SU (Maryland Subtractions from Income): You used this form to claim Maryland-specific subtractions, such as certain retirement income, military pay, or contributions to Maryland 529 plans.
Form 502UP (Underpayment of Estimated Tax) calculates interest if you underpaid your estimated taxes throughout the year. It helped you avoid further penalties by documenting the underpayment.
Form PV (Payment Voucher): This was used when submitting a payment with your return. It ensured your payment was correctly applied to your account.
Form 502INJ (Injured Spouse Claim Form): This form protects the portion of a refund belonging to a spouse who was not responsible for the other spouse’s debt.

For Small Businesses & Pass-Through Entities

Small business owners and those operating pass-through entities in 2020 needed to use different forms depending on their business structure and filing election:

Form 502: Sole proprietors reported their business income and expenses on a federal Schedule C, then transferred the results to this form as part of their personal Maryland return.
Form 510 (Pass-Through Entity Income Tax Return): Partnerships, S corporations, and LLCs are taxed as partnerships. This form is used to report income and calculate tax for nonresident members.
Form 511 (Electing Pass-Through Entity Income Tax Return): Pass-through entities that chose to pay Maryland tax at the entity level for all members filed this form. It was introduced as part of the 2020 tax law changes.
Form 510C (Composite Pass-Through Entity Income Tax Return): This form was used when filing on behalf of nonresident individual members, combining their reporting into a single return.
Form 2 (Personal Property Return): Sole proprietorships and general partnerships with business property in Maryland had to file this with the Maryland Department of Assessments and Taxation by April 15, 2021, to report taxable business property.

All official Maryland tax forms for the 2020 tax year were available for download online or could be requested by the Maryland Comptroller’s Office at 410-260-7951. Using the official forms ensured that your submission met state requirements and avoided processing delays.

Step-by-Step Instructions for Completing Your Maryland Return

Filing your 2020 Maryland tax return required careful preparation and accurate completion of all necessary forms. By following these key steps, you could ensure your return was complete and reduce the risk of errors or delays.

Step 1: Prepare Your Federal Return and Gather Documents

Complete your federal income tax return first, since Maryland forms use figures from your federal return. Gather W-2s, 1099s, records of Maryland tax payments, and supporting documents for deductions or tax credits.

Step 2: Enter Personal and Filing Information

On Form 502, provide your name, address, Social Security number, county of residence, and political subdivision code. Select your filing status to match your federal return and complete Form 502B if claiming dependents.

Step 3: Report Income and Adjustments

Transfer income figures from your federal return to Form 502. Include Maryland additions, such as non-Maryland municipal bond interest, and apply allowable subtractions, like retirement income exclusions or Maryland 529 contributions.

Step 4: Determine Deductions, Exemptions, and Tax Liability

Choose between the Maryland standard deduction and itemizing deductions. Calculate exemptions based on your filing status and dependents, then use state tax tables to compute your state and local tax.

Step 5: Apply Credits and Record Payments

Claim eligible Maryland tax credits using Form 502CR to lower your tax owed. Enter Maryland withholding from your W-2s and 1099s and any estimated payments made during 2020.

Step 6: Finalize, Sign, and Submit Your Return

Determine whether you owe tax or qualify for a refund. Attach all required forms, sign your return (both spouses if filing jointly), and either electronically file or mail it to the correct address. Keep a copy for your records.

Common Mistakes to Avoid

Many taxpayers experienced delays or penalties in 2020 due to errors such as using the wrong political subdivision code, forgetting to attach W-2s, failing to report all income, or making math errors. Reviewing your return before submission helped prevent these issues.

Additional Steps for Sole Proprietors

If you were a sole proprietor, you first reported your business income and expenses on federal Schedule C, then transferred your net profit or loss to your Maryland Form 502. If you own taxable business property, you must also check eligibility for Maryland business tax credits and file Form 2 with the Maryland Department of Assessments and Taxation by April 15, 2021.

Additional Steps for Pass-Through Entities

If your business were a partnership, S corporation, or LLC taxed as a partnership, you would file Form 510 or Form 511, depending on your tax election. You also reported Maryland-specific additions and subtractions and calculated tax for nonresident members (Form 510) or all members (Form 511), issued Maryland Schedule K-1s, and kept detailed records for at least three years in case of an audit.

How to File Your Maryland Tax Return

For the 2020 tax year, Maryland allowed taxpayers to file electronically or by paper. The Comptroller’s Office encouraged e-filing for faster refunds, fewer errors, and secure submission.

Electronic Filing

Taxpayers could file using the free Maryland iFile system, approved commercial tax software, or an authorized tax professional. Electronic filing provides instant confirmation, reduces errors, and allows you to schedule payments up to the due date.

Paper Filing

Paper returns require blue or black ink, all necessary attachments (including W-2s and 1099s), and a valid signature. The correct mailing address depended on payment status:

Form 502 with payment: Comptroller of Maryland, Payment Processing, PO Box 8888, Annapolis, MD 21401-8888
Form 502 without payment: Comptroller of Maryland, Revenue Administration Division, 110 Carroll Street, Annapolis, MD 21411-0001
Form 510 or 511: Comptroller of Maryland, Revenue Administration Division, 110 Carroll Street, Annapolis, MD 21411-0001

If using a private delivery service like FedEx or UPS, send it to the Comptroller of Maryland, Revenue Administration Division, 110 Carroll Street, Annapolis, MD 21411-0001.

How to Make a Payment

For the 2020 Maryland tax year, payments were due by April 15, 2021, even if you filed for an extension. Late payments were subject to interest and penalties.

Online Payment Options

Maryland offered several electronic payment methods for faster and more secure transactions:

Direct Debit: When e-filing, you could authorize a withdrawal from your bank account and schedule it for any date up to the due date.
Bill Pay Service: The Comptroller’s online Bill Pay system allows you to pay from a bank account, whether you file electronically or on paper.
Credit Card Payment: Credit card payments can be made through the Comptroller’s website. The payment processor charges a service fee.

Traditional Payment Options

If you preferred to pay by mail, you could send a check or money order payable to “Comptroller of Maryland.” You must write your Social Security number and “2020 Form 502” on the payment, include Form PV (Payment Voucher), and mail it to the payment address listed in the Paper Filing section.

Deadlines and Penalties

Payment Deadline: The 2020 tax year payments were due by April 15, 2021. E-filers could schedule payments until April 30, 2021. Missing this deadline triggered interest and possible penalties.
Interest: Charged at 10% annually, calculated daily from the due date until paid. Even short delays increased the total amount owed.
Late Payment Penalty: Up to 10% of the unpaid tax if you missed the payment deadline. This was added on top of interest charges.
Late Filing Penalty: 5% of unpaid tax for each month or part of a month late, up to 25% maximum. Applied even if the tax was later paid in full.
Estimated Tax Interest: Applied if you did not pay enough tax during 2020 through withholding or estimated payments.

How to Track Your Refund or Balance Due

Knowing how to check your refund status or handle a balance due helped you stay informed and avoid unnecessary delays or penalties for the 2020 tax year.

Checking Refund Status

For 2020 returns, you could check your refund online at the Comptroller’s website or by phone. You needed your Social Security number and the exact refund amount from your return. Online tools provided the fastest updates, while phone lines offered assistance for those without internet access.

Processing Times for 2020 Returns

Refunds from electronically filed returns with direct deposits were typically issued within three business days after acknowledgment. Paper returns generally take 30 days or more, especially if a paper check is requested. Errors, missing information, or returns selected for review could significantly delay processing.

If You Owe Additional Tax After Filing

If you discovered you owed more tax after filing, you must file an amended return using Form 502X. Paying your tax promptly reduces additional interest and penalties. If you could not pay in full, the Comptroller’s Office could work with you to arrange a payment plan.

Final Filing Checklist

It was essential to review each step to ensure accuracy before submitting your 2020 Maryland tax return. Following this checklist helped taxpayers avoid delays, reduce questions related to their filing, and ensure that all payments, forms, and supporting documents were complete.

For Individual Returns (Form 502)

Complete your federal income tax return. To complete your Maryland tax forms accurately, you need figures from this return, which was prepared for the Internal Revenue Service (IRS).
Verify all Social Security numbers: Double-check that your own, your spouse’s, and any family members’ numbers are correct to avoid delays in processing your refund.
Confirm your local tax rate and political subdivision code: This determines the correct local portion of your Maryland taxes, so review the code in the Form 502 instructions before filing.
Attach all required forms: Include W-2s, 1099s, and any schedules such as Form 502B, 502R, 502SU, or 502CR to document income, deductions, and tax credits.
Review all calculations: Use the tax year 2020 worksheets to ensure your state returns match your federal figures and that math errors are avoided.
Sign and date your return: The Comptroller’s Office will not process unsigned tax returns. Both spouses must sign if filing jointly.
Include payment if required: If you owe Maryland tax, attach Form PV with your check or money order and mail it to the payment processing address.
Keep a copy for your records: Store a complete copy of your return and all forms in case state agencies or the Comptroller’s Office request additional information later.

For Small Business and Pass-Through Entity Returns

Complete your federal business return first: Sole proprietors, partnerships, and corporations must prepare their federal return before completing Maryland business tax forms.
Use the correct Maryland form: Sole proprietors filed Form 502, while pass-through entities used Form 510 or 511, depending on their election.
Include all supporting schedules: Attach documentation for deductions, business income, and credits claimed. Businesses claiming Maryland tax credits needed to provide proof of eligibility.
Verify identification numbers: Ensure the federal Employer Identification Number (EIN) and Maryland business account numbers are correct.
Sign and date the return: Authorized individuals must sign before submission.
Submit Form 2 if required: Businesses with taxable personal property in Maryland must file the Personal Property Return with the Department of Assessments and Taxation by the applicable deadline.
Retain business tax records: Keep all receipts, invoices, and tax forms for at least three years if the Comptroller’s Office or other state agencies require verification.

Frequently Asked Questions

What should I do if I missed the tax filing deadline for Maryland in 2020?

If you fail to submit your Maryland tax return by the April 15, 2021, deadline, you should do so as soon as possible. Late filing can result in penalties and interest from the Comptroller’s Office. If you are due a refund, file within three years of the deadline to remain eligible.

Can I direct file my Maryland tax return?

Yes, Maryland taxpayers can file their taxes directly through the Comptroller's free iFile system for the 2020 tax year. Through this option, you were able to electronically file without being subject to any income restrictions, prepare your forms online, and submit them securely. Direct filing helped reduce errors and provided faster refund processing than paper filing.

What Maryland deductions and tax credits are often missed?

Many taxpayers overlook Maryland-specific deductions and credits. Examples for the 2020 tax year include the pension exclusion, Maryland 529 plan contributions, certain military retirement income, and credits claimed on Form 502CR. Reviewing state instructions carefully ensures you claim all deductions and tax credits for which you qualify, reducing your overall tax liability.

How do I request an extension for my 2020 Maryland return?

To submit a request for an extension in the year 2020, those claiming Maryland tax credits must provide proof of their claim. You must submit Form PV along with extension code 27 and any payment due by April 15, 2021. Maryland honored federal income tax extensions filed with the IRS. An extension gave more time to file, but not more time to pay.

Can I file jointly if I moved in or out of Maryland during 2020?

Yes, part-year residents who were married in 2020 could file jointly. You would need only to report the income earned while a Maryland resident. Maryland would not tax your spouse’s out-of-state income, but could influence your tax rate. Use the instructions on Form 502 for correct filing details.

How were COVID-19 stimulus payments treated for Maryland taxes?

For the 2020 tax year, federal COVID-19 stimulus payments were not taxable for Maryland purposes. These amounts did not need to be included as income on your state return. Maryland’s tax rules follow the IRS guidance, so all taxpayers were not required to make any additions to receive stimulus payments.

How do I report unemployment income on my 2020 Maryland tax return?

In 2020, up to $10,200 of unemployment income could be excluded federally for certain taxpayers under the American Rescue Plan Act. Maryland conformed to this exclusion, so qualifying taxpayers did not have to add it back. Use Form 502SU to report any remaining taxable unemployment income to the state.