How do you apply a repayment of taxable credit to Maryland state taxes?

Maryland handles repayments the same way as federal. You can claim an income tax deduction or tax credit of a repayment of more than $3,000.

Deduction
To claim a deduction, enter the amount in Deductions and Credits > Other Deductible Expenses in federal and it will carry over if you itemise on your MD return.

Credit
You will need TurboTax CD/Desktop to enter a credit.

How do I switch from TurboTax Online to TurboTax CD/Download?

Here’s what to do:

1. Calculate the tax difference as if the repayment was not included in your prior year MD income
2. Tap Forms in the top right of CD/Desktop
3. In the left column (Forms in My Return) find Form 502CR.
   •  If you do not see this form, tap Open Form in the top left.
   • Type 502cr in Search
   • Highlight Form 502CR: Personal Income Tax Credits and tap Open Form
4. Go to Part CC – Refundable Income Tax Credits
5. Enter the tax difference you calculated in Step 1 on line 4: IRC Section 1341 Repayment Credit
6. Tap Step-by-Step in the top right to return to the Interview mode

See Administrative Release No. 40 for more detailed help. Ignore any information about repayments of $3,000 or less. Those sections are outdated and no longer apply. However, the current instructions for Form 502CR still advise you to refer to Administrative Release No. 40 for repayments of more than $3.000.