Maryland interest penality on taxes owed

Forum|Forum|2 years ago
April 2, 2024
1 reply
0 views

Hi,

My wife owns a rental property with her brothers.

At the end of the year, she receives a 1099 MISC for income which no state of Maryland taxes were taken out.

I know that I owe state taxes, but am being charged an interest penality becuasetaxes were not paid at the time they were earned.

Tubo tax does not show this penality but when I use the state of MD filing form, the penality shows up.

Do I really owe the intrest penality?

How do I avoid in the future?

Thank you

DianeW777

You may owe the penalty shown. You can choose to pay only the tax and then wait for a bill from Maryland (MD) for any late payment penalty. The states, like the federal, require taxes to be paid when the money is earned each year. Based on the current year, you can make estimated tax payments to MD. Use the link below as your guide.

MD Individual Payment Center - Click on Estimated Payments
MD Tax Rates and Brackets - This will give you an idea of how much to pay.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

ChaucertaxAuthor

Employee

Understood.

But Turbo tax says I owe no interest penalty from the form 502UP.

Which is correct?

tks

IsabellaG

Employee

It depends. If you have a balance due of more than $500, Maryland will charge an estimated tax penalty unless you qualify for an exception.
You qualify for an exception if

You have paid in at least 90% of your 2023 tax
You have paid in at least 110% of last year's tax
At least 90 percent of your taxable income is taxable by another state, and the underpayment is of the county income tax only.

Your Form 502UP will show if you indicated that you met any exceptions. Line 8 shows 90% of your 2023 tax, and lines 9a and 9b show the calculation of 110% of your 2022 tax.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"