Maryland taxpayers who were not permitted to claim a credit for personal income taxes paid to other states against their local income tax (i.e., City, County or Town) may still claim such a credit on a timely filed protective claim for refund for a tax year with respect to which such opportunity is still available.
Last year, the Howard County Circuit Court ruled that Maryland’s current application of the credit for taxes paid to other states is unconstitutional in so far as the credit is not allowed to offset the Maryland local personal income tax. That decision is still working its way through the appeal process and is unlikely to get to a final determination anytime soon. Nonetheless, the decision presents an opportunity for Maryland taxpayers to amend prior years’ tax returns and claim credits, against their local taxes, for taxes paid to other states. For affected taxpayers, the returns requiring immediate amendments are those filed for the 2008 tax year because the opportunity to file refund claims for that year will expire either on April 15 or October 15, 2012.
Aronson’s tax professionals can assist you with both: (1) the evaluation of whether your prior years’ tax returns should be amended; and (2) the actual amendment of those tax returns. To get more information concerning these potential amendments, please call either your Aronson tax professional or Henry Chiwaya of our State and Local Tax Practice at 301.222.8215.