STATE MD TAX PREP STATE EXAM UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

STATE MD TAX PREP STATE EXAM UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS

Question:
1. MD State Residency
Answer:
Generally, a taxpayer is required to file a Maryland return if all of the following apply:
-The taxpayer was a Maryland resident during the year.
-They are required to file a federal return.
-Their Maryland gross income is equal to or greater than the threshold for their filing status.

Question:
2. Additions
Answer:
to income that must be made to account for differences between federal law and Maryland law are reported
on lines 2 through 5 of Form 502. They are totaled on line 6, and added to federal AGI on line 7

Question:
3. Subtractions
Answer:
Subtractions from federal AGI. These subtractions will generally benefit taxpayers by reducing the amount
of their Maryland income subject to tax

Question:
4. Deductions
Answer:
This is because the deduction amount changes based on the taxpayer's income and filing status. The
standard deduction method gives taxpayers a deduction of 15% of Maryland adjusted gross income.

Question:
5. Deductions pt 2
Answer:
If the taxpayer chose to itemize deductions on their federal return, they are not required to itemize on their
Maryland return. They still have the option to use the Maryland standard deduction or itemize their
Maryland deductions. Taxpayers who chose the federal standard deduction do not have a choice; they must
use the Maryland standard deduction.

Question:
6. Exemptions
Answer:
Taxpayers whose federal AGI is less than $100,000 can claim a $3,200 exemption amount for themselves
and each of their dependents. The exemption amount is reduced, and eventually phased out, for taxpayers
whose federal AGI is over $100,000.