A Maryland resident couple filing jointly and who both have income subject to tax may be able to subtract from their taxable income the lesser of $1,200 or the income of the spouse with the lower income. This is the Two-Income Subtraction.
When completing the "Two-Income Married Couple Subtraction Worksheet" included in the Maryland Form 502 instructions, TaxSlayer Pro allocates additions and subtractions to federal AGI between the spouses where known. However there are certain additions and subtractions to AGI that you will need to allocate between the spouses:
- Additions:
- Lump sum distributions
- Other Maryland-specific additions with a code letter as reported on Form 502 Line 5
- Subtractions:
- Taxable refunds of state taxes
- Child and dependent care expenses
- Income received during the period of nonresidence
- Other Maryland-specific subtractions with a code letter as reported on Form 502SU
Note: Based on the facts and circumstances, it may or may not be correct to allocate these additions and subtractions evenly to each spouse. If uncertain about how to allocate, ask the taxpayer.
To allocate an addition or subtraction between the spouses on the two-income worksheet in TaxSlayer Pro, from the Maryland Tax Return Menu select:
- Total Maryland Adjusted Gross Income
- Subtractions from Income
- Two-income Subtraction
- Portion of Additions for Each
Portion of Subtractions for Each - Visit each of the above addition and subtraction menu lines and look for an amount needing allocation, as indicated by a dollar amount in the window heading that is greater than $0.
For example, in this return $500 of child and dependent care expenses needs to be allocated (note $500 in the window heading):
Enter each spouse's portion of the subtraction. The expense might be allocated evenly between them, i.e., $250 to each, or it might be allocated differently based on their situation, but however the expense is allocated the sum of the two allocations must equal $500.
If a Maryland return requires an allocation, you won't be able to mark the return for electronic filing until you have made the allocation.
Note: This is an article on entering the Maryland Two-Income Subtraction in the TaxSlayer Pro program. It is not intended as tax advice.
Additional Information:
Maryland: Personal tax tip #50 Families and Maryland Income Taxes