The Maryland Comptroller's has released the 2018 income tax withholding percentage and regular methods and a reminder to provide employees with information about the earned income credit by December 31, 2017.

Note that an exemption from withholding is provided for students and single persons if their yearly income is less than $10,350 annually. (2018 Maryland Employer Withholding Guide.)

Maryland local income tax rate change for 2018

Only one locality has a change in its income tax withholding rates for 2018:

More information on 2018 Maryland income tax withholding is available in the 2018 Withholding Tax Facts publication.

2017 Form W-2 filing reminders

For calendar year 2017 Forms W-2, Maryland employers filing 25 or more forms are required to submit their Forms W-2 data by magnetic media (CD or 3 ½" diskette) or over the Comptroller's Office b-File system by January 31, 2018. Payers filing 25 or more required Forms 1099 that do not participate in the 1099 combined federal/state filing program must file the forms on CD or diskette (though payers that do participate in the program and reflect withholding on 25 or more Forms 1099 must electronically file the annual withholding reconciliation). The W-2/1099 specifications are located here.

Failure to file electronically if required may result in a penalty of $100 per incorrectly filed W-2/1099.

Note that magnetic media and electronic filers do not need to file a paper Form MW508, Annual Employer Withholding Reconciliation Return. The MW508 information will be included in the "RV" record data sent to the agency.

For electronic filing, go to the b-File system here.

The 2017 Form MW508, is located here.

Earned income tax credit

Maryland Tax General Article 10-913 (House Bill 632, Chapter 352, Acts of 2011) requires an employer to provide, on or before December 31, 2017, electronic or written notice to an employee who may be eligible for the federal and Maryland earned income tax credit (EITC). Employers may choose to notify all employees; or choose to notify only those employees with annual wages less than or equal to the amounts shown below.

Employees may be entitled to claim an EITC on their 2017 federal and Maryland income tax returns if both their federal adjusted gross income and their earned income is less than the following:

— $48,340 ($53,930 married filing jointly) with three or more qualifying children

— $45,007 ($50,597 married filing jointly) with two qualifying children

— $39,617 ($45,207 married filing jointly) with one qualifying child

— $15,010 ($20,600 married filing jointly) with no qualifying children

The Comptroller is required to notify all employers in Maryland each year by mail of information on the state EITC. A sample employee notification is included on the back of the 2017 alert that may be photocopied and distributed to employees, or employers may choose to develop their own notice.

If you have not yet received the 2017 EITC tax alert, it is available here.

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