Does Maryland Accept Federal Extension for Individuals?

Income tax filing is an annual obligation for many individuals, requiring careful attention to deadlines and requirements. For those who find they need more time to prepare their tax return, tax extensions offer a way to postpone the filing deadline. While an extension provides additional time to submit the necessary paperwork, it does not alter the due date for any taxes owed. This article explores the specifics of individual income tax extensions within Maryland.

Maryland’s Automatic Extension for Individuals

Maryland provides an automatic six-month extension for individuals to file their state income tax returns. This means that if you file a federal tax extension with the IRS using Form 4868, you will receive a corresponding extension for your Maryland return. The extended due date for filing, for most calendar year filers, moves from April 15 to October 15.

A separate Maryland extension form is not required if you have already filed a federal extension and anticipate owing no Maryland income tax. However, if a federal extension is not filed, or if you are filing only a Maryland return, a specific state form, such as Form 502E, can be used to request an extension. The purpose of Form 502E is primarily for making an extension payment if tax is due. If no tax is due and no federal extension is filed, an extension request can be made electronically or by phone.

Payment Obligations with an Extension

An extension of time to file your tax return does not extend the time to pay any taxes you owe. Any estimated tax liability must still be paid by the original tax deadline, April 15th, even if an extension to file has been granted. Paying as much of your estimated tax liability as possible by this original due date is important to avoid underpayment penalties and interest charges.

Maryland offers several methods for taxpayers to make estimated tax payments. You can make payments online through direct debit from a bank account or by using a credit card, though credit card payments may incur a service fee. Alternatively, payments can be submitted by mail using a payment voucher, such as Form PV, ensuring the payment is postmarked by the original deadline. Tax software can also facilitate these payments.

Penalties and Interest

Failure to meet Maryland’s tax filing and payment obligations can result in financial consequences, even when an extension is involved. Two types of penalties that are assessed are the “failure to file” penalty and the “failure to pay” penalty. The failure to file penalty amounts to 5% of the unpaid tax for each month or part of a month that the return is late, with a maximum penalty of 25%.

The failure to pay penalty is 0.5% of the unpaid tax for each month or part of a month the tax remains unpaid, also capped at 25% of the unpaid tax. In addition to these penalties, interest is assessed on any unpaid tax balance, accruing from the original due date of the return until the date the tax is paid. Interest rates can vary.

For underpayments of estimated income tax throughout the year, individuals face additional interest charges, calculated using Form 502UP. To avoid this underpayment interest, taxpayers need to have paid at least 90% of their current year’s tax liability or 110% of their prior year’s tax liability through withholding or estimated payments. Penalties or interest can be waived if the taxpayer can demonstrate reasonable cause for the delay in filing or payment.