Maryland Quarterly Tax Payment Due Dates
Learn how to manage Maryland estimated tax obligations on non-withheld income to ensure compliance and avoid penalties for inaccurate or late payments.
Estimated taxes are a pay-as-you-go system for income not subject to employer withholding. This method involves making periodic payments to the state throughout the year to cover your anticipated tax bill. For individuals who are self-employed or have significant investment income, this approach ensures tax obligations are met gradually, preventing a large, unexpected balance due when filing an annual return.
Who is Required to Pay Maryland Estimated Taxes
An individual must file and pay Maryland estimated taxes if they anticipate owing more than $500 in state and local tax after accounting for any taxes already withheld. This requirement applies to both Maryland residents and nonresidents who earn income from Maryland sources. The need to make these payments commonly arises from income that does not have automatic tax withholding, such as earnings from self-employment, freelance work, independent contracting, capital gains, dividend, and interest income.
Even individuals with taxes withheld from a primary job may need to make estimated payments if substantial additional income pushes their net tax due over the $500 threshold.
Maryland’s Quarterly Tax Deadlines
Maryland’s system for estimated tax payments is structured around four quarterly due dates that align with the federal estimated tax payment schedule. For a typical calendar-year filer, the deadlines are as follows:
- April 15, for income earned from January 1 through March 31.
- June 15, for income earned between April 1 and May 31.
- September 15, for income from June 1 to August 31.
- January 15 of the following year, for income earned from September 1 through December 31.
If any of these dates fall on a weekend or a legal holiday, the payment deadline is automatically extended to the next business day.
Calculating Your Required Payment
To avoid potential penalties, taxpayers must meet “safe harbor” requirements with their estimated payments. The primary methods involve paying either at least 90% of the tax owed for the current year or 110% of the tax that was owed for the previous tax year. The 110% rule applies to most taxpayers, ensuring that paying more than the prior year’s total tax liability will prevent an underpayment penalty.
The total required annual payment is then divided into four equal installments. The state provides the Maryland Payment Voucher Worksheet (PVW) to help calculate the payment amount. This worksheet guides you through estimating your annual income and calculating the projected tax and is for your records only. An overpayment from the previous year’s tax return can also be applied toward the current year’s estimated tax liability.
Methods for Submitting Your Payment
Once the required payment amount is determined, Maryland offers several convenient methods for submission. One way is to pay electronically through the Comptroller of Maryland’s iFile system, an online portal for secure payments from a bank account that provides immediate confirmation. Payments can also be made by mail by sending a check or money order with the completed Form PV (Personal Tax Payment Voucher).
Additionally, many commercial tax preparation software programs integrate state estimated tax payments, allowing users to calculate and submit their Maryland payments.
Consequences of Underpayment or Late Payments
Failing to pay the correct amount of estimated tax by the quarterly deadlines can lead to financial penalties. Maryland imposes both interest and a penalty on any underpaid amount for the period it remains unpaid. The interest charge accrues daily, starting from the installment’s due date until the balance is paid in full.
This means the longer the underpayment goes unaddressed, the higher the interest charge will be. The state uses Form 502UP, Underpayment of Estimated Tax by Individuals, to calculate the total penalty and interest owed. The penalty is assessed as a percentage of the underpayment amount. The combination of these charges is designed to encourage timely and sufficient payment of taxes throughout the year.