Maryland Taxpayers Could Be Missing Out on Thousands: A Guide to Credits and Deductions
Baltimore – As Tax Day approaches, a significant number of Maryland residents may be unknowingly leaving money on the table. Recent data suggests approximately 72,000 tax filers in Maryland were potentially eligible for the Earned Income Tax Credit (EITC) in Tax Year 2024 but didn’t claim it. Beyond the EITC, new deductions for seniors, tipped workers, and overtime pay are now available, adding to the potential savings for Marylanders.
Understanding the Earned Income Tax Credit
The Earned Income Tax Credit is a refundable tax credit designed to benefit low-to-moderate income workers. Eligibility hinges on factors like income, filing status, the number of qualifying children, and investment income. The maximum credit can be substantial – potentially reaching upwards of $8,000 for those with three or more dependents. However, the IRS estimates that only 4 out of 5 eligible individuals actually claim it.
New Tax Deductions for 2026
Senior Bonus Deduction
The One Big Stunning Bill Act has introduced a new $6,000 deduction for filers aged 65, and older. This bonus begins to phase out for incomes exceeding $75,000. No special application is needed; simply check the “65 or older” box on your tax return.
Tip Income Deduction
Workers who receive tips can now deduct their tip income, up to $25,000. However, it’s crucial to verify that your profession is on the IRS list of businesses regularly receiving tips to avoid potential audit issues.
Overtime Pay Deduction
A new deduction is also available for overtime pay. Filers can deduct the additional half-time pay received for overtime hours, up to a maximum of $12,500.
Don’t Overlook Other Credits
The Child Tax Credit remains a valuable benefit for parents with qualifying children under 17, offering up to $2,200 per child.
Free Tax Preparation Resources
For those who need assistance, numerous free tax preparation options are available. The IRS Free File program is accessible to individuals with incomes under approximately $89,000. Many Maryland nonprofits offer free tax preparation services, though appointments tend to fill up quickly.
Choosing a Tax Preparer: A Word of Caution
Be cautious when selecting a tax preparer. Avoid those who promise excessively large refunds or charge a percentage of your refund, as this practice can open the door to fraudulent schemes. A reputable preparer will focus on accurate tax preparation, not maximizing their earnings from your refund.
Important Deadlines and Programs
Homeowners Property Tax Credit
The deadline to apply for the Homeowners Property Tax Credit is Tax Day, April 15th. Applying by this date ensures the credit will be reflected on your July tax bill. Applications submitted after April 15th, but by October 1st, will be applied to a later tax bill.
“Trump Accounts” for Children
Parents of children born between 2025 and 2028 may be eligible to open “Trump Accounts,” which could receive a one-time $1,000 contribution from the federal government. Families can sign up when filing their taxes or through the IRS program website.
Frequently Asked Questions (FAQ)
- What is the Maryland EITC?
- It’s a state tax credit for people who work but don’t earn a lot of money. It can lower the taxes you owe or increase your refund.
- Where can I find free tax preparation help?
- Check the IRS Free File program or search for nonprofits offering free tax preparation in Maryland.
- What is the deadline for the Homeowners Property Tax Credit?
- April 15th to have the credit applied to your July tax bill. October 1st is the final deadline.
For more information on the EITC and available resources, visit the Maryland Comptroller’s website.
Do you think you might be eligible for tax credits you’ve been missing? Share your thoughts in the comments below!
