Audience: Businesses
Business taxpayers will find important information about filing Business Income Tax for Corporations, Pass-through entities and sole proprietorships. To file or pay your taxes, visit the Maryland Tax Connect portal, use an independent software provider, a professional tax preparer, or file in person at any of our local branch offices. Follow the links below for detailed information.
Every Maryland corporation must file a corporation income tax return, using Form 500, even if the corporation has no taxable income or is inactive.
Corporation income tax returns can be filed electronically, using approved software. Talk to your software provider about electronic filing options.
Every other corporation that is subject to Maryland income tax law and has income or losses attributable to sources within Maryland must also file Form 500.
Corporations operating in Maryland and in one or more other states are subject to Maryland income tax if their Maryland activity exceeds the provisions for federal protection from state taxation. 15 U.S.C. Section 381 (P.L. 86-272) of the Interstate Commerce Act (P.L. 86-272) prescribes the extent of business activity required before states may impose income taxes.
A Multi-state corporation that operates in Maryland but is not subject to the Maryland income tax is not required to file, although a return reflecting an apportionment factor of zero may be filed for record purposes. We cannot accept letters sent in lieu of filing.
All financial institutions formerly subject to the financial institution franchise tax are subject to corporation income tax and have special apportionment rules. For more information, see Regulation 03.04.08 on COMAR Online.
Remember to enter your federal employer identification number (FEIN) on the Maryland corporation tax return and other forms.
Be sure to enter the business activity code number on Form 500.
Indicate the following on all correspondence and payments:
Every corporation that reasonably expects its Maryland taxable income to develop a tax in excess of $1,000 for the tax year or period must make estimated income tax payments with Form 500D-Maryland Declaration of Estimated Corporation Income Tax.
If the corporation is required to make multiple payments it will use Form 500D for each of the additional payments.
Do not use form 500D to remit estimated tax for form 510 or 511, or to remit employer withholding tax.
The total Maryland estimated tax payments must be at least 90% of the tax developed for the current tax year or 110% of the tax developed for the prior tax year. At least 25% of the total estimated tax must be remitted by each of the four installment due dates.
The annualization method for calculating estimated tax is not permitted for corporations. In the case of a short tax period the total estimated tax payment required is the same as for a regular tax year: 90% of the tax developed for the current (short) tax year or 110% of the tax developed for the prior tax year. The minimum estimated tax for each of the installment due dates is the total estimated tax required divided by the number of installment due dates occurring during the short tax year.
Multi-state corporations are corporations that operate in more than one state and beyond the protection of 15 U.S.C. Section 381 (P.L. 86-272) of the Interstate Commerce Act. Multi-state corporations operating in Maryland as a unitary business must allocate income using an apportionment formula.
Unistate corporations are those that operate in only one state, or operate in more than one state but the extent of the activity in the other states is within the protection of 15 U.S.C. Section 381 (P.L. 86-272). Unistate corporations subject to the Maryland income tax law may not apportion income.
Allocation means the assignment of income to a particular state. Apportionment means the allocation of income among the states by the use of a formula containing apportionment factors. For more information regarding the computation of apportionment factors, see Administrative Release No. 2 (PDF): Interstate Commerce Act - Domestic and Foreign Corporations - Nexus Requirements - Apportionment of Corporate Net Income and Maryland Tax Regulation 03.04.03.
The Maryland corporation income tax applies to every Maryland corporation and every other corporation that has a nexus with Maryland. Nexus indicates a taxable connection between a corporation and a taxing authority. If a corporation conducts business activity within Maryland and exceeds the provisions of U.S.C.A. Title15, Section 381 of the Interstate Commerce Tax Act (P.L. 86-272), it has a nexus and must file a corporation income tax return, using Form 500.
The following list includes some in-state activities which generally create nexus and are outside the protection of U.S.C.A. Title 15 Section 381 (P.L. 86-272):
For more information, see Administrative Release No. 2 (PDF): Interstate Commerce Tax Act - Domestic and Foreign Corporations - Nexus Requirements - Apportionment of Corporate Net Income.
Form 500 must be filed by the 15th day of the fourth month following the close of the taxable year or period, or by the original due date required for filing the federal return.
Corporations and organizations that are allowed later due dates for federal returns under the Internal Revenue Code are allowed the same due date for Maryland income tax returns.
If you are unable to file Form 500 by the due date, you can request a filing extension using Form 500E, Application for Extension of Time to File Corporation Income Tax Return. You can request an extension online if you have previously filed Form 500 and have no estimated balance due on Line 5 of Form 500E.
Pass-through entities unable to file Form 510 by the due date can request a filing extension using Form 510/511E, Application for Extension of Time to File Pass-Through Entity Income Tax Return. You can request an extension online if you have previously filed Form 510 and have no estimated balance due on Line 5 of Form 510/511E.
A seven-month extension can be granted for corporations using Form 500E and S corporations using Form 510E, Application for Extension of Time to File Pass-Through Entity Income Tax Return. A six-month extension can be granted for partnerships, limited liability companies and business trusts using Form 510/511E. In no case can an extension be granted for more than seven months beyond the original due date.
The application extends only the time allowed to file the annual income tax return and not the time allowed to pay the tax.
A request for an extension of time to file will be automatically granted and will not be acknowledged, provided that:
For more information about corporation income tax extensions, see Administrative Release No. 4 (PDF): Extension of Time for Filing Maryland Individual, Corporation, Partnership, Limited Liability Company, Fiduciary Income Tax Returns, and Estate Tax Returns.
For federal purposes sole proprietors file Schedule C, Profit or loss from Business with their personal tax return Form 1040 (PDF). Sole proprietor farmers file Schedule F, Profit or Loss from Farming (PDF). If you are a sole proprietor in Maryland you would file the same as an individual using individual using Form 502. Your net profit or less is combined on the return with your other income and deductions and taxed using individual tax rates.
Sole proprietors generally do not have taxes withheld from their income so they usually make quarterly estimated tax payments. The Maryland form to submit quarterly estimated tax payments is Form PV.
Filing information for sole proprietors may be found under Sole Proprietorships or in the Filing Information section under Individuals Income Tax section. For federal information on sole proprietors see IRS web site.
File and submit your payments using the correct tax forms.
Follow the Mailing Instructions and please make sure you complete the name and address area on your form.
County | Abbreviation |
|---|---|
Allegany | AL |
Anne Arundel | AA |
Baltimore County | BL |
Baltimore City | BC |
Calvert | CV |
Caroline | CL |
Carroll | CR |
Cecil | CC |
Charles | CH |
Dorchester | DR |
Frederick | FR |
Garrett | GR |
Harford | HR |
Howard | HW |
Kent | KN |
Montgomery | MG |
Prince George's | PG |
Queen Anne's | QA |
St. Mary's | SM |
Somerset | SS |
Talbot | TB |
Washington | WH |
Wicomico | WC |
Worcester | WR |