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Updates to Maryland PTE Election – New Forms and Guidance

IntuitRichard
Employee
Employee

Maryland Senate Bills 496 and 787, clarify and update tax treatment for filers utilizing the pass-through entity (PTE) income tax election. Senate Bill 496 created a member addback of the credit for taxes paid by the electing PTE on the Maryland K-1. Senate Bill 787 updates the definition of federal taxable income for the electing PTE, disallowing a deduction for state and local income taxes paid by the entity.

To administer the changes related to SB 496 and 787 the Maryland Comptroller’s Office is creating a new Form, Form 511, to be used by a Pass-Through Entity (PTE) electing PTE tax treatment. An electing PTE will pay Maryland income tax at the entity level on all member’s distributive or pro rata shares of income. The electing PTE is able to deduct the Maryland income taxes paid at the entity level for federal purposes and avoid the $10,000 state and local income tax deduction limitation on the member’s individual tax return.

  • PTE’s who anticipate making this election are encouraged to wait until the new Form 511 is available for use prior to filing
  • PTE’s not making the election should continue to file on the Form 510 and withhold Maryland taxes on behalf of only the nonresident members.

We’re working in collaboration with the Maryland Comptroller’s Office to understand the timing and other technical implications of the new Form 511 and related changes. Once we receive confirmation of the implementation timing from the Comptroller’s office we will update you with further details of the changes and timing in ProSeries

ProSeries will require significant changes to incorporate the new Maryland Form 511 in TY20. We strongly recommend you save and print the current versions of the Maryland returns for your records before any software updates are installed. Once updates are installed it will not be possible to retrieve previously used Form 510 and related schedules.

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