COM/RAD 017
UNDERPAYMENT OF ESTIMATED
INCOME TAX BY INDIVIDUALS
INSTRUCTIONS
2016
MARYLAND
FORM
502UP
GENERAL INSTRUCTIONS
Section 10-815 of the Tax-General Article of the Annotated Code of
Maryland requires every individual, or individuals filing jointly, who
receives taxable income which is not subject to Maryland withholding, or
from which not enough Maryland tax is withheld to file a Declaration of
Estimated Tax, if the income can be expected to develop a tax of more
than $500 in excess of the Maryland withholding. Furthermore, Sections
13-602 and 13-702 stipulate that any individual so required to file, who
either (1) fails to file on the date or dates prescribed; (2) fails to pay
the installment or installments when due or (3) estimates a tax less than
ninety (90) percent of the developed tax shown on the return for the
current tax year and less than 110% of the tax that was developed for
the prior year, shall be subject to penalty and interest.
WHO MUST FILE
If you believe you are liable for interest for one of the reasons outlined
above, or if you believe you are not liable for interest due to an unequal
distribution of income, please complete and submit this form with your
tax return.
If you meet one of the exceptions shown on page 1, you are not
required to file this form.
If you want us to figure the interest for you, complete your return as
usual. Do not file Form 502UP. You will be notified of any interest due.
SPECIFIC INSTRUCTIONS
Lines 1 through 10 are used to determine the minimum amount required
to be paid by estimated or withholding tax to avoid interest.
Line 1 Enter your Maryland adjusted gross income from line 16 of
Form 502 or line 8 of Form 505NR. Alternatively, if you
itemize deductions, you may elect to enter taxable net
income from line 20 of Form 502 or net income from line
11 of Form 505NR.
Lines 2-4 Enter the amount specified from your 2016 Form 502 or
505.
Line 5 Multiply the amount on line 5 of Form 502TP by the highest
state rate used on your tax return. Add to this result the
amount on line 5 of Form 502TP multiplied by your local (or
special nonresident) tax rate.
Line 9a If your 2015 tax was corrected or amended, be sure to
include any additional tax when calculating your total tax for
the year.
Lines 11 through 15 will determine which periods are
underpaid and the amount of underpayment.
Line 11 Enter in each column the income received for the period of
the year covered by that column. If your income was
received evenly throughout the year, enter one-fourth of
line 1 in column 1, one-half of line 1 in column 2, three-
fourths of line 1 in column 3 and an amount equal to line
1 in column 4. You may elect to report your income based
on the actual dates of receipt. If so, enter income received
between January 1 and March 31 in the first column; enter
income received between January 1 and May 31 in the
second column; enter income received between January 1
and August 31 in the third column and 100% of your income
in the fourth column.
NOTE: Regardless of whether you use an even distribution
or base your entries on the actual receipt dates, each
succes sive column will include the amount from the prior
columns. See the example in the instructions for line 14.
Line 14 Enter in each column the sum of any estimated payments
you have made and any Maryland tax withheld from the
beginning of the year to the due date at the top of that
column. Include any nonresident tax paid by S corporations,
partnerships or limited liability companies on your behalf.
NOTE: Just as in line 11, each successive entry will include
the amount from the prior columns. For example, if you
paid $500 in estimated payments each quarter, the first
column will contain $500, the second $1,000, the third
$1,500 and the fourth $2,000. Overpayments in later
quarters may not be used to offset underpayments in
previous quarters.
Lines 16 through 18 determine the amount of interest due
for each underpaid quarter.
Line 16 The factors represent the interest rate for the portion of the
year between the due date of each quarter and the due
date of the next quarter. Interest is computed at a rate of
1.08% per month for due dates prior to January 1, 2017.
Interest is computed at a rate of 1.00% per month after
December 31, 2016. See www.marylandtaxes.com for
more information.
If your estimated tax payment was not timely, but was paid
earlier than the due date of the next quarter, adjust the
factor as follows:
1st Period - For payments due by April 15, 2016 that were
not paid by April 15, 2016 but paid earlier than June 15,
2016, count the number of months from the due date of
April 15, 2016 that the payment was late. Treat a partial
month as one month. Divide that number by twelve and
multiply it by the 13% annual rate. Apply this adjusted
factor to the underpaid amount on line 15.
2nd Period - For payments due by June 15, 2016 that were
not paid by June 15, 2016 but paid earlier than September
15, 2016, count the number of months from the due date
of June 15, 2016 that the payment was late. Treat a partial
month as one month. Divide that number by twelve and
multiply it by the 13% annual rate. Apply this adjusted
factor to the underpaid amount on line 15.
3rd Period – For payments due by September 15, 2016
that were not paid by September 15, 2016 but paid earlier
than December 15, 2016, count the number of months from
the due date of September 15, 2016 that the payment was
late. Treat a partial month as one month. Divide that
number by twelve and multiply it by the 13% annual rate.
Apply this adjusted factor to the underpaid amount on line
15. For payments made on or later than December 15,
2016, apply the interest factor of .0430 to the underpaid
amount on line 15.
4th Period - For payments due by January 15, 2017 that
were not paid by January 15, 2017 but paid earlier than
April 15, 2017, count the number of months from the due
date of January 15, 2017 that the payment was late. Treat
a partial month as one month. Divide that number by twelve
and multiply it by the 12% annual rate. Apply this adjusted
factor to the underpaid amount on line 15.
Line 17 Using the factors on line 16 or the adjusted factor described
above, determine the amount of interest due for each
quarter and enter the amounts in the appropriate columns.
Line 18 Add all interest amounts in columns 1 through 4 on line 17.
Enter the total interest on the appropriate line of your tax
return.
If the interest calculated on line 18 is zero because your income
was not received evenly throughout the year, enter code number
301 on one of the lines marked “code numbers” on the Form 502,
505 or 515 and attach this form to your return.
FARMERS AND FISHERMEN
If your gross income from farming or fishing is at least two-thirds of
your total estimated gross income for the year, the 2016 declaration and
full payment of the estimated tax is due on or before January 15, 2017.
In lieu of filing the declaration, you may elect to file your full and
complete annual return on or before March 1, 2017 and make full
payment of the developed tax at that time.
If you fail to do either of the above, and the income not subject to
withholding or from which not enough Maryland tax is withheld would be
expected to develop a tax of more than $500, then you are subject to
interest. To compute the applicable interest charge, complete lines 1
through 10 of this form. Enter the amount from line 10 on line 13,
column 4 and complete the rest of the form. Only column 4 will have
entries.
To claim exemption from this interest charge or to use the
special calculation, enter code number 300 on one of the lines
marked “code numbers” on the Form 502, 505 or 515. Attach this
form to your return if you used the special calculation.
INCOME TAXABLE BY ANOTHER STATE
If at least 90% of your taxable income is taxable by another state, and
the underpayment is not greater than the local tax, no interest is due
and you are not required to file this form.
To claim exemption from this interest charge, enter code number
302 on one of the lines marked “code numbers” on the Form
502, 505 or 515.
For more information, visit our Web site at www.marylandtaxes.com
or email your question to TAXHELP@comp.state.md.us. You may also
call 1-800-638-2937 or from Central Maryland 410-260-7980.
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