How do I calculate the Maryland Military Retirement Income subtraction for my client in Drake Tax?
The Military Retirement Income subtraction is calculated for qualified resident, part-year resident, and nonresident individuals with military retirement income. To mark Form 1099-R as military retirement income, select code M in the Pension Type drop down box at the top of the applicable screen 1099.
If the taxpayer is a MD resident or part-year resident, the subtraction will calculate on MD502SU, line U and then flow to MD502, page 2, line 13 with a code of U.
If the taxpayer is a nonresident with MD military retirement income, the subtraction will calculate on MD505SU, line U and then flow to MD505, page 2, line 23 with a code of U.
According to the MD instructions, the amount of income allowed to be subtracted varies depending on the age of the qualifying individual (amounts and age ranges vary depending on the tax year). Current values:
- If the taxpayer is under age 55, up to $5,000 of military retirement income received may be subtracted.
- If the taxpayer is 55 or over, up to $15,000 of military retirement income received may be subtracted.
For additional details about which taxpayers might be qualified to take this subtraction, see the MD Resident or MD Non-resident instruction booklets.