Md. Code Regs. 03.04.02.06

Current through Register Vol. 51, No. 24, December 2, 2024

Section 03.04.02.06 - Maryland Adjusted Gross Income of a Nonresident Individual

A. The Maryland adjusted gross income of a nonresident individual is the individual's federal adjusted gross income for the taxable year as determined under the Internal Revenue Code with the adjustments described in §§B and C of this regulation.

B. Additions to Federal Adjusted Gross Income shall be:

(1) Wages, salary, or other compensation for services performed in this State which are exempt by federal law or treaty from federal but not State tax on income;

(2) Oil percentage depletion allowance as provided for under Tax-General Article, §10-204(e), Annotated Code of Maryland, to the extent attributable to sources in this State;

(3) 50 percent of the sum of the tax preference items as provided for under Tax-General Article, §10-205(f), to the extent derived from real or tangible personal property located in this State;

(4) Amount of the credit claimed under Tax-General Article, §10-702, Annotated Code of Maryland, for wages paid to an employee in an enterprise zone located in this State;

(5) Amount of expenses for reforestation or timber stand improvement as provided for under Tax-General Article, §10-205(c); and

(6) The amount of any loss or adjustment to income that is:

(a) Included in computing federal adjusted gross income, and

(b) Not attributable to sources within this State.

C. Subtractions from Federal Adjusted Gross Income. To the extent included in computing federal adjusted gross income, the following are subtracted from the federal adjusted gross income of a nonresident individual to determine Maryland adjusted gross income:

(1) Income derived from:

(a) Real or tangible personal property located outside this State;

(b) Services performed outside this State;

(c) A business, occupation, profession, or trade that is carried on wholly outside this State;

(d) That part of a business, occupation, profession, or trade carried on by the individual both within and without this State that is attributable to the business, occupation, profession, or trade carried on outside this State;

(e) A pass-through entity that is equal to the member's distributive or pro rata share attributable to the business carried on outside this State;

(f) Annuities, pensions, state and local income tax refunds, interest, dividends, or other intangible property except if from:

(i) Maryland State lottery prizes or other gambling winnings derived from this State, or

(ii) A business, occupation, profession, or trade carried on by the individual in this State;

(g) Distributions, to a beneficiary, of accumulated income on which a fiduciary has paid Maryland income tax; and

(h) Salary, wages, or other compensation received as:

(i) An active member of the armed forces;

(ii) A midshipman of the Naval Academy at Annapolis;

(iii) A commissioned officer of the United States Public Health Service;

(iv) A commissioned officer of the National Oceanic and Atmospheric Administration; or

(v) The spouse of a servicemember that is an active member of the armed forces, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the United States Public Health Service, who is present in this State solely to be with the servicemember that is present in this State in compliance with military orders;

(2) Amounts derived from:

(a) Adoption expenses as provided for under Tax-General Article, §10-208(b);

(b) Blindness-related expenses as provided for under Tax-General Article, §10-208(c);

(c) Enhanced agricultural management equipment expenses as provided for under Tax-General Article, §10-208(d), to the extent that the expenses are incurred for conservation of land located in this State;

(d) Dependent care and household expenses as provided for under Tax-General Article, §10-208(e), to the extent the expenses are attributable to income received from services performed or business carried on within this State;

(e) Value of fringe benefits attributable to an employer-provided police or fire department vehicle as provided for under Tax-General Article, §10-207(d);

(f) Volunteer travel expenses as provided for under Tax-General Article, §10-208(j);

(g) Reforestation or timber stand expenses as provided for under Tax-General Article, §10-208(i), to the extent incurred for land located in this State;

(h) Wage expenses for targeted jobs as provided for under Tax-General Article, §10-208(k), to the extent that the wages are paid for services performed in Maryland;

(i) The amount by which the cost difference between a conventional on-site sewage disposal system and a system that utilizes nitrogen removal technology exceeds the amount of assistance the individual receives from the Department of the Environment under the Environment Article, § 9-1108, Annotated Code of Maryland; and

(3) The value of:

(a) Donated artwork to the extent provided for under Tax-General Article, §10-208(f); and

(b) Donated farm products as provided for under Tax-General Article, §10-208(g), to the extent that the products are donated to a gleaning cooperative located in this State.

D. A net operating loss generated when an individual is not subject to Maryland income tax law may not be allowed as a deduction to offset the Maryland income from any year when that individual is subject to Maryland income tax law.

Md. Code Regs. 03.04.02.06

Regulations .06, Individual, adopted effective January 9, 1989 (15:27 Md. R. 3126)
Regulation .06 amended effective August 20, 1990 (17:16 Md. R. 1989); October 12, 1992 (19:20 Md. R. 1813); December 28, 1998 (25:26 Md. R. 1919); January 14, 1999 (26:1 Md. R. 21)
Regulation .06C amended effective October 9, 2006 (33:20 Md. R. 1612); April 19, 2010 (37:8 Md. R. 614); March 21, 2011 (38:6 Md. R. 393); April 30, 2012 (39:8 Md. R. 533);41:6 Md. R. 377, eff. 3/31/2014
Regulation .06D adopted effective October 22, 2007 (34:21 Md. R. 1913); amended effective 49:9 Md. R. 529, eff. 5/2/2022