Welcome Guest. Register Now!  

LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 08-26-2009, 08:56 AM
Junior Member
Join Date: Aug 2009
Location: Rockville, MD
Posts: 1
Maryland Now Taxes Interest on U.S. Bonds

Effective in 2008, Maryland has begun an indirect tax on interest earned on U.S. obligations, including U.S. Savings Bonds, in violation of 31 U.S.C. 3124(a) which exempts such interest from State and local income tax. Here's how: Maryland now has several different amounts for a taxpayer's personal exemption, ranging from $3200 to $600. The amount of the taxpayer's personal exemption directly affects the amount of the taxpayer's taxable income in Maryland. Here's the problem. The amount of the taxpayer's personal exemption is based on the taxpaper's TOTAL Federal adjusted gross income, including interest earned on U.S. obligations. Because I earned interest on U.S. Savings Bonds in 2008, my Maryland tax liability increased by $191 above what the liability would have been had I not received such interest. Obviously, this is a tax on such interest.

I am appealing to the Maryland Tax Court--no date yet set. Does anyone know of any other State using this indirect method to tax interest on U.S. obligations or is anyone aware of litigation on this issue? Thanks.
Winston J. Dean, J.D., M.P.H.

Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
interest and penalty on taxes jenniferjp41 Sole-Proprietorship 0 04-24-2009 10:30 AM
Where do I mail my Maryland Corporation Tax Return? TaxGuru Maryland 0 01-19-2009 01:43 AM
Maryland State Tax Information TaxGuru Maryland 0 09-21-2008 05:15 PM
IRS dropped Interest Rates again in 3rd quarter 2008 on overdue taxes. TaxGuru For 2008 0 06-25-2008 05:55 PM
Can we roll our Savings Bonds into a 529 Plan that we have in place for my son? Roberto Education Planning 1 03-14-2008 09:29 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 » Income
 » IRA/Sep
 » Medical
 » Payroll
Forum for CPAs
Financial Planning