Based on state legislation enacting the elective pass-through entity tax (see S.B. 523 (2020), as well as S.B. 787 (2021) and S.B. 496 (2021) for subsequently enacted clarifying legislation), the Maryland Comptroller recently released instructions for Maryland Form 510/511D for tax years beginning after Dec. 31, 2022.
Such instructions require that Maryland pass-through entities that wish to make the Maryland pass-through entity tax (PTET) election to do so with the first estimated tax payment of the year. For tax year 2023, this is due April 17, 2023 for calendar year taxpayers. For fiscal year taxpayers with tax years beginning after Jan. 1, 2023, the election must be made with the payment of their estimated tax by, on, or before the due date of their first quarter estimated payment.
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In prior years, the PTET election was due with the timely filing of Maryland Form 511 Electing Pass-Through Entity Income Tax Return. The updated election due date will require pass-through-entity taxpayers to understand their Maryland filing method far in advance of the due date of the return. This should be considered in tandem with other jurisdictions that have early PTET election requirements, such as California, New York, and New York City.
This planning is especially important as the PTET election is irrevocable once made. Taxpayers should determine their filing methodology in Maryland as soon as possible to make the election for their upcoming 2023 tax year in a timely manner.
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