Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Sun will publish answers through April 15.
Q: I am filing a Maryland Form 502. On line 16, adjustments to income, it says "do not include federal exemptions on this line." Is the one-half of self-employment tax considered a federal exemption? That's what normally goes on line 25 of the Federal 1040 for self-employed people.
A: No. It is not a federal exemption. It is an adjustment. The federal exemptions referred to in the bold type of the instructions to line 16 on Maryland Form 502 are the exemption amounts allowed on line 36 of the Federal Form 1040 for each taxpayer and dependent. The amount which should appear on line 16 of Maryland Form 502 is from line 30 of Federal Form 1040. That line is entitled Total Adjustments and includes line 25, which is the one-half of self-employment tax paid.
Q: I bought stocks in 1993 and sold them in 1994 and made a substantial gain. Do I have to pay taxes now or wait until 1995?
A: As a general rule, 90 percent of the 1994 income tax on 1994 gains must be paid in quarterly installments. There are exceptions, depending on when the gain was made and how large. If an exception applies, it may be possible to delay paying the tax on the gain, even if it was substantial, until April 15, 1995. Discuss details with a tax adviser.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.