Does Maryland Have a Personal Property Tax?
The short answer is, “Yes”. Maryland has a personal property tax for business owners that must be filed and paid every year. Today we’re going to take a deeper look at what this means for your business, what to do about it, and how to minimize its impact. Let’s take a look.
What is a Personal Property Tax?
In the state of Maryland, the personal property includes things like furniture, office equipment, tools, computers, and other items that you use to conduct business. This does not include real property like real estate. It also excludes commercial vehicles that you use for your business. However, it can include things like patents and copyrights; it does not have to be physical to qualify as personal property.
Now, the personal property tax is determined by the Department of Assessments and Taxation. You are taxed based on the value of your personal property and its associated depreciation. However, the depreciation rates are different from the rates issued by the IRS for corporate income tax returns. The assessment used to determine your tax amount is handled by the state and then issued by the county you’re conducting business in.
What Should I Do About Personal Property Taxes in Maryland?
The most important thing you need to do for your personal property tax is make a list of your personal property. Make sure to only include things that are actually considered personal property and only include things that are used in Maryland. If you have multiple locations, exclude any property not used in your Maryland location. However, if you have multiple locations, you need only submit one return that encompasses all of them.
As you take a look at this list every year, make sure that you’re removing anything you no longer have or use and that your list is as up to date as reasonably possible. Maryland is the only state that requires a filing fee, so be ready to pay your $300 to file. You can request an extension by completing the online extension application by April 15th.
How Can I Minimize the Impact of Personal Property Taxes?
The best way to minimize the impact of your personal property taxes is to make sure that they are updated and correct. You don’t want to get taxed on property you no longer own, so keep your list updated. You should also make sure that your items are categorized correctly as certain categories have different depreciation rates. You can also relocate your items or business to a lower-rated jurisdiction to save on these taxes.
Need Help with Personal Property Taxes?
If you’re not sure how to handle your property taxes, contact the CFO Source today. We can advise you on all aspects of your business’s taxes and make sure that you’re getting the appropriate deductions.