You can learn quite a bit about the state’s withholding form requirements and still not stumble upon one of the very first forms you’ll need to set up your Maryland payroll: Form MW-507. This is the worksheet form that your employee will need to fill out so that you can calculate the estimated income tax to withhold from the employee’s paycheck based on their personal exemptions.
Why Maryland Employers Need Form MW-507
Much like the rest of the Maryland income tax withholding, form MW-507 is very similar to the federal exemptions worksheet, Form W-4. Most employers find it makes a lot of sense to give their employees both forms at once. Using the adjusted gross income and filing status of the household (single, married filing separately, married filing jointly) is pretty much exactly the same.
That said, there are some notable differences. Due to the state’s unique geography, it’s not uncommon for people to work in Maryland but live in a different state. Thus, one of the exemptions an employee may claim is Box 4, which certifies that the employee is domiciled in DC, PA, VA, or WV. Note: Simply having a residence in another state is not sufficient to make this exemption if you maintained a “place of abode” in Maryland for 183 days or more. MW-507 is also useful for employees to declare exemptions from withholding.
Your Responsibility as an Employer
When an employee provides you with a MW-507, you must retain the certificate with your records. Additionally, if you suspect anything may be wrong with the MW-507, you are required to submit a copy of the certificate with all accompanying attachments to the Compliance Division of the Compliance Programs Section. Though we have several resources for where to send necessary forms, we have included the address below for your convenience.
Compliance Division, Compliance Programs Section
301 West Preston Street
Baltimore, MD 21201
You must do this if the following criteria are met.
- You believe the certificate is incorrect
- The employee has claimed more than 10 exemptions
- The employee claims an exemption because they had no tax liability for the preceding year, expects no tax liability this year, and wages are expected to exceed $200 each week
- The employee claims their exemption from withholding based on non-residence
- The employee claims their exemption under the Military Souses Residency Relief Act
The Compliance Division will make a determination and notify you should any change be made to the form. If the certificate is revoked by the state Comptroller, you must send any new certificate from the employee to the Comptroller before implementing it.
Get Filing Support from AMS
An informal worksheet like MW-507 doesn’t require software support on its own, but the information on this form can be used to customize your Maryland payroll system. And when it comes time to calculate, withhold, report, and deposit your employees’ income tax withholding, AMS Payroll is the resource you need to prepare and file your UI Forms 15 and 16, while our Forms Filer Plus module will handle your MW-506 and MW-508 forms.