Maryland Tax Preparers Practice Test Questions and
Answers Updated
QUESTION 1
A Maryland individual tax return must generally be filed by residents who are required to file a
federal income tax return and have a Maryland income greater than:
A. $1,000
B. $12,550
C. The federal filing requirement threshold
D. $20,000
CORRECT ANSWER: C. The federal filing requirement threshold
RATIONALE: Maryland follows the federal filing requirement thresholds; if a taxpayer must file
federally and has income sourced to Maryland, a state return is also required.
QUESTION 2
Which of the following forms is used to file a Maryland resident individual tax return?
A. Form 505
B. Form 502
C. Form 515
D. Form 505NR
CORRECT ANSWER: B. Form 502
RATIONALE: Form 502 is used by full-year Maryland residents. Form 505 is for nonresidents and
505NR applies to part-year residents or those with nonresident income.
QUESTION 3
True or False: Electronic filing of Maryland tax returns is mandatory for all tax preparers filing
more than 100 returns per year.
CORRECT ANSWER: True
,RATIONALE: Maryland requires preparers who file 100 or more returns in a calendar year to e-
file all individual Maryland income tax returns.
QUESTION 4
Which Maryland form must nonresidents file if they earned wages from a Maryland source?
A. Form 502
B. Form 505
C. Form MW507
D. Form 502SU
CORRECT ANSWER: B. Form 505
RATIONALE: Nonresidents use Form 505 to report Maryland-source income. Residents, by
contrast, use Form 502.
QUESTION 5
What is the due date for the Maryland individual income tax return for calendar year taxpayers?
A. March 15
B. April 15
C. May 15
D. June 30
CORRECT ANSWER: B. April 15
RATIONALE: Like the IRS deadline, Maryland individual income tax returns are due April 15
unless extended due to weekends or holidays.
QUESTION 6
A taxpayer can apply for an automatic six-month filing extension by filing which form?
A. 502E
B. 505E
C. 510E
D. None; Maryland does not allow extensions
CORRECT ANSWER: A. 502E
,RATIONALE: Form 502E grants Maryland taxpayers an automatic six-month extension to file,
although payments must still be made by the original due date.
QUESTION 7
Which of the following income types is fully taxable in Maryland?
A. Maryland state lottery winnings
B. U.S. government bond interest
C. Social Security benefits
D. Railroad retirement benefits
CORRECT ANSWER: A. Maryland state lottery winnings
RATIONALE: Lottery winnings from Maryland are fully taxable by the state. Interest on U.S.
obligations and federal benefits have partial or full exclusions.
QUESTION 8
True or False: A Maryland college savings plan distribution used for qualified education
expenses is taxable at the state level.
CORRECT ANSWER: False
RATIONALE: Qualified distributions from Maryland 529 plans are excluded from state taxable
income.
QUESTION 9
When calculating Maryland taxable income, which of the following adjustments is subtracted
from federal adjusted gross income?
A. Contributions to federal retirement
B. Income from other states
C. U.S. government bond interest
D. Maryland tax refund from prior year
CORRECT ANSWER: C. U.S. government bond interest
RATIONALE: Interest on U.S. obligations is exempt from Maryland income tax and subtracted
from federal AGI.
, QUESTION 10
Which of the following credits is nonrefundable in Maryland?
A. Earned Income Credit
B. Child and Dependent Care Credit
C. Elderly or Retired Tax Credit
D. Student Loan Debt Relief Tax Credit
CORRECT ANSWER: C. Elderly or Retired Tax Credit
RATIONALE: The Elderly or Retired Tax Credit is nonrefundable, while the others may provide
refundable benefits.
QUESTION 11
What is the maximum penalty for willfully preparing a false Maryland tax return?
A. $500 fine
B. $1,000 fine and/or 6 months imprisonment
C. $5,000 fine and/or 5 years imprisonment
D. $10,000 fine and jail
CORRECT ANSWER: C. $5,000 fine and/or 5 years imprisonment
RATIONALE: Maryland imposes severe penalties for willful fraud in tax preparation to maintain
compliance integrity.
QUESTION 12
Which local taxes are added to the Maryland state tax liability?
A. County and municipal income taxes
B. Property taxes
C. Sales taxes
D. Excise taxes
CORRECT ANSWER: A. County and municipal income taxes
RATIONALE: Maryland imposes local income taxes determined by county of residence, calculated
as a percentage of state taxable income.
Answers Updated
QUESTION 1
A Maryland individual tax return must generally be filed by residents who are required to file a
federal income tax return and have a Maryland income greater than:
A. $1,000
B. $12,550
C. The federal filing requirement threshold
D. $20,000
CORRECT ANSWER: C. The federal filing requirement threshold
RATIONALE: Maryland follows the federal filing requirement thresholds; if a taxpayer must file
federally and has income sourced to Maryland, a state return is also required.
QUESTION 2
Which of the following forms is used to file a Maryland resident individual tax return?
A. Form 505
B. Form 502
C. Form 515
D. Form 505NR
CORRECT ANSWER: B. Form 502
RATIONALE: Form 502 is used by full-year Maryland residents. Form 505 is for nonresidents and
505NR applies to part-year residents or those with nonresident income.
QUESTION 3
True or False: Electronic filing of Maryland tax returns is mandatory for all tax preparers filing
more than 100 returns per year.
CORRECT ANSWER: True
,RATIONALE: Maryland requires preparers who file 100 or more returns in a calendar year to e-
file all individual Maryland income tax returns.
QUESTION 4
Which Maryland form must nonresidents file if they earned wages from a Maryland source?
A. Form 502
B. Form 505
C. Form MW507
D. Form 502SU
CORRECT ANSWER: B. Form 505
RATIONALE: Nonresidents use Form 505 to report Maryland-source income. Residents, by
contrast, use Form 502.
QUESTION 5
What is the due date for the Maryland individual income tax return for calendar year taxpayers?
A. March 15
B. April 15
C. May 15
D. June 30
CORRECT ANSWER: B. April 15
RATIONALE: Like the IRS deadline, Maryland individual income tax returns are due April 15
unless extended due to weekends or holidays.
QUESTION 6
A taxpayer can apply for an automatic six-month filing extension by filing which form?
A. 502E
B. 505E
C. 510E
D. None; Maryland does not allow extensions
CORRECT ANSWER: A. 502E
,RATIONALE: Form 502E grants Maryland taxpayers an automatic six-month extension to file,
although payments must still be made by the original due date.
QUESTION 7
Which of the following income types is fully taxable in Maryland?
A. Maryland state lottery winnings
B. U.S. government bond interest
C. Social Security benefits
D. Railroad retirement benefits
CORRECT ANSWER: A. Maryland state lottery winnings
RATIONALE: Lottery winnings from Maryland are fully taxable by the state. Interest on U.S.
obligations and federal benefits have partial or full exclusions.
QUESTION 8
True or False: A Maryland college savings plan distribution used for qualified education
expenses is taxable at the state level.
CORRECT ANSWER: False
RATIONALE: Qualified distributions from Maryland 529 plans are excluded from state taxable
income.
QUESTION 9
When calculating Maryland taxable income, which of the following adjustments is subtracted
from federal adjusted gross income?
A. Contributions to federal retirement
B. Income from other states
C. U.S. government bond interest
D. Maryland tax refund from prior year
CORRECT ANSWER: C. U.S. government bond interest
RATIONALE: Interest on U.S. obligations is exempt from Maryland income tax and subtracted
from federal AGI.
, QUESTION 10
Which of the following credits is nonrefundable in Maryland?
A. Earned Income Credit
B. Child and Dependent Care Credit
C. Elderly or Retired Tax Credit
D. Student Loan Debt Relief Tax Credit
CORRECT ANSWER: C. Elderly or Retired Tax Credit
RATIONALE: The Elderly or Retired Tax Credit is nonrefundable, while the others may provide
refundable benefits.
QUESTION 11
What is the maximum penalty for willfully preparing a false Maryland tax return?
A. $500 fine
B. $1,000 fine and/or 6 months imprisonment
C. $5,000 fine and/or 5 years imprisonment
D. $10,000 fine and jail
CORRECT ANSWER: C. $5,000 fine and/or 5 years imprisonment
RATIONALE: Maryland imposes severe penalties for willful fraud in tax preparation to maintain
compliance integrity.
QUESTION 12
Which local taxes are added to the Maryland state tax liability?
A. County and municipal income taxes
B. Property taxes
C. Sales taxes
D. Excise taxes
CORRECT ANSWER: A. County and municipal income taxes
RATIONALE: Maryland imposes local income taxes determined by county of residence, calculated
as a percentage of state taxable income.
