How to Complete and File Maryland Form MW508: Line-by-Line, Submission, and Penalties

Maryland Form MW508, the Annual Employer Withholding Reconciliation Return, is due to the Comptroller of Maryland by January 31 each year. It reconciles the state and local income tax you withheld from wages and other payments during the calendar year against what you actually remitted through your periodic Form MW506 filings, and it must be submitted along with the state copies of every W-2 and 1099 showing Maryland withholding.¹

Who Has to File

If you filed any MW506 return during the calendar year, you owe an MW508 by January 31 of the following year. The duty applies whether you file monthly, quarterly, or annually, and it covers everyone required under Maryland Tax-General § 10-906 to withhold state income tax from wages or other payments.² The obligation continues even during periods when you paid no wages, as long as your withholding account remains open.

If the business has closed or you no longer have employees, the way to end the annual filing duty is to close the withholding account itself. Call the Comptroller at 410-260-7980 (or 1-800-638-2937 from outside Central Maryland), Monday through Friday, 8:30 a.m. to 4:30 p.m., with your account number and closing date ready.³ Until the account is formally closed, a January return is still expected.

What to Have in Front of You

Before you open the form, pull together:

Your Maryland Central Registration Number.
Your federal Employer Identification Number.
The state copies of every W-2 issued for the year that shows Maryland income tax withheld.
Every 1099 with Maryland withholding — 1099-R, 1099-MISC, 1099-NEC, or any other variant.
Your MW506 filing records for the year, showing what you remitted each period.

The form asks for the W-2 count and the 1099 count on separate lines, so keep the two stacks separate rather than mixed.¹

Completing the Form Line by Line

Enter your business name, address, Maryland registration number, and FEIN at the top. Then work through the numbered lines:

Line 1a: number of W-2 forms you are submitting.
Line 1b: number of 1099 forms you are submitting.
Line 1: the sum of 1a and 1b.
Line 2: total Maryland withholding tax reported for the year across your MW506 filings.
Line 3a: total state and local tax shown on all W-2s.
Line 3b: total state and local tax shown on all 1099s.
Line 3: the sum of 3a and 3b.
Line 3c: total withholding tax you actually paid to the Comptroller during the year.
Line 3d: if you are a tax-exempt organization claiming eligible business tax credits, enter that amount and attach Form MW508CR.
Line 4: line 3 minus 3c and 3d. If zero or positive, this is the balance you owe.
Line 5: if line 3 minus 3c and 3d is negative, enter the difference as a positive number. This is your overpayment.
Line 6: any portion of the overpayment you want applied as a credit to future periods.
Line 7: any portion you want refunded. Lines 6 and 7 together cannot exceed line 5.

The error that most often trips employers up is a mismatch between line 2 (what you reported on MW506 filings) and line 3c (what you actually paid). Those figures can legitimately differ if you owed a balance on a prior return or received an adjustment, so check your payment history against your MW506 records before you sign the return.¹

If You Owe or Overpaid

A balance on line 4 is due with the return itself. The Comptroller does not mail a separate bill, and any amount unpaid after January 31 begins accruing interest.⁴

An overpayment on line 5 is yours to direct. You can apply it as a credit to future withholding periods (line 6), request a refund (line 7), or split it. If you elect the credit, wait for the Comptroller’s approval notice before applying it against upcoming MW506 payments.⁴

How to Submit

Employers with 25 or more W-2 and 1099 forms to report must file electronically. Employers with fewer than 25 may file electronically or on paper, though the Comptroller encourages the electronic route regardless of volume.⁴

Filing Electronically

Maryland Tax Connect at marylandtaxes.gov/MDTaxConnect is the Comptroller’s online interface for employer withholding filings. You can key in your MW508 data directly, upload W-2 and 1099 files, and receive immediate confirmation.⁵ Electronic returns process within a few days and cut down on the data-entry mismatches that generate notices.

Filing on Paper

If you qualify to file on paper, complete MW508, attach the state copies of every W-2 and 1099, and mail the package to:¹

Comptroller of Maryland
Revenue Administration Division
Returns Processing, Room 206
110 Carroll Street
Annapolis, MD 21411-0001

Paper returns take several weeks to process. If you owe a balance, include a check payable to “Comptroller of Maryland” with your registration number written on it, and keep a copy of everything you mail.

Penalties, Interest, and Personal Liability

Maryland imposes a $100 penalty for each violation when an employer willfully fails to file the annual reconciliation or files a false one.⁶ If you fail to pay withheld tax when due, the Comptroller can assess a separate penalty of up to 10 percent of the unpaid amount.⁷ Interest runs on any unpaid balance from the due date until the tax is paid, at an annual rate the Comptroller publishes each year.⁸

The exposure is not limited to the entity. Employers who negligently fail to withhold or remit income tax face personal liability that reaches corporate officers with direct control over fiscal management and agents responsible for withholding. For LLCs and limited liability partnerships, the same personal liability attaches to anyone who controls the entity’s finances.⁹

Fixing a Filed Return

If you find errors after filing, use Form MW508A, the Amended Annual Employer Withholding Reconciliation Return, and attach corrected W-2c or 1099 forms as applicable.¹⁰ One rule catches employers off guard: adjustments to prior-year withholding amounts are only allowed when the correction is administrative and does not change the tax actually withheld from the employee.⁴ Because employees claim the W-2 figure as a credit on their personal returns, a genuine change to what was withheld requires issuing W-2c forms with the amended MW508A, and the employee will need to fold the change into their own return.

1
Comptroller of Maryland. Maryland Form MW508 – Annual Employer Withholding Reconciliation Return
2
Justia Law. Maryland Tax-General Code 10-822
3
Comptroller of Maryland. Closing A Business
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Comptroller of Maryland. 2025 Maryland Employer Withholding Guide
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Comptroller of Maryland. bFile – Select Application
6
New York Codes, Rules and Regulations. Maryland Tax-General – Annual Withholding Reconciliation Penalty
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New York Codes, Rules and Regulations. Maryland Tax-General 13-701 – Assessment of Penalty for Failure to Pay Tax or File Return
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Comptroller of Maryland. Tax Guidance – Penalty and Interest Charges
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Maryland General Assembly. Maryland Tax-General 10-906
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Comptroller of Maryland. Tax Guidance – 2025 Employer Withholding Forms