Maryland Fiduciary Income Tax Return: Form 504 Filing and Payment

If you are the personal representative of a Maryland estate or the trustee of a trust that earned income, Maryland Form 504 is the fiduciary income tax return you file with the Comptroller, and these Maryland Form 504 instructions walk through who must file, how to calculate the tax, what to report to beneficiaries, and the deadlines that trigger penalties when missed. The return begins with the numbers from your federal Form 1041, adjusts them for Maryland-specific items, and applies the state’s graduated fiduciary rates (up to 6.50% on income above $1,000,000) plus a county tax of 2.25% to 3.20% for residents.¹

Who Has to File Form 504

Two conditions trigger the filing obligation, and both must be met: the estate or trust is required to file a federal Form 1041, and it has Maryland taxable income.² Federally, an estate must file Form 1041 once it generates more than $600 in annual gross income.³ Maryland follows the federal income tax treatment for fiduciaries, which is why the federal return is the starting point.⁴

One wrinkle: entities that are tax-exempt federally but report unrelated business taxable income on Form 990-T must also file Form 504 if that income produces any Maryland tax liability.⁵

Resident or Nonresident Fiduciary

Status determines how much income Maryland can reach. Resident fiduciaries pay tax on all income regardless of where it was earned. Nonresident fiduciaries pay only on Maryland-source income.

For an estate, the fiduciary is a resident if the decedent was domiciled in Maryland at death. For a trust, resident status attaches in any of three situations:⁶

The trust was created by, or holds property transferred under, the will of a decedent domiciled in Maryland at death.
The creator or grantor of the trust is a current Maryland resident.
The trust is principally administered in Maryland.

That last category catches trusts with out-of-state grantors that use Maryland-based trustees, banks, or administrators. If the day-to-day decisions happen in Maryland, the trust is a resident trust.

A nonresident fiduciary is any fiduciary who doesn’t meet one of those tests. Nonresidents are taxed on income from Maryland real or tangible personal property, income from a trade or business carried on in Maryland, and income from wagering in Maryland. Rental income from Maryland property and income from a pass-through entity operating in the state are the usual triggers. In place of the county income tax a resident would pay, nonresident fiduciaries owe a special nonresident tax set at the lowest county rate in the state, currently 2.25%.²

Calculating the Tax

Form 504 begins with the federal taxable income reported on Form 1041. You then apply Maryland additions and subtractions on Schedule A to arrive at Maryland taxable income, and that figure runs through the fiduciary rate table.⁴

Additions to Income

Additions push Maryland taxable income above the federal figure. The common ones:⁷

Interest on bonds issued by other states or their local governments, which is federally exempt but Maryland taxable.
State and local income taxes imposed by Maryland, another state, or D.C. that were deducted on the federal 1041.
Capital losses on intangible personal property held in trust, when the proceeds go to principal and all remaindermen are nonresidents or out-of-state corporations (resident fiduciaries only).
Net losses from sources outside Maryland (nonresident fiduciaries only).

Subtractions From Income

Subtractions pull income back out. The largest for most trusts is interest on U.S. government obligations, which Maryland cannot constitutionally tax.⁸ Treasury bond interest comes off the top. Other subtractions cover income already taxed by Maryland at the entity level through pass-through arrangements and certain retirement income qualifying for Maryland’s pension exclusion.

Forgetting to add back out-of-state bond interest is the fastest way to draw a notice from the Comptroller, and overlooking the U.S. government interest subtraction means the trust overpays.

Rate Table

Fiduciaries use the same graduated schedule that applies to individuals filing single or married filing separately. For the 2025 tax year (returns due April 15, 2026):¹

$1 to $1,000: 2.00%
$1,001 to $2,000: $20 plus 3.00% of the excess over $1,000
$2,001 to $3,000: $50 plus 4.00% of the excess over $2,000
$3,001 to $100,000: $90 plus 4.75% of the excess over $3,000
$100,001 to $125,000: $4,697.50 plus 5.00% of the excess over $100,000
$125,001 to $150,000: $5,947.50 plus 5.25% of the excess over $125,000
$150,001 to $250,000: $7,260 plus 5.50% of the excess over $150,000
$250,001 to $500,000: $12,760 plus 5.75% of the excess over $250,000
$500,001 to $1,000,000: $27,135 plus 6.25% of the excess over $500,000
Over $1,000,000: $58,385 plus 6.50% of the excess over $1,000,000

County Income Tax

Resident fiduciaries add county income tax on top. For estates, the county is where the decedent was domiciled at death; for trusts, it is the county where the trust is principally administered.⁹ Rates range from 2.25% to 3.20%, and some counties use tiered structures that step up at higher income levels.¹ The combined state and local burden on fiduciary income can exceed 9% in the higher-rate counties, so budget for both.

Reporting Distributions to Beneficiaries

Income the fiduciary distributes shifts the tax from the entity to the beneficiary. For each beneficiary, you complete a Maryland Schedule K-1 (504) showing that person’s share of distributed income along with their portion of the Maryland additions and subtractions.¹⁰ Attach every K-1 to the Form 504 you file with the Comptroller, and give a copy to each beneficiary for their personal Maryland return.

For nonresident beneficiaries, the K-1 also reports their share of Maryland-source income and any nonresident tax the entity paid on their behalf through pass-through arrangements.⁵ Track distributed versus retained income carefully. The trust or estate pays only on what it keeps; distributed income flows through to the beneficiaries. A mismatch between the entity return and the individual returns reliably draws audit attention.

Filing, Payment, and Extensions

Calendar-year Form 504 is due April 15, 2026 for the 2025 tax year. Fiscal-year filers use the 15th day of the fourth month after the close of the tax year. If the due date falls on a weekend or legal holiday, it moves to the next business day.⁷

Maryland participates in the Federal/State Modernized e-File program, so you can file Form 504 electronically through approved software. The Comptroller’s website lists current vendors, and the e-File help desk is at 410-260-7753.⁷ Paper returns go to the Comptroller of Maryland, Revenue Administration Division, 110 Carroll Street, Annapolis, Maryland 21411-0001.¹¹ Checks or money orders are payable to the Comptroller of Maryland and should show the entity’s federal employer identification number, tax year, and tax type in blue or black ink. Electronic payment is also available through the Comptroller’s BillPay system.

If you need more time, Form 504E gets you a six-month extension, but you must file it by the original due date and pay any estimated tax owed with the request.¹¹ An extension buys time to file. It does not extend the deadline to pay.

Estimated Tax Payments

If the trust or estate expects to owe more than $500 in Maryland tax on income not subject to withholding, the fiduciary must make quarterly estimated payments. They are due the 15th of the 4th, 6th, 9th, and 13th months of the tax year. For calendar-year filers that works out to April 15, June 15, September 15, and January 15 of the following year.

Estates get a grace period: the personal representative is not required to make estimated payments for the first two tax years of the estate’s existence. After that, the $500 threshold and quarterly schedule apply.

You generally avoid underpayment interest when each quarterly payment equals at least one-fourth of 110% of the prior year’s tax, or when total payments cover at least 90% of the current year’s actual tax. Federal trust estimated payments follow a similar schedule with the same April, June, September, and January installments.¹²

Penalties and Interest for Late Filing or Payment

Miss the filing or payment deadline and two charges apply. The Comptroller can assess a penalty of up to 10% of the unpaid tax for failure to file or failure to pay when due. Interest accrues on top at a rate the Comptroller sets annually under Tax-General § 13-604, with a statutory floor of 9% per year and a possibility of a higher rate depending on prevailing interest rates.¹³ Interest runs from the original due date until the tax is paid, calculated monthly.

The practical protection is to remit the estimated tax by the original due date, even when you need an extension to finalize the paperwork.

Credit for Taxes Paid to Another State

Resident fiduciaries that pay income tax to another state on the same income can claim a credit against the Maryland tax to avoid double taxation. The credit is limited to the lesser of the tax actually paid to the other state or the Maryland tax attributable to that income.¹⁴ One restriction: the credit is unavailable if the fiduciary claims, and the other state allows, a credit for Maryland tax paid to that other state. You cannot claim the credit in both directions.

Trusts holding rental property or business interests in Virginia, Delaware, or Pennsylvania run into this often. Compare the effective rates in each state before deciding which direction to claim the credit, because the math can favor one state over the other depending on the income amounts.

1
Comptroller of Maryland. Maryland Income Tax Rates and Brackets
2
Comptroller of Maryland. Administrative Release No. 16
3
Internal Revenue Service. File an Estate Tax Income Tax Return
4
Comptroller of Maryland. Fiduciary Tax for Individual Taxpayers
5
Comptroller of Maryland. Tax Guidance – 2025 Estate and Fiduciary Forms
6
Maryland General Assembly. Maryland Code Tax-General 10-101
7
Comptroller of Maryland. Instructions for Filing Fiduciary Income Tax Returns
8
Comptroller of Maryland. Maryland Form 504 Schedule A – Fiduciarys Share of Maryland Modifications
9
New York Codes, Rules and Regulations. Maryland Code Tax-General 10-103 – County Income Tax
10
Comptroller of Maryland. 2025 Maryland Schedule K-1 (504)
11
Comptroller of Maryland. Maryland Form 504E – Application for Extension to File Fiduciary Income Tax Return Instructions
12
Internal Revenue Service. Estimated Income Tax for Estates and Trusts
13
Maryland General Assembly. Maryland Code Tax-General 13-604
14
New York Codes, Rules and Regulations. Maryland Code Tax-General 10-703 – Tax Credit for Taxes Paid to Other State