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Filling Out Maryland Withholding Form MW507

IRS form MW507 is the state of Maryland’s Withholding Exemption Certificate. All Maryland residents or employees must complete form MW507 to ensure their employer withholds the correct amount from their paycheck. This document is similar to the W-4 document that all Americans complete for federal withholding of their working wages, only it is specific to the state of Maryland.


Key Takeaways:

  • Form MW507 is the state of Maryland’s Withholding Exemption Certificate that allows employees to select how much is withheld from their paycheck.
  • Form MW507 is the same as the W-4 document Americans complete for federal withholding of their working wages.
  • Form MW507 is filled out differently depending on where you live, if you are filing as a single or married individual, and if you have dependents.

What Is Maryland Form MW507?

The Maryland form MW507 is an IRS form that must be filled out by Maryland-based taxpayers to ensure the correct amount is withheld from their wages to be applied to state taxes. While it can seem intimidating to figure out how to fill out the Maryland MW507 form, if someone fails to fill out this form, they may end up paying more in taxes because their employer would withhold taxes on the assumption that the taxpayer is not claiming deductions.

How To Fill Out Form MW507: Employee's Maryland Withholding Exemption Certificate

The purpose of Maryland form MW507 is to learn information about an individual’s tax status and exemptions. Before beginning to fill out this form, it is beneficial to gather all previous tax forms, account information, and financial documents and be prepared with the knowledge of which exemptions you plan to claim. Below is a breakdown of each of the parts of IRS form MW507:

Personal Information Section

At the top of form MW507 is the section to input all of your personal information. The details listed in this area will include your full name, social security number (SSN), street address, country of residence, and whether you are single, married, or married but you withhold your taxes at the single rate. 

Line 1

Line 1 of form MW507 requests that the taxpayer lists the total number of exemptions they are claiming. 

Line 2

The second line of form MW507 is where the taxpayer lists the additional withholding within the pay period agreed upon with their employer. If an employee finds that they owe money during the tax season because too little has been withheld from their wages, line 2 of this form is where this can be remedied. 

Line 3

Line 3 of form MW507 is where taxpayers can select exemptions from withholding in the case that they don’t expect to pay Maryland taxes. The two instances in which line 3 should be selected include:

  1. During the last tax year, the taxpayer did not owe the IRS payment for Maryland income tax and was eligible for a refund of the total amount of income tax withheld.
  2. During the current tax year, the taxpayer does not expect to owe the IRS payment for Maryland income tax and expects to be eligible for a refund of the total amount of income tax withheld.

If both of these instances apply to you, you must input the year applicable for exemption and write “EXEMPT” in this section.

Line 4

The fourth line is for taxpayers who are employed within the state of Maryland but live in a different area, such as Washington D.C., Virginia, or West Virginia. If you live in one of these areas but work in the state of Maryland, check the box next to your place of residence and write “EXEMPT” under line 4.

Line 5

Line 5 is the same circumstance as line 4 except it involves workers who are employed by the state of Maryland and reside in the Commonwealth of Pennsylvania. Taxpayers who are eligible for this exemption from Maryland state taxes and who live in Pennsylvania can write “EXEMPT” under line 5.

Line 6

The sixth line of form MW507 relates to Maryland workers who live in Pennsylvania, except compared to line 5, line 6 exemptions are specific for taxpayers living in York or Adams counties. Write “EXEMPT” on line 6 and line 4 if you are eligible for this exemption.  

Line 7

Line 7 is utilized to signify the workers who live in the Pennsylvania districts that do not impose taxes on Maryland workers. If eligible, you can write “EXEMPT” on line 7 of form MW507.  

Line 8

Line 8 of form MW507 can be utilized by servicemembers or military spouses that reside in a different state, thanks to the Servicemembers Civil Relief Act, as amended by the Military Spouses Residency Relief Act. In this section, eligible taxpayers can list their state and claim their exemption.

Signature Section

In the final section of form MW507, taxpayers can finish filling out their information by inputting their signature, the date, the employer’s name, and the employee identification number (EIN).

Filling Out Form MW507 Single Vs. Married

There are differences in how you file taxes based on whether you are a single filer or a married filer.

Filling Out Form MW507 When Single

Unmarried individuals file their taxes by marking themselves as ‘single.’ It gets more complicated if you also have one or more dependents.

Single Filer

Single filers with no dependents can check the box marked ‘single’ and fill out the rest of form MW507 as normal. After $100,000 of income, the maximum tax exemptions will start to drop.

Single Filer with 1 Dependent

Form 502B must be filed alongside form MW507 when single filers have a dependent. If a single filer has a dependent, they are considered the head of household and must select the “married (surviving spouse or unmarried Head of Household) rate.” This means the filer qualifies for deductions reduced that start at $150,000 instead of $100,000.

Single Filer with 2 Dependents

If a single filer has 2 dependents, they must also fill out form 502B with form MW507. The only difference between claiming 2 compared to 1 dependent is that they must be differentiated if a dependent is above the age of 65.

Filling Out Form MW507 When Married Filing Jointly

If married taxpayers elect to file their taxes together, they must select “married” and not “married filing separately.”

Married Filer

The reduced deduction rate changes from $100,000 to $150,000 for people who are married and filing jointly. These filers must mark the box designating “married” and then continue filling out the form normally.

Married Filer with 1 Dependent

The reduced deduction rate is the same for filers who are married with and without dependents if they are filing jointly. The only difference is that filers with dependents must fill out form 502B with form MW507.

Married Filer with 2 Dependents

The protocol is the same for married filers with 2 dependents as it is if they only have 1 dependent. You can record multiple dependents on the same form 502B.

How To Fill Out Form MW507 Personal Exemptions Worksheet

The second page of form MW507 is the Personal Exemptions Worksheet. Within this section, taxpayers can calculate the total deduction they are eligible to claim on line 1 of the form. Below is an outline of each of the sections of this worksheet:

Section (a)

Section a depends on your marital status, dependents, and income. Deductions can be claimed based on your marital and dependent status. Exemptions can be multiplied based on how much you’re entitled to due to your income.

Section (b)

Section b involves claiming dependents over the age of 65.

Section (c)

Section c looks at itemized deductions, including local income and state taxes, childcare expenses, alignment payments, qualified retirement contributions, business expenses, and business losses.

Section (d)

Section d considers $1,000 deductions for filers or spouses over the age of 65 who are blind.

Section (e)

Section e accounts for the total amount of deductions from Section a-d.

Section (f)

Section f divides section 2 by $3,200. The final amount cannot be a fraction or rounded up. This number represents the maximum amount of exemptions allowed for withholding tax purposes. 

How Many Exceptions Should You Claim?

You can use the exemptions worksheet to calculate how many exemptions you should claim on MW507:

0-3 Exemptions

Those with 0-3 exemptions are most likely to be single without dependents. 

3-5 Exemptions

Families who can claim exemptions for themselves, their spouses, and their dependents are most likely to have 3-5 exemptions. 

5-10 Exemptions

Large families or families with elderly dependents are most likely to have 5-10 exemptions.

10+ Exemptions

Families who claim to have above 10 exemptions force their employer to submit a copy of form MW507 to the Compliance Programs section of the Compliance Division of Maryland. This is rare, so the compliance division must confirm this claim.

If you work in Maryland but live in a different state, you must pay attention to the details when filing IRS form MW507. There are different areas of the form you must pay attention to depending on where you live, if you are single or married, and if you have dependents when filling out the form MW507, so if you fall under this category, it is important to pay attention to detail.

If you have questions about form MW507 or other tax-related issues, contact the experts at Ideal Tax today.

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