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Dos and Don'ts

When filling out the Maryland Tax 766 form, it’s important to follow certain guidelines to ensure everything is completed correctly. Here are seven things you should and shouldn't do:

  • Do read the entire form carefully before filling it out.
  • Do provide accurate personal information, including your Social Security number and home address.
  • Do indicate your marital status clearly when claiming allowances.
  • Do check the appropriate box for your Maryland residency status.
  • Don't leave any required fields blank; all sections must be completed.
  • Don't forget to sign and date the form; it is not valid without your signature.
  • Don't assume previous elections remain in effect; a new form revokes prior requests.

By following these guidelines, you can help ensure that your tax withholding elections are processed smoothly and accurately.

Misconceptions

Here are seven common misconceptions about the Maryland Tax 766 form, along with clarifications to help you understand the process better.

  • Misconception 1: You can submit the Maryland Tax 766 form without signing it.

    • This form is invalid unless you provide your signature. Always ensure you sign before submission.

  • Misconception 2: You can only choose one withholding option for both federal and state taxes.

    • You must complete a combined form that covers both federal and state tax withholding elections. Each section must be filled out according to your preferences.

  • Misconception 3: The form allows you to specify a dollar amount for federal withholding without indicating allowances.

    • You must designate the number of withholding allowances on line 2 before entering any additional dollar amount on line 3.

  • Misconception 4: You can ignore the form if you are not a Maryland resident.

    • If you are receiving payments from the Maryland State Retirement Agency, you still need to complete the form, even if you are not a resident.

  • Misconception 5: Once you submit the form, your withholding choices are permanent.

    • You can change or revoke your withholding elections at any time by submitting a new form.

  • Misconception 6: The Maryland State Retirement Agency can help you prepare your tax returns.

    • The Agency does not provide assistance with tax returns. For help, consult the IRS or a tax professional.

  • Misconception 7: You will not face penalties for insufficient tax withholding.

    • Failure to withhold enough federal or state taxes can lead to penalties. It's crucial to review your withholding choices regularly.

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Key takeaways

Filling out the Maryland Tax 766 form can be a straightforward process if you understand the key points. Here are some essential takeaways to keep in mind:

  • Combined Form Requirement: You must complete one form that covers both your Federal and Maryland state tax withholding elections. Submitting a new request will revoke all previous elections.
  • Federal Tax Withholding: To have federal income tax withheld, you need to specify the number of allowances on line 2 of Form W-4P. If you don’t want any federal tax withheld, simply check the box on line 1.
  • Marital Status Matters: Your marital status affects the number of allowances you can claim. Ensure you check the correct box to reflect your situation.
  • Maryland State Tax Withholding: Indicate whether you are a Maryland resident and your choice regarding state tax withholding. You can opt not to have any Maryland tax withheld or specify a dollar amount.
  • Form Validity: Remember, the form is not valid unless you sign it. Always ensure your signature is included before submission.
  • Continuous Effect: Once you make an election, it remains in effect until you decide to revoke or change it by submitting a new form.
  • Estimated Tax Responsibility: If you choose not to have enough tax withheld, you may be responsible for making estimated tax payments to avoid penalties.
  • Keep Records: Your payer will provide a statement by January 31 of the following year, summarizing your pension payments and the total federal tax withheld. Keep this for your records.
  • Seek Assistance if Needed: If you have questions about your tax situation, consult the IRS or a tax professional for guidance. The Maryland State Retirement Agency cannot assist with tax return preparation.

Guidelines on Utilizing Maryland Tax 766

Completing the Maryland Tax 766 form requires careful attention to detail. This form is essential for establishing your federal and state tax withholding preferences related to your pension allowance. Follow these steps to ensure accurate completion.

  1. Begin by downloading or obtaining a copy of the Maryland Tax 766 form.
  2. Fill in your first name, middle initial, and last name at the top of the form.
  3. Provide your social security number in the designated area.
  4. Enter your home address, including the number and street or rural route.
  5. Include your city or town, state, and ZIP code.
  6. If applicable, write your claim or identification number for your pension or annuity contract.
  7. In Part I, decide if you want federal income tax withheld. If yes, check the appropriate box on line 1 or 2.
  8. If you choose to have federal tax withheld, indicate your marital status and the total number of allowances on line 2.
  9. If you want an additional amount withheld, enter that amount on line 3.
  10. Sign and date the form at the bottom of Part I.
  11. Move to Part II for Maryland state income tax withholding. Choose one option that applies to your residency status.
  12. If you are a Maryland resident and want state tax withheld, specify the amount on the appropriate line.
  13. Provide your signature and date in Part II.
  14. Include your daytime phone number for contact purposes.
  15. Review the form for accuracy and completeness before submission.
  16. Return the completed form to the Maryland State Retirement Agency at the address provided at the top of the form.

Form Preview Example

MARYLAND STATE RETIREMENT AGENCY

VSP

 

120 EAST BALTIMORE STREET

 

BALTIMORE, MARYLAND 21202-6700

 

FEDERAL AND MARYLAND STATE TAX WITHHOLDING REQUEST

FOR PENSION ALLOWANCE

You must file one combined form covering both your Federal and State tax withholding elections. This form revokes all prior Federal and State tax withholding elections. For example, if you previously requested Federal and State tax withholdings and now submit a new request indicating only State tax, the SRA shall delete your prior Federal tax withholdings.

PART I – FEDERAL TAX WITHHOLDING CERTIFICATE

If you want federal income tax to be withheld, you must designate the number of withholding allowances on line 2 of Form W-4P. Under current federal law, you cannot only designate a specific dollar amount to be withheld. However, you can designate an additional amount to be withheld on line 3 below. If you do not want any federal income tax withheld from your periodic payments, check the box on line 1 of Form W-4P. If you do not submit Form W-4P, the Agency must withhold periodic payments as if you are married claiming 3 exemptions.

Form W-4P

 

 

 

Withholding Certificate for

 

20__

 

Department of the Treasury

 

 

Pension or Annuity Payments

 

 

 

 

 

 

 

 

 

 

Internal Revenue Service

 

 

 

 

 

 

 

 

Type or print your first name and middle initial

 

Last name

 

Your social security number

 

 

 

 

 

:

:

 

 

 

 

 

 

 

:

:

 

 

Home address (number and street or rural route)

 

 

Claim or identification number (if

 

 

 

 

 

 

any) of your pension or annuity

 

 

 

 

 

 

contract

 

 

 

City or town, state, and ZIP code

 

 

 

 

 

 

 

 

 

 

 

 

 

Complete the following applicable lines.

 

 

 

►

1 Check here if you do not want any federal income tax withheld from your pension or annuity. (Do not complete lines 2 or 3.)

2 Total number of allowances and marital status you are claiming for withholding from each periodic pension or annuity

►

 

 

payment. (You may also designate an additional dollar amount on line 3.)

Marital status:

Single

Married

Married, but withhold at higher “Single” rate

 

 

(Enter number

 

 

 

 

 

 

 

 

of allowances.)

3 Additional amount, if any, you want withheld from each pension or annuity payment. (Note. For periodic payments,

► $

you cannot enter an amount here without entering the number (including zero) of allowances on line 2.). . . .

. . . . . .

YOUR SIGNATURE

►

 

 

DATE

►

 

 

 

 

 

THIS FORM IS NOT VALID UNLESS YOU SIGN IT.

 

 

 

Form W-4P (2010)

PART II – MARYLAND STATE INCOME TAX WITHHOLDING REQUEST

Please check the appropriate block indicating your election. Check only one.

1.[ ] I am NOT a Maryland resident. Do not withhold Maryland income tax.

2.[ ] I AM a Maryland resident but I do not wish to have Maryland income tax withheld.

3.[ ] Withhold Maryland income tax from each monthly pension payment the following whole dollar

amount:

$

.xx

Return this form to the Maryland State Retirement Agency at the address above.

Your Signature

 

 

Date

Daytime Phone #: (

)

 

 

 

 

 

 

IT IS IMPORTANT THAT YOU CAREFULLY READ THE REVERSE SIDE OF THIS FORM.

THIS FORM IS NOT VALID UNLESS YOU SIGN.

FORM 766 (Rev. 1/2010)

2

Part I

FEDERAL INCOME TAX WITHHOLDING

The monthly retirement payments you receive from the Maryland State Retirement and Pension System may be subject to Federal income tax withholding. For further information, please refer to Internal Revenue Service Publication 575 regarding the taxability of pension and annuity income.

As a retiree, the following Federal income tax withholding alternatives are available to you:

1.You may elect not to have Federal income tax deducted from your monthly retirement payment, or

2.You may claim a certain number of exemptions and have the Maryland State Retirement and Pension System deduct the appropriate amount, if any, in accordance with the Federal income tax tables and you may designate an additional specific whole dollar amount to be withheld from your monthly retirement payment.

If you elect not to have Federal withholding apply to your monthly retirement payments, or if you do not have enough Federal income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the Internal Revenue Service estimated tax rules if your withholding and estimated tax payment are not sufficient. New retirees, especially, should see IRS Publication 505.

Part II

MARYLAND STATE INCOME TAX WITHHOLDING

The monthly retirement payments you receive from the Maryland State Retirement and Pension System may be subject to Maryland income tax withholding.

As a retiree and a Maryland resident, the following Maryland income tax withholding alternatives are available to you:

1.You may elect not to have Maryland income tax deducted from your monthly retirement payment, or

2.You may designate a specific whole dollar amount to be withheld from your monthly retirement payment.

If you elect not to have Maryland withholding apply to your monthly retirement payments, or if you do not have enough Maryland income tax withheld, you may be responsible for payment of estimated tax.

An election of any one of the alternatives will remain in effect until you revoke it. You may revoke or change your election at any time by filing a new Federal and Maryland State Tax Withholding Request.

The Maryland State Retirement Agency can not assist you in the preparation of tax returns. Please contact the Internal Revenue Service at 1-800-829-1040, the Comptroller’s Taxpayer Service Information Line at 410-260- 7980 (in Central Maryland) or 1-800-638-2937, or a tax consultant for any assistance.

To receive additional copies of the Federal and Maryland State Tax Withholding Request form, or for other information concerning your retirement benefits, call 410-625-5555, or toll free in Maryland 1-800-492-5909, or visit our website at www.sra.state.md.us.

SEE REVERSE SIDE FOR FEDERAL AND MARYLAND STATE TAX WITHHOLDING REQUEST

FORM 766 (Rev. 1/2010)

Additional Instructions:

Section references are to the Internal Revenue Code. Agency refers to the Maryland State Retirement Agency.

When should I complete the form? Complete Form W-4P and give it to the payer as soon as possible. Get Pub. 919, How Do I Adjust My Tax Withholding, to see how the dollar amount you are having withheld compares to your projected total federal income tax for 2010. You may also use the Withholding Calculator on the IRS website at www.irs.gov/individuals for help in determining how many withholding allowances to claim on your Form W-4P.

Other income. If you have a large amount of income from other sources not subject to withholding (such as interest, dividends, or capital gains), consider making estimated tax payments using Form 1040-ES, Estimated Tax for Individuals. Call 1-800-TAX- FORM (1-800-829-3676) to get Form 1040-ES and Pub. 505, Tax Withholding and Estimated Tax. You can also get forms and publications from the IRS website at www.irs.gov.

Withholding From Pensions and Annuities

Generally, federal income tax withholding applies to the taxable part of payments made from pension, profit-sharing, stock bonus, annuity, and certain deferred compensation plans; from individual retirement arrangements (IRAs); and from commercial annuities. The method and rate of withholding depends on (a) the kind of payment you receive, (b) whether the payments are delivered outside the United States or its possessions, and (c) whether the recipient is a nonresident alien individual, a nonresident alien beneficiary, or a foreign estate. Qualified distributions from a Roth IRA are nontaxable and, therefore, not subject to withholding. See special withholding rules that apply to payments outside the United Sates and payments to foreign persons.

Because your tax situation may change from year to year, you may want to refigure your withholding each year. You can change the amount to be withheld by using lines 2 and 3 of Form W-4P.

Choosing not to have income tax withheld. You (or in the event of death, your beneficiary or estate) can choose not to have federal income tax withheld from your payments by using line 1 of Form W-4P. For an estate, the election to have no income tax withheld may be made by the executor or personal representative of the decedent. Enter the estate’s EIN in the area reserved for “Your social security number” on Form W-4P. You may not make this choice for eligible rollover distributions

Caution. There are penalties for not paying enough federal income tax during the year, either through withholding or estimated tax payments. New retirees, especially, should see Pub. 505. It explains your estimated tax requirements and describes penalties in detail. You may be able to avoid quarterly estimated tax payments by having enough tax withheld from your pension or annuity using Form W-4P.

Periodic payments. Withholding from periodic payments of a pension or annuity is figured in the same manner as withholding from wages. Periodic payments are made in installments at regular intervals over a period of more than 1 year. They may be paid annually, quarterly, monthly, etc.

If you want federal income tax to be withheld, you must designate the number of withholding allowances on line 2 of Form W-4P and indicate your marital status by checking the appropriate box. Under current law, you cannot designate a specific dollar amount to be withheld. However, you can

3

designate an additional amount to be withheld on line 3. If you do not want any federal income tax withheld from your periodic payments, check the box on line 1 of Form W-4P and submit the form to your payer.

Caution. If you do not submit Form W-4P to your payer, the payer must withhold on periodic payments as if you are married claiming three withholding allowances. Generally, this means that tax will be withheld if your pension or annuity is at least $2,080 a month.

If you submit a Form W-4P that does not contain your correct

taxpayer identification number (TIN), the payer must withhold as if you are single claiming zero withholding allowances even if you choose not to have federal income tax withheld.

There are some kinds of periodic payments for which you cannot use Form W-4P because they are already defined as wages subject to federal income tax withholding. These payments include retirement pay for service in the U.S. Armed Forces and payments from certain nonqualified deferred compensation plans and deferred compensation plans of exempt organizations described in section 457. Your payer should be able to tell you whether Form W-4P applies.

For periodic payments, your Form W-4P stays in effect until you change or revoke it. Your payer must notify you each year of your right to choose not to have federal income tax withheld or to change your choice.

Changing Your “No Withholding” Choice

Periodic Payments. If you previously chose not to have federal income tax withheld and you now want withholding, complete another Form W-4P and submit it to your payer.

Payments to Foreign Persons and

Payments Outside the United States

Unless you are a nonresident alien, withholding (in the manner described above) is required on any periodic or nonperiodic payments that are delivered to you outside the United States or its possessions. You cannot choose not to have federal income tax withheld on line 1 of Form W-4P. See Pub. 505 for additional details.

In the absence of a tax treaty exemption, nonresident aliens, nonresident alien beneficiaries, and foreign estates generally are subject to a 30% federal withholding tax under section 1441 on the taxable portion of a periodic or nonperiodic pension or annuity payment that is from U.S. sources. However, most tax treaties provide that private pensions and annuities are exempt from withholding and tax. Also, payments from certain pension plans are exempt from withholding even if no tax treaty applies. See Pub. 515-T, Withholding of Tax on Nonresident Aliens and Foreign Entities, and Pub. 519, U.S. Tax Guide for Aliens, for details. A foreign person should submit Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to the payer before receiving any payments. The Form W-8BEN must contain the foreign person’s TIN.

Statement of Federal Income Tax Withheld From Your Pension or Annuity

By January 31 of next year, your payer will furnish a statement to you on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., showing the total amount of your pension or annuity payments and the total federal income tax withheld during the year. If you are a foreign person who has provided your payer with Form W-8BEN, your payer instead will furnish a statement to you on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, by March 15 of next year.

Common mistakes

  1. Not Signing the Form: A common mistake is failing to sign the Maryland Tax 766 form. Without your signature, the form is invalid and cannot be processed.

  2. Incorrectly Filling Out Personal Information: Ensure that your name, Social Security number, and address are accurate. Any errors can lead to processing delays.

  3. Choosing the Wrong Residency Status: Carefully check the box that reflects your residency status. Misidentifying yourself as a non-resident when you are a resident can lead to incorrect tax withholding.

  4. Leaving Out Allowances: When filling out the Federal Tax Withholding section, you must indicate the number of allowances you are claiming. Failing to do so will result in default withholding, which may not suit your financial situation.

  5. Not Designating an Additional Amount: If you want an extra amount withheld, you must specify this on line 3. Omitting this can lead to insufficient withholding.

  6. Ignoring the Instructions: It is crucial to read all instructions provided on the form. Overlooking important details can result in errors that affect your tax situation.

  7. Failing to Submit the Form Promptly: Delay in submitting the form can affect your tax withholding for the year. It is best to send it as soon as possible to avoid complications.

  8. Not Keeping a Copy: Always retain a copy of the completed form for your records. This can be helpful for future reference or in case of discrepancies.

Free Maryland Tax 766 PDF

Learn More on This Form

What is the Maryland Tax 766 form?

The Maryland Tax 766 form, also known as the Federal and Maryland State Tax Withholding Request for Pension Allowance, is a document used by retirees to specify their federal and state tax withholding preferences. This form must be submitted to the Maryland State Retirement Agency and covers both federal and Maryland state tax elections. It revokes any previous withholding elections, ensuring that the most current choices are in effect.

Who needs to complete the Maryland Tax 766 form?

Retirees receiving pension or annuity payments from the Maryland State Retirement and Pension System should complete this form. It is particularly important for those who wish to adjust their federal and state tax withholding amounts or for those who are newly retired and need to establish their withholding preferences.

What information is required on the form?

The form requires personal information, including your name, Social Security number, home address, and claim or identification number related to your pension or annuity. Additionally, you will need to indicate your federal tax withholding preferences by completing Form W-4P, which includes your marital status and the number of allowances you wish to claim. For Maryland state tax withholding, you will specify whether you are a resident and if you want state taxes withheld from your pension payments.

Can I choose not to have any federal income tax withheld?

Yes, if you do not wish to have federal income tax withheld from your pension or annuity payments, you can indicate this by checking the appropriate box on line 1 of Form W-4P. However, if you do not submit this form, the agency will withhold taxes as if you are married claiming three exemptions, which may not align with your actual tax situation.

What are the options for Maryland state tax withholding?

For Maryland state tax withholding, you have several options. You can choose not to have any Maryland income tax withheld, or if you are a Maryland resident, you can specify a whole dollar amount to be withheld from each monthly pension payment. Your choice will remain in effect until you decide to change or revoke it by submitting a new withholding request.

What happens if I do not submit the form?

If you fail to submit the Maryland Tax 766 form, the Maryland State Retirement Agency will withhold taxes based on default assumptions. This means that your withholding will be calculated as if you are married and claiming three exemptions, which may lead to an unexpected tax liability at the end of the year. It is essential to complete and submit the form to ensure your withholding aligns with your financial situation.

How often can I change my withholding preferences?

You can change your withholding preferences at any time by submitting a new Maryland Tax 766 form. This flexibility allows you to adjust your elections based on changes in your financial circumstances, tax liabilities, or personal preferences. It is advisable to review your withholding annually or whenever your financial situation changes.

Where should I send the completed form?

Once you have completed the Maryland Tax 766 form, you should return it to the Maryland State Retirement Agency at the address listed on the form: 120 East Baltimore Street, Baltimore, Maryland 21202-6700. Ensure that you sign the form, as it is not valid without your signature.