Form MW507: Employee’s Withholding Exemption Certificate

Form MW507: Employee’s Withholding Exemption Certificate: Key Takeaways

• Form MW507 is required for Maryland employees to specify state income tax withholding allowances accurately
• Employees claim exemptions based on personal, dependent allowances, or may claim exemption from withholding if criteria are met
• Employers must collect, retain, and potentially submit MW507 forms, withholding tax at the highest rate if the form isn't provided

Form MW507 is a critical document for Maryland employees and employers to ensure the proper amount of state income tax is withheld from wages.

Understanding how to complete and manage this form helps prevent over- or underpayment of Maryland taxes throughout the year.

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1. Overview of Form MW507 Employee’s Withholding Exemption Certificate

Form MW507, officially known as the Employee's Maryland Withholding Exemption Certificate, is used by employees in Maryland to instruct their employers on the correct Maryland income tax withholding amount.

The form helps align tax withholding with the employee’s actual tax liability to avoid surprises during tax season.

Maryland requires this form to be completed and maintained by employers for all employees subject to state tax withholding.

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2. Key Components of Form MW507 for Employees

Personal Information

Employees must provide:

• Full legal name
• Home address
• Social Security Number
• County of residence or, if a nonresident, the Maryland county or Baltimore City where employed

Marital Status and Withholding Rate Options

The form requires selecting one of the following withholding statuses:

• Single
• Married, but withhold at Single rate
• Married (surviving spouse or unmarried Head of Household) Rate

Exemptions and Allowances

Employees claim personal and dependent exemptions as allowed under Maryland Tax-General Article §10-211.

The total number of exemptions claimed should correspond to the calculations made using the Personal Exemption Worksheet that accompanies the form to avoid excess claims.

Additional Withholding and Exemptions from Withholding

Employees may voluntarily specify an additional dollar amount to withhold per pay period if they anticipate owing more tax.

Alternatively, employees may claim exemption from withholding if they meet criteria such as expecting no Maryland tax liability this year and having no tax liability last year, or if they meet residency or military spouse exemption conditions.

3. Employer Responsibilities for Form MW507

Maryland employers must collect Form MW507 from each employee to determine the correct amount of state income tax withholding.

If an employee does not submit the form, the employer is required to withhold Maryland income tax as if the employee claimed no exemptions, meaning a higher withholding rate applies.

Employers must retain employees’ completed Form MW507 copies for their records. In some cases, employers may need to submit these forms to the Maryland Comptroller’s Office for approval before applying new withholding certificates.

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4. Employee Responsibilities and Updating Form MW507

Employees should carefully complete Form MW507 upon starting employment or whenever personal or financial circumstances change.

Key events prompting a new submission include changes in:

• Number of exemptions claimed
• Marital status
• Residency or other factors affecting withholding eligibility

If any such changes occur, employees must file an updated Form MW507 with their employer within 10 days.

Regular review and updating of withholding allowance helps maintain accurate tax withholding and reduces the likelihood of tax surprises at year-end.

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5. Why Accurate Completion of Form MW507 Matters

Completing Form MW507 correctly ensures that the right amount of Maryland state income tax is withheld from employee wages.

Overwithholding leads to unnecessarily reduced take-home pay during the year, while underwithholding could result in a tax bill and potential penalties at filing time.

Using personal exemption calculations and understanding one's eligibility for exemption helps employees optimize tax withholding from the start.

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6. Additional Tips and Best Practices for Form MW507

• Review your withholding certificate annually or following major life events like marriage or having children
• Use the Personal Exemption Worksheet included with the form to calculate allowable exemptions confidently
• Communicate promptly with your employer if your status or exemption count changes
• Employers should maintain organized records and provide employees with information about completing Form MW507

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7. Helpful Resources for Form MW507

For more information and official materials related to Form MW507, consider the following authoritative resources:

• Maryland Comptroller's Office - Individual Withholding Forms
• Maryland Comptroller's Office - Employer Withholding Forms
• Maryland Department of Legislative Services - Regulations
• University of Maryland - Payroll Services
• Wolters Kluwer - Form MW507 Information

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