Filing a Maryland inheritance tax form isn't something most people do every day. When you're handling it after losing a family member, emotions are high, the paperwork feels unfamiliar, and one small error can trigger delays, penalties, or an unexpected tax bill. Knowing the common mistakes on Maryland inheritance tax forms to avoid can save you weeks of frustration and hundreds sometimes thousands of dollars. This guide walks you through the errors that trip people up most, so you can file with confidence the first time.

What are the most frequent errors people make on Maryland inheritance tax forms?

The Maryland Comptroller's office processes thousands of inheritance tax filings each year. The same handful of mistakes come up over and over. Most of them aren't complicated they're the kind of thing you'd catch if you knew to look for them. The biggest categories include incorrect valuations, missing beneficiaries, wrong asset reporting, missed deadlines, and confusing the inheritance tax with the estate tax. Let's break each one down.

How do incorrect property valuations cause problems?

This is probably the single most common error. Maryland requires you to report the fair market value of inherited property as of the date of the decedent's death not the original purchase price, not the tax-assessed value, and not what you think it might sell for next year.

People often use the county tax assessment because it's easy to find. But tax assessments in Maryland can be significantly lower (or occasionally higher) than actual market value. If the Comptroller's office catches an undervaluation, they can reassess the property and charge interest on the difference.

Practical example: A home in Montgomery County was assessed at $350,000 for tax purposes, but comparable sales in the neighborhood showed a fair market value closer to $475,000. The executor filed using the assessed number. The Comptroller's office flagged it, reassessed, and the estate owed additional tax plus interest.

A proper appraisal from a licensed Maryland appraiser is the safest approach, especially for real estate, business interests, or valuable personal property.

What happens if beneficiary information is wrong or missing?

The form requires you to list every beneficiary who receives property from the estate, along with their relationship to the deceased. Errors here are more common than you'd think misspelled names, wrong Social Security numbers, missing beneficiaries entirely, or listing the wrong relationship.

Why does relationship matter? Maryland's inheritance tax rate depends on the beneficiary's relationship to the decedent. Direct descendants, siblings, and spouses face different rates than nieces, nephews, friends, or unrelated individuals. If you accidentally list a niece as a daughter, you could underpay the tax and face penalties later.

Double-check every name, Social Security number, and relationship classification before submitting. If you're unsure about the proper classification, the Maryland Comptroller's website provides guidance, or you can review our step-by-step Maryland inheritance tax guide for detailed instructions.

Which assets do people forget to report?

People tend to focus on the obvious items the house, the car, the bank accounts. But Maryland inheritance tax applies to a broader range of assets. Commonly overlooked items include:

• Jointly held property Real estate or bank accounts held in joint tenancy still trigger a tax obligation for the non-deceased owner's share in many cases.
• Life insurance proceeds Depending on how the policy was structured and who the beneficiary is, proceeds may be taxable.
• Retirement accounts IRAs, 401(k)s, and pensions with named beneficiaries can still be subject to inheritance tax even if they bypass probate.
• Personal property of value Jewelry, art, collectibles, and antiques need to be reported at fair market value.
• Out-of-state property Maryland can tax the inheritance of intangible property (like investment accounts) even if the decedent owned real estate in another state.

If you're an out-of-state beneficiary, the rules get even more specific. We cover this in detail in our guide on paperwork requirements for out-of-state beneficiaries.

Can filing the wrong form cost you money?

Yes. Maryland has separate forms for different situations, and mixing them up causes real problems. The Form REV-1 (Maryland Estate Tax Return) and the inheritance tax reporting forms serve different purposes. Executors sometimes file the estate tax return when they need to file an inheritance tax form, or vice versa.

The estate tax applies to the total estate value, while the inheritance tax applies to what each individual beneficiary receives. They're calculated differently, filed differently, and have different thresholds. If you're an executor trying to figure out which form applies, our estate tax return filing instructions for executors clarify the distinction.

What happens if you miss the filing deadline?

Maryland gives you nine months from the date of death to file the inheritance tax return. Miss that window, and you're looking at penalties and interest that accrue from the original due date not from when you eventually get around to filing.

Late-filing penalties can reach up to 10% of the tax owed, plus interest. If the estate is complex and you genuinely need more time, you can request an extension, but you have to ask before the deadline passes. Waiting until after the due date and hoping for leniency doesn't work well in practice.

For a detailed breakdown of the timeline, check our article on when the Maryland inheritance tax is due after the death of the property owner.

Do people claim exemptions they don't qualify for or miss ones they do?

Both happen regularly. Maryland offers exemptions and reduced rates for certain beneficiaries. Surviving spouses, for instance, are fully exempt from the state inheritance tax. Children and other direct descendants pay a lower rate than distant relatives or non-family beneficiaries.

Common exemption mistakes include:

• Failing to claim the spousal exemption because the executor assumed it was automatic (it still needs to be properly documented on the form).
• Claiming an exemption for a beneficiary who doesn't actually qualify for example, a stepchild who was never legally adopted.
• Missing the exemption for charitable organizations. Property left to qualifying nonprofits is exempt from inheritance tax, but the organization must meet IRS requirements.
• Not recognizing that certain property transfers made before death (within three years) may still be taxable under Maryland's lookback rules.

Why do people confuse Maryland estate tax with inheritance tax?

This confusion is one of the costliest mistakes. Maryland is one of the few states that levies both an estate tax and an inheritance tax. They're separate taxes with separate rules.

Estate tax is paid by the estate itself based on the total value of everything the deceased owned. It only kicks in above a certain threshold (currently $5 million for deaths in 2024, adjusted annually).

Inheritance tax is paid by individual beneficiaries on what they receive. It applies regardless of the estate's total size.

An executor who only deals with the estate tax and forgets the inheritance tax or the other way around leaves the estate exposed to penalties and unpaid obligations.

What practical steps can you take right now to avoid these errors?

If you're preparing to file a Maryland inheritance tax return, here's a straightforward checklist to work through:

1. Get proper appraisals Hire a licensed appraiser for real estate and valuable personal property. Use the date-of-death value, not the tax-assessed value.
2. Verify every beneficiary's details Names, Social Security numbers, relationships, and shares of inheritance should all be confirmed before you fill out the form.
3. Make a complete asset inventory Include jointly held property, retirement accounts, life insurance, and intangible assets. Don't assume something is exempt just because it bypassed probate.
4. Use the correct form Confirm whether you need the inheritance tax form, the estate tax return, or both. If you're unsure, start with our step-by-step guide to filling out the form.
5. Calendar the deadline Nine months from the date of death. Put it in your phone, your planner, wherever you'll see it. File for an extension early if you need one.
6. Double-check exemption claims Confirm each exemption with documentation. The spousal exemption requires a marriage certificate or equivalent proof.
7. Review before you submit Have a second set of eyes on the form. A tax professional familiar with Maryland law can catch issues you might miss.

Maryland's inheritance tax system isn't designed to be tricky, but it does demand accuracy. Take your time, verify your numbers, and don't hesitate to get professional help if the estate has complicated assets or multiple beneficiaries. A few hours of careful work now prevents months of headaches later.

For official guidance, the Maryland Comptroller's estate and inheritance tax page provides current forms, rates, and filing instructions.