Maine Revenue Services
Important Changes for 2018
Please take a few minutes to review the changes in Maine tax law for 2018.
Click to see 2018 Form 1040ME
page 8 of 2018 Maine Income Tax Booklet
Conformity and why we care
With a few exceptions, Maine tax laws conform with Federal provisions in the
Federal Tax Cuts and Jobs Act of 2017 (“TCJA”) and
Bipartisan Budget Act of 2018
Conformity is assumed unless it’s OTHERWISE stated in Maine statutes as it is with regard to
Income Modifications (36 M.R.S. §§ 5122 and 5200-A)
Itemized Deductions (36 M.R.S. § 5125)
Personal Exemption Deduction (36 M.R.S. 5126-A)
etc.
These differences must be accounted for.
We handle the differences that exist between Maine and Federal tax laws, in many instances, by making manual entries in the tax software.
You will find that some differences are handled automatically by the tax software.
Because of this variance, when preparing the federal return, it is common for tax preparers to maintain a checklist for items that need special attention when completing the Maine return.
Listed below are the changes in Maine tax laws for tax year 2018 found on page 2 of the
2018 MAINE Individual Income Tax Booklet.
Schedule 1 - Income Modifications
Addition Income Modifications
There are no changes that are within scope & relate to AARP Tax-Aide.
Subtraction Income Modifications
Maine PERS pick-up contributions. Pick-up contributions distributed to the taxpayer in the form of a rollover may be subtracted from Maine income during the tax year of the rollover. Any amount not subtracted in the tax year of the rollover may be subtracted in the two tax years immediately following the rollover year.
Medical use of marijuana business expense. A deduction may be claimed for expenses related to carrying on a business as a registered caregiver or a registered dispensary, in an amount equal to the deduction that would otherwise be allowable for Maine purposes to the extent the deduction was disallowed under Internal Revenue Code.
At the Federal level:
§ 280E - Expenditures in connection with the illegal sale of drugs
Forbes article - What Cannabis Entrepreneurs Should Know About Tax § 280E
Maine is offering relief at the state level for those business expenses associated producing and dispensing medical marijuana that were not allowed at the federal level. [Sample tax return]
Standard deduction
Amount is equal to the federal standard deduction amount. Standard deduction amount is subject to phaseout rules at higher income levels.
Itemized Deduction
May be increased by the amount of real and personal property taxes not claimed on the Federal return because of the
$10,000 limitation on real estate & personal property taxes
$5,000 limitation on married filing separate (MFS) returns
Personal exemption
Maine personal exemption deduction
$4,150 For filing status Single, Head-of-Household, or Married filing separate
$8,300 For Married filing joint or Surviving spouse
Subject to phaseout at higher income levels
SCHEDULE PTFC/STFC
Sales Tax Fairness Credit
Base credit amount is determined by filing status and number of dependents claimed under the federal child tax credit rather than the number of exemptions claimed by the taxpayer.
Taxpayers claimed as a dependent on another taxpayer’s return do not qualify
Increases to range $125 - $225 (NOT avail on MFS returns)
Property Tax Fairness Credit
Credit is increased from 50% to 100% of the benefit base that is greater than 6% of taxpayer’s income.
Maximum credit amount is increased from $600 to $750
Taxpayers 65 and over, the maximum credit amount is increased from $900 to $1,200
Definition of benefit base is changed to
$2,050 for taxpayer filing as Single
$2,650 for taxpayer filing as Married filing joint or Head of Household that claim the federal child tax credit for one qualifying child or dependent
$3,250 for taxpayer filing as Head of Household that claim the federal child tax credit for more than one qualifying child or dependent and for taxpayers filing Married filing joint that claim the federal child tax credit for at least one qualifying child or dependent.
Married individuals using MFS filing status are not eligible for this credit
Schedule A - Adjustments to Tax
Section 1 - Refundable Credits
No changes that are within Scope and relate to AARP Tax-Aide.
Section 2 - nonRefundable Credits
Line 8. NEW! Dependent exemption tax credit.
This credit was created to mitigate the loss of the exemption for dependents. Although Maine has kept the Personal Exemption, it is different from the 2017 Personal Exemption.
Eligible taxpayers may claim a $300 tax credit for each qualifying child and dependent for whom the Federal child tax credit was claimed.
Nonrefundable credit
Nonresidents & part-year residents are eligible on a prorated basis.
LINE 19. Employer CR. for Family & Medical Leave
Eligible employers may claim a credit equal to the credit claimed on Federal return
Eligible employer defn: “…employer with a written policy in place that provides paid family and medical leave and satisfies minimum paid leave requirements”
Credit amount - Federal Form 8994, line 3
Line 20. Certain Homestead Modifications Cr.
This is a nonrefundable credit BUT unused portion may be carried forward
Federal AGI less than $55,000
Qualified expenses must first be certified by Maine State Housing Authority
Credit is lesser of $9,000 or “applicable percentage” of your qualified expenditures.
2018 CHANGES:
The Credit must be claimed in the tax year during which the certification of eligibility is issued by the Maine State Housing Authority.
Credits claimed after 2017 may not include qualified expenditures for which a credit has previously been claimed.