Maine Tax Form 1040ME - Individual Income Tax Instructions

IMPORTANT CHANGES

ELECTRONIC FILING and PAYMENT MANDATES. 36 M.R.S.A. § 193, sub-§§ 2 and 3. The following rules relate to electronic filing and tax payments mandates.

Rule 104 affecting tax return preparers (“Electronic Filing of Maine Tax Returns”) mandates electronic filing of certain Maine tax returns if specified thresholds are exceeded. The rule applies to original Maine individual income, sales, use, service provider and income tax withholding returns, but does not include amended versions of those returns. The rule includes provisions for the State Tax Assessor to waive the requirement to file electronically where the mandate causes undue hardship.

Rule 102 (“Electronic Funds Transfer”) covers the remittance of taxes by electronic transfer for certain taxpayers making large tax payments. Effective January 1, 2008, EFT thresholds are based on the taxpayer’s combined tax liability to the state for most of the major taxes administered by Maine Revenue Services, including Maine sales tax, individual and corporate income tax and Maine income tax withholding. In addition, a lower threshold triggering the EFT requirement applies

For more information, visit www.maine.gov/revenue (select Laws & Rules).

DOMICILE “SAFE HARBORS”. 36 M.R.S.A. § 5102(5). Generally, individuals who are domiciled in Maine are considered residents for Maine income tax purposes. However, Maine law now provides that for tax years beginning on or after January 1, 2007, certain individuals spending significant time outside Maine will not be treated as resident individuals for income tax purposes even though they are domiciled in Maine. For more information on these exceptions, see the Residency Worksheet and instructions on page 4 and the Guidance to Residency “Safe Harbors” document available at www.maine.gov/revenue/forms (select Income Tax Guidance Documents).

PAYMENTS TO FIREFIGHTERS AND EMERGENCY MEDICAL RESPONDERS. 36 M.R.S.A. § 5122(1)(Z). Qualified payments and tax benefits from states or municipalities to firefighters and emergency medical responders must be added back to adjusted gross income for Maine income tax purposes, to the extent that the payments are excluded from federal gross income. Applies to tax years beginning on or after January 1, 2008.

DEDUCTION FOR DENTISTS WITH MILITARY PENSIONS. 36M.R.S.A. § 5122(2)(AA). Certain licensed dentists who practice an average of 20 hours or more per week in Maine and accept patients who receive MaineCare benefits may reduce Maine taxable income by the amount of military retirement benefits not included in the pension income deduction allowed by 36 M.R.S.A. § 5122(2)(M). Applies to tax years beginning on or after January 1, 2008.

 DEDUCTION FOR AIRPORT AUTHORITY BOND INTEREST. 36 M.R.S.A. § 179(10). Maine adjusted gross income may be reduced by the amount of interest from bonds issued by a Maine Airport Authority to the extent included in federal adjusted gross income.

BONUS DEPRECIATION ADD-BACK. 36 M.R.S.A. § 5122(1)(AA). Maine will not conform to the net increase in depreciation applicable to the 50% bonus depreciation claimed for federal income tax purposes under section 103 of the Economic Stimulus Act of 2008. Maine taxable income must, therefore, be increased by this amount. Applies to tax years beginning in 2008 and 2009.

BONUS DEPRECIATION RECAPTURE. 36 M.R.S.A. § 5122(2)(AA).A subtraction modification is allowed equal to the net decrease in depreciation, in years after the asset was placed in service, applicable to the 50% bonus depreciation claimed for federal income tax purposes under section 103 of the Economic Stimulus Act of 2008. Applies to tax years beginning on or after January 1, 2009.

ITEMIZED DEDUCTION - MORTGAGE INSURANCE PREMIUMS. 36M.R.S.A. § 5125(3)(F). Maine itemized deductions must be reduced by the amount of mortgage insurance premiums claimed for federal tax purposes under IRC § 163(h)(3)(E). Applies to tax years beginning on or after January 1, 2008.

 CREDIT FOR EDUCATIONAL OPPORTUNITY. 36 M.R.S.A. § 5217-D. A nonrefundable credit is available for certain educational loan payments for Maine resident individuals who earn an associate or bachelor’s degree from a Maine college or university and who subsequently live in Maine, work for an employer located in Maine and pay taxes in Maine. The credit is available to eligible graduates and employers making loan payments on behalf of qualifying employees. Unused credits may be carried over for up to 10 tax years. If eligible, both spouses on a married-joint return may claim the credit. Maine universities and colleges certify qualifying loans and applicable caps.

The employer credit is limited to eligible payments made during the term of the qualified employee’s employment and is also limited to 50% of the credit amount if the qualified employee works only part-time. A qualified employee is an employee that would be eligible to claim the credit if they had made the loan payments.

Only scheduled loan payments made during the tax year are eligible for the credit. Generally, the credit is available with respect to Educational Opportunity Programs beginning after 2007.

REFUNDABLE CREDIT FOR REHABILITATION OF HISTORIC PROPERTIES. 36 M.R.S.A. § 5219-BB. For qualified expenditures incurred after 2007, the credit is equal to either 1) 25% of qualified expenditures with respect to certified historic structures located in Maine for which a federal credit is claimed under the Code, Section 47; or, 2) 25% of qualified expenditures between $50,000 and $250,000 with respect to certified historic structures located in Maine for which a federal credit is not claimed. The credit is claimed in the tax year the property is placed in service. Qualified expenditures exclude expenditures incurred before 2008 and after 2013. Eligible rehabilitations are certifi ed by the Maine Historic Preservation Commission. Limitations and recapture provisions apply.

USE TAX. 36 M.R.S.A., §1861-A. The optional percentage rate for reporting use tax liability on individual income tax returns is increased from 0.04% to 0.08% of Maine adjusted gross income. Applies to tax years beginning on or after January 1, 2008.

SALES TAX ON CASUAL RENTALS OF LIVING QUARTERS. 36 M.R.S.A. § 1951-A(3). Individuals with an expected sales tax liability during the income tax year of less than $2,000 due to casual rental of living quarters may report the liability on, and make payment with, that individual’s Maine income tax return. Effective June 30, 2008.

Maine Revenue Services Taxpayer Privacy Policy

Maine Revenue Services (“MRS”) maintains the highest standards in handling personally identifi able taxpayer information. Taxpayers have the right to know what information is kept on file about them, to have reasonable access to it, and to receive a copy of their file. Under penalties of law, employees and agents of MRS are prohibited from willfully inspecting information contained on any tax return for any purpose other than the conduct of offi cial duties. In addition, MRS employees and agents are prohibited from disclosing tax information to anyone other than the taxpayer except in a limited number of very specifi c circumstances. No unassociated third parties may receive information pertaining to tax returns without written permission from the affected taxpayer except as allowed under 36 M.R.S.A. § 191. Communications that do not meet the defi nition of tax information are subject to the general confi dentiality and public inspection provisions of Maine’s “Freedom of Access” laws. When confi dential taxpayer information is stored by MRS, it is kept in a secure location where it is accessible only to authorized employees and agents of MRS. If you have any questions regarding the Privacy Policy, please contact MRS at (207) 626-8475.

Record-keeping Requirements

Keep a copy of your Maine income tax return, including worksheets, and supporting documents (such as W-2 and 1099 forms) for the same period required for keeping your federal income tax records. This is generally 3 years from the date the return was filed. You should keep some records longer. For example, keep property records (including those on your home) as long as they are needed to calculate the basis of the original or replacement property. See 36 M.R.S.A. § 135.

GENERAL INSTRUCTIONS

SHOULD I FILE A MAINE INCOME TAX RETURN?

If you are a resident of Maine who is required to file a federal income tax return, you must file a Maine income tax return. If you are not required to file a federal return, but do have income subject to Maine income tax resulting in a Maine income tax liability, a Maine return must be filed. You do not have to file a Maine income tax return if you meet all of the following requirements: 1) your Maine taxable income is $2,000 or less, 2) you claim yourself as an exemption on your return, AND 3) you are not subject to the Maine Minimum Tax. However, you must file a return to claim any refund due to you.

If you are a nonresident or a “Safe Harbor” resident who has income from Maine sources resulting in a Maine income tax liability, you must file a Maine income tax return. However, you may not be required to file if the number of days worked in Maine as an employee is 10 or less and your only Maine income is compensation for personal services. See 36 M.R.S.A. § 5142(8-A).

Am I a Resident, “Safe Harbor” Resident, Part-Year Resident, or Nonresident?

To determine your residency status for 2008, read the following and check the proper box. Retain this worksheet for your records.

Domicile: Domicile is the place an individual establishes as his or her permanent home and includes the place to which he or she intends to return after any period of absence. A number of factors associated with residency are relevant in the evaluation of a claimed domicile. A domicile, once established, continues until a new, fixed and permanent home is acquired. To change domicile, a taxpayer must exhibit actions consistent with a change. No change of domicile results from moving to a new location if the intent is to remain only for a limited time, even if it is for a relatively long duration.

RESIDENCY WORKSHEET

 Full-Year Resident:

  1. Maine was my domicile for the entire year of 2008; OR
  2. I maintained a permanent place of abode in Maine for the entire year and spent a total of more than 183 days in Maine.

“Safe Harbor" Resident:

General Safe Harbor - Maine was my domicile in 2008, I did not maintain a permanent place of abode in Maine, I maintained a permanent place of abode outside Maine and I spent no more than 30 days of 2008 in Maine. Individuals qualifying under the safe harbor rule will be treated as a nonresident for Maine individual income tax purposes. IF YOU ARE A “SAFE-HARBOR” RESIDENT, YOU MUST FILE FORM 1040ME WITH SCHEDULE NR OR NRH.

 Foreign Safe Harbor - I spent at least 450 days in a foreign country during any 548-day period beginning after 2006. The taxpayer must also meet other eligibility criteria. If you qualify for the Foreign Safe Harbor, you will be considered a “Safe Harbor” Resident and treated as a nonresident for the 548-day period even though you were domiciled in Maine.

For more information and examples on “Safe Harbors”, see the Guidance to Residency “Safe Harbors” brochure available at www. maine.gov/revenue/forms or call the forms line at (207) 624-7894.

Part-Year Resident: 

I was domiciled in Maine for part of the year and was not a full-year resident as defined in (2) above.

IF YOU ARE A PART-YEAR RESIDENT, YOU MUST FILE FORM 1040ME WITH SCHEDULE NR OR NRH.

  Nonresident:

I was not a resident or part-year resident in 2008, but I do have Maine-source income. Note: If you filed as a nonresident alien on your federal income tax return, file as a nonresident alien on your Maine income tax return, Form 1040ME. Follow the federal filing requirements for filing status, number of exemptions, federal adjusted gross income, and itemized deductions.

IF YOU ARE A NONRESIDENT, YOU MUST FILE FORM 1040ME WITH SCHEDULE NR OR NRH.

For additional information on determining Maine residency, see the Maine Revenue Services Guidance to Residency Status and Guidance to Residency “Safe Harbors” brochures at www.maine.gov/revenue/forms or call the forms line at (207) 624-7894.

I AM IN THE ARMED FORCES. WHAT IS MY RESIDENCY STATUS?

 Maine Resident: Except for “Safe Harbor” Residents treated as nonresidents for Maine income tax purposes (see example below), a Maine resident who enters the U.S. armed forces remains a Maine resident throughout the period of military service (even when absent from Maine on military orders) and is subject to the same filing requirements as any other Maine resident. This remains true unless you take legal action to change your residency (domicile) to another state.

 Example: Paul, single, is a member of the U.S. armed forces stationed in Arizona and domiciled in Maine. He lived in military housing in Arizona during all of 2008 and did not maintain a permanent place of abode in Maine at any time during the year. While on leave, he stayed with relatives in Maine for 15 days. Paul is a “Safe Harbor” resident and will be treated as a nonresident for Maine income tax purposes.

Nonresident: If you are not a Maine resident, but stationed in this state by military orders, your military income is not subject to Maine tax. However, if you or your spouse earned non-military pay in Maine resulting in a Maine income tax liability, you must file Form 1040ME with Schedule NR or NRH.

Instructions for Married Couples

WE ARE BOTH FULL-YEAR MAINE RESIDENTS. HOW DO WE FILE WITH MAINE? You must file a Maine return using the same filing status as properly used on your federal return.

I AM A FULL-YEAR MAINE RESIDENT, BUT MY SPOUSE IS NOT. HOW SHOULD WE FILE? If you filed a joint federal return you have two options:

  1. You can choose to file a joint Maine return as if both of you were full-year Maine residents (you may qualify for Credit for Tax Paid to Another Taxing Jurisdiction, see Form 1040ME, Schedule 3); OR
  2. Each can file a Maine return as a single individual using Form 1040ME with Schedule NRH. Each return must show the proper residency status. (If the nonresident, or “Safe Harbor” resident spouse, has no Maine-source income, that spouse does not have to file a Maine return.) You may choose this option only if you filed a joint federal return. Otherwise, you must file a Maine return using the same filing status as properly used on your federal return.

WE ARE BOTH NONRESIDENTS or “SAFE HARBOR” RESIDENTS, FILED A JOINT FEDERAL RETURN, BUT ONLY ONE SPOUSE HAS MAINE-SOURCE INCOME. You have two options:

  1. You can choose to file a joint Maine return and determine your joint tax liability as nonresidents using Form 1040ME with Schedule NR; OR
  2. The spouse who has Maine-source income can choose to file a return as a single individual using Form 1040ME with Schedule NRH.

WE ARE BOTH NONRESIDENTS or “SAFE HARBOR” RESIDENTS AND BOTH HAVE MAINE- SOURCE INCOME. You must file a Maine return using the same filing status as properly used on your federal income tax return, and you must complete Form 1040ME and Schedule NR.

WHEN MUST I FILE MY RETURN? No later than April 15, 2009.

WHAT IF I NEED MORE TIME TO FILE? If you are unable to file your return by Wednesday, April 15, 2009, Maine allows an automatic six- month extension of time to file. Requests for additional time to file must be submitted in writing prior to the expiration of the six-month period. Generally, the total extension period cannot exceed eight months. The automatic extension is only effective if the return is filed within the six-month period. See “What if I file or pay late?” below.

CAUTION: AN EXTENSION TO FILE YOUR MAINE RETURN IS NOT AN EXTENSION FOR PAYMENT OF TAX. If you owe tax, you must pay at least 90% of that amount by the original due date for filing your return (April 15, 2009 for calendar-year filers) in order to avoid the penalty for late payment of tax. The remaining 10% must be paid when the return is filed on or before October 15, 2009 in order to avoid the failure-to-pay penalty. However, interest is charged on any tax paid after the original due date of your return.

Remit your extension payment electronically using Maine EZ Pay (no forms required) at www.maine.gov/revenue or with the payment voucher on page 8 by the original due date for filing your Maine return to: Maine Revenue Services, PO Box 9114, Augusta, ME 04332-9114. If you make a payment prior to filing your return, you must use a Long Form (1040ME) when you file your return.

WHERE DO I GET FORMS? You may download forms from the internet at www.maine.gov/revenue/forms or order forms by calling (207) 624-7894. Income tax booklets are also available at most banks, public libraries, and post offices located in Maine. Note: you must file an original or downloadable state form – photocopies are not acceptable.

MAY I ROUND TO WHOLE DOLLARS? Yes. Round down to the next lower dollar any amount less than 50 cents. Round up to the next higher dollar any amount 50 cents or more.

I AM GETTING A REFUND THIS YEAR. WHEN WILL I GET MY CHECK? Please allow at least eight weeks for your refund to arrive before you contact us. For automated information about the status of your refund request, visit our web site at www.maine.gov/revenue (select Where’s My Refund).

WHAT SHOULD I DO IF THERE IS A CHANGE IN MY MAINE TAX LIABILITY? You must file a Maine amended return if you file a federal amended return, if the Internal Revenue Service makes a change to your federal return, or if your Maine tax liability changes for any other reason. Individuals must file a Maine amended return (1040X-ME) within 90 days after filing a federal amended return or after receiving final determination of any change by the Internal Revenue Service. Maine imposes a penalty for failure to notify the state of these changes. When filing a Maine amended return, attach a copy of your federal amended return (Form 1040X) or the Internal Revenue Service agent’s report to your form. If the change is to the Maine return only, include a description of the change on page 2 of Form 1040X-ME.

WHAT IF A TAXPAYER DIES? When an individual dies before filing a tax return for a given year, a personal representative or surviving spouse must file a return for the decedent. If the decedent was single and a refund is due, attach Form 1310ME (Statement of Person Claiming Refund Due a Deceased Taxpayer) to the return. A surviving spouse may claim a refund by filing a joint return with the decedent without Form 1310ME. The surviving spouse may file a joint return with the decedent provided similar filing was followed for federal purposes. Write “deceased” above the deceased taxpayer’s name. Enter the date of death in the spaces above the signature area on your return.

WHAT IF THE FEDERAL TAX IS FORGIVEN DUE TO A COMBAT CASUALTY? A taxpayer whose federal income tax liability is forgiven under IRC § 692 due to a combat casualty is similarly forgiven the Maine income tax for the same period(s). To request tax forgiveness, include with your Maine return a statement that shows the computation of Maine tax liability before any amount is forgiven and the amount that is to be forgiven along with any other documentation supporting your claim.

WHAT IF I AM UNABLE TO PAY MY TAXES? If you are unable to pay your taxes in full, you should file your return by the due date and request, in writing, a payment plan. In your request, give your name, social security number, and the amount of money you can pay and indicate how often you can make that payment. Your fi rst payment should be submitted with the request and you should continue to make the payments as you have indicated until Maine Revenue Services contacts you. Indicate your name, address, telephone number and tax year on your check or money order. A payment plan request will not stop interest or penalties from being added to the tax balance. Requests should be forwarded to Maine Revenue Services, Compliance Division, 888 State House Station, Augusta, Maine 04332-0888. Also, you may call (207) 621-4300 or e-mail compliance.tax@maine.gov.

WHAT IF I FILE OR PAY LATE? You will be charged interest. For calendar year 2009, the interest rate is 8%, compounded monthly, on income tax not paid by the due date (April 15, 2009 for calendar-year filers). An extension allows only additional time to file; it does not allow additional time for payment of tax due or prevent accrual of interest. In addition to interest, a penalty is assessed for late filing. A separate penalty is assessed for the late payment of tax. The penalty for late filing is $25 or 10% of the tax due, whichever is greater. If a tax return is not filed upon demand, the penalty for late filing is 100% of the tax due. The penalty for late payment of the tax is 1% per month up to a maximum of 25%. Both penalties are assessed when the return is filed late and the tax is paid late. The law also provides for penalties for underpaying estimated tax, preparing or filing a fraudulent income tax return, and for understating income. For more information on late filing, see 36 M.R.S.A. § 5278 or visit www.maine.gov/revenue.

WHAT IF I AM AN INNOCENT OR INJURED SPOUSE? Maine Revenue Services acknowledges Innocent and Injured Spouse Claims (see federal Form 8379 or Form 8857 and related instructions) for purposes of individual income tax only. The spouse is not required to request federal relief prior to requesting state relief. For more information call the Compliance Division of Maine Revenue Services at (207) 624-9595 or e-mail compliance.tax@maine.gov. If you believe that your refund may be set off to pay a debt other than an income tax debt, you must contact the other tax department or agency directly to request injured spouse relief.

SHOULD I CHANGE MY INCOME TAX WITHHOLDING FOR 2009? You may need to review your withholding if the amount of your refund or balance due is large. A married couple with two incomes may choose to use the single withholding table. See your employer for details. For withholding questions, contact Maine Revenue Services at (207) 6268475 or e-mail withholding.tax@maine.gov.

WHO MUST FILE AND PAY ESTIMATED TAX? Generally, you must pay estimated tax if your tax after subtracting withholding and other allowable credits is $1,000 or more and if the tax liability for the prior year was $1,000 or more. Equal installments of estimated tax are due on April 15, June 15, September 15 and January 15. Payments can be made electronically using Maine EZ Pay (no forms required) at www. maine.gov/revenue or download Form 1040ES-ME at www.maine. gov/revenue/forms or call (207) 624-7894 to order the form.

IS THERE A PENALTY FOR NOT PAYING ENOUGH ESTIMATED TAX? Yes. If you did not pay enough estimated tax or have enough tax withheld from your earnings by any due date for paying estimated tax, you may be subject to a penalty. For calendar year 2008, the underpayment penalty is 12%, compounded monthly. For calendar year 2009, the penalty is 8%, compounded monthly. If your 2008 tax liability is $1,000 or more, you should refer to Form 2210ME, Underpayment of Estimated Tax by Individuals.

WHAT IF I AM MOVING? Let us know your new address. E-mail: income. tax@maine.gov, or write: Maine Revenue Services, P.O. Box 9100, Augusta, Maine 04332-9100.

SPECIFIC INSTRUCTIONS

Note: Form 1040ME is designed to comply with optical scanning requirements. The spaces outlined in red must be completed carefully in black or blue ink. Letters and numbers must be entered legibly within the outline area. Letters must be in upper case only. Name, address, etc., start on the left; dollar amounts start from the right.

Due to scanning requirements, only original forms and schedules may be submitted. PHOTOCOPIES ARE NOT ACCEPTABLE.

For information on electronic filing, visit our web site at www.maine.gov/revenue.

STEP 1: NAME, ADDRESS, SOCIAL SECURITY NUMBERS

Name and Address. If you have a pre-printed label (located on the front cover of this booklet) and your name and address are correct, peel it off and place it on your completed Form 1040ME inside the red dotted lines.

If you do not have a pre-printed label or the name or address on the label is not correct, please print or type your name(s) and mailing address in the spaces provided. Social Security Number(s): You must enter your social security number(s) in the spaces provided.

Line 1. Maine Clean Election Fund. FOR MAINE RESIDENTS ONLY. Check the box for you and/or your spouse if you want $3 of your tax dollars applied to the Maine Clean Election Fund. This fund was established to finance the election campaign of certified Maine Clean Election Act candidates. Please note that checking this box does not increase your tax or reduce your refund but reduces General Fund revenue by the same amount.

Line 2. Commercial Farming or Fishing. Check this box if at least two-thirds of your gross income for 2008 was from commercial farming or fishing as defined by the Internal Revenue Code. Include your spouse’s income in your calculation if you are filing a joint return.

STEP 2: FILING/RESIDENCY STATUS, NUMBER OF EXEMPTIONS

Lines 3-7. Filing Status. Check the box for the filing status properly used on your federal income tax return. If you filed a married-joint federal return and one spouse is a part-year resident, nonresident or “Safe Harbor” resident, see the instructions for married couples on page 4. If you are filing married filing separately, be sure to include your spouse’s name and social security number.

Composite Return. For pass-through entities only. Check the red box below line 7 if this is a composite filing. A composite return may be filed by a pass-through entity on behalf of nonresident partners, shareholders or members. You must complete and enclose Schedule 1040C-ME and Schedule NRC with your composite return. For more information on composite filing and forms, visit our web site at www.maine.gov/revenue.

Lines 8-11. Residency Status. See General Instructions on page 4 to determine your residency status. Check the appropriate box on your return. Note: Check box 8a if you are claiming “Safe Harbor” Residency status for all or part of the year. If you check the box on line 8a, 9, 10 or 11, enclose a copy of your federal return.

 Schedule NRH. Check the red box below line 11 if you are completing and filing Schedule NRH with Form 1040ME. For more information on Schedule NRH, see pages 4, 29 and 30 of the nonresident long form booklet.

Line 12. Age and Blindness. Check the appropriate boxes for you and your spouse if you or your spouse were 65 or over and/or blind for federal income tax purposes.

Line 13. Exemptions. Enter the total number of exemptions properly claimed on your federal return.

STEP 3: CALCULATE YOUR TAXABLE INCOME

Line 14. Federal Adjusted Gross Income. Enter the amount of income shown on your federal income tax return (federal Form 1040EZ, line 4 or 1040A, line 21 or 1040, line 37). Enter negative amounts with a minus sign in the box immediately to the left of the number.

Line 15. Income Modifications. You must complete this line if you have income that is taxable by the state but not by the federal government (additions) or income that is taxable by the federal government but not by the state (subtractions). Complete Schedule 1 on page 19 to calculate your entry for this line. Enter a negative amount with a minus sign in the box immediately to the left of the number.

Part-year residents, Nonresidents and “Safe Harbor” residents: See instructions for Schedule NR or NRH.

Line 17. Deduction. If you itemize deductions on your Maine return (based on federal itemized deductions), you must file using the long form, Form 1040ME, and complete Schedule 2 on page 19. (NOTE: If your filing status is nonresident alien, you must use itemized deductions.) If you use the standard deduction on your federal return, you must use the Maine standard deduction on your Maine return. In 2008, the Maine standard deduction amounts may differ from federal standard deduction amounts.

The Maine standard deduction amounts are listed below.

MAINE STANDARD DEDUCTION AMOUNTS:

SINGLE ---------------------------------------------------------------$5,450
MARRIED FILING JOINTLY OR QUALIFYING WIDOW(ER) ----$9,100
HEAD OF HOUSEHOLD ---------------------------------------------$8,000
MARRIED FILING SEPARATELY -----------------------------------$4,550

IF YOU CAN BE CLAIMED AS A DEPENDENT on another person’s return, the standard deduction is the greater of $900 or earned income plus $300 (up to the standard deduction amount shown above for your filing status).

Additional Standard Deduction for Age and/or Blindness:

Unmarried (single or head of household): the additional amount is $1,350 if the individual is 65 or over OR blind; $2,700 if the individual is both 65 or over AND blind.

Married (whether filing jointly or separately) or a qualified widow(er): the additional standard deduction is $1,050 if one spouse is age 65 or over OR blind; $2,100 if one spouse is 65 or over AND blind; $2,100 if both spouses are 65 or over OR blind; $4,200 if both spouses are 65 or over AND blind, etc.

NOTE: If married filing separately, the additional deduction amounts pertaining to your spouse apply only if you can claim an exemption for him/her.

Line 18. Exemption. Multiply the total number of exemptions on line 13 by $2,850 and enter the result on this line.

Caution: If you filed federal Form 1040EZ and checked one or both boxes on line 5 of that form and line F of the “Worksheet for dependents who checked one or both boxes on line 5” is zero (see reverse side of federal Form 1040EZ), enter zero on line 18 of your Maine long form. If you checked one or both boxes on federal Form 1040EZ, line 5 and line F of the worksheet is $3,500, enter $2,850 on line 18 of your Maine long form.

STEP 4: CALCULATE YOUR TAX AND CREDITS

Line 20. Income Tax. Find the tax for the taxable income on line 19 in the tax table on pages 31 through 35 or compute your tax based on the tax rate schedule on page 35.

Line 21. Tax Additions. See Maine Schedule A on page 21 and instructions beginning on page 10. If you are required to complete Section 1 of Schedule A, enter on this line the amount from line 4 of Maine Schedule A.

Line 22. Low-Income Tax Credit. If your taxable income, line 19, is $2,000 or less, neither you nor your spouse (if married) is claimed as a dependent on somebody else’s return, and you are not subject to the Maine Minimum Tax, you are entitled to a credit equal to the income tax that would normally be due. If you qualify, enter the amount from line 20 plus line 21 on this line. You are not required to file a return if you qualify for this credit. However, you must file a return to claim any refund due to you.

Line 24. Tax Credits. See Maine Schedule A on page 21 and instructions beginning on page 10. If you qualify for any of the credits listed, complete Section 2 of Maine Schedule A. Enter the amount from line 21 of Maine Schedule A on this line.

Line 25. Nonresident/“Safe Harbor” Resident Credit. Enter the amount of nonresident credit from either Maine Schedule NR, line 9 or Maine Schedule NRH, line 11. Attach the completed schedule and related worksheets to your return. Also, enclose a copy of yourfederal return and all W-2 forms. If you were assigned to temporaryduty outside Maine, also enclose copies of your TDY papers.

Line 26. Net Tax. Subtract lines 24 and 25 from line 23. Nonresidents and “Safe Harbor” Residents only: show negative amounts with a minus sign in the box to the left of the number. A negative amount represents unused business credits claimed on Schedule A that may be carried over. See instructions for Maine Schedule A.

STEP 5: CALCULATE YOUR TAX PAYMENTS

Line 28a. Maine Income Tax Withheld. Enter the total amount of Maine income tax withheld. Enclose (do not staple or tape) supporting W-2, 1099 and 1099ME forms. Unless the 1099 form is required as supporting documentation for another schedule or worksheet, only send 1099 forms if there is State of Maine income tax withheld shown on them. Legible photocopies of your W-2 and 1099 forms on 8 1/2 by 11 inch paper are preferred.

Line 28b. 2008 Estimated Tax Payments and 2007 CreditCarried Forward. Enter the total amount of estimated taxes actually paid for 2008 and any 2007 credit carried forward. See General Instructions on page 5 for further explanation of estimated payments. Real Estate Withholding Payments (REW): also enter on this line amounts withheld in 2008 on the sale of real estate in Maine. Enclose a copy of Form REW-1 to support your entry.

Line 28d. Refundable Child Care Credit. Enter the amount of refundable Child Care Credit from the Child Care Credit Worksheet, line 5 on page 22.

STEP 6: CALCULATE YOUR USE TAX, VOLUNTARY CONTRIBUTIONS, PARK PASSES

Line 31. Use Tax (Sales Tax). If you have purchased items for use in Maine from retailers who do not collect the Maine sales tax (such as businesses in other states and many mail order and internet sellers), you may owe Maine use tax on those items. The use tax is calculated at the same rate as the sales tax. The rate of tax for purchases in 2008 is 5%. If you paid another state’s sales or use tax on any purchase, that amount may be credited against the Maine use tax due on that purchase. If you do not know the exact amount of Maine use tax that you owe, either multiply your Maine adjusted gross income from line 16 by .08% (.0008) or use the table below. NOTE: If you use the percentage method or the table and owe use tax on items that cost $1,000 or more, you must add the tax on those items to the percentage or table amount. Use Tax on items that cost more than $5,000 must be reported on an individual use tax return by the 15th day of the month following its purchase. If it is determined that you owe more use tax than what is shown on your return, you may be subject to an assessment for the additional use tax plus interest and penalty. For additional information on Maine use tax visit www.maine. gov/revenue/salesuse/usetax/usetax.html or call (207) 624-9693.


USE TAX TABLE

Maine Adjusted Gross Income
Use Tax Amount
At Least
 
Less Than
$ 0
$ 6,000
$ 5
6,000
12,000
10
12,000
18,000
14
18,000
24,000
19
24,000
30,000
24
30,000
36,000
 
29
36,000
42,000
34
42,000
48,000
 
38
48,000
54,000
43
54,000
60,000
 
48

$60,000 and up — .08% of Maine 1040ME, Line 16


Line 31a. Sales Tax on Casual Rentals of Living Quarters. If you choose to report sales tax on casual rentals of living quarters on your Maine individual income tax return in lieu of reporting the amounts on Maine sales tax returns, multiply the rentals received in 2008 not reported on any sales tax return by 7% (.07). Casual rentals include the rental of a house, cottage, condominium unit, vacation home, camp or any other place kept, used, maintained, advertised or held out to the public as a place where living quarters are offered for rent to transient guests or tenants. Note: If the sales tax on casual rentals of living quarters is greater than $2,000 or you have any other sales tax collections to report other than Use Tax you owe on line 31, you must file a sales/use tax return to report all sales tax you owe to the State of Maine. Sales and Use Tax forms are available at www.maine.gov/revenue/forms.

Line 32. Voluntary Contributions and Park Passes. Enter the total of your voluntary contributions and state park pass purchases from Schedule CP, line 14. See page 23.

STEP 7: CALCULATE YOUR REFUND OR BALANCE DUE

Line 34b. Refund. Refunds of $1.00 or more will be issued to you. Checks that are returned to us cannot be remailed until the correct address is known.

Lines 34c-34e. Direct Deposit of Refund. You may have your refund directly deposited into your checking or savings account (if it is $10,000 or less) or to an existing NextGen College Investing Plan® Account (NextGen® Account). (The NextGen Program is administered by the Finance Authority of Maine). ENTRIES MUST BE ACCURATE. You should call your bank to make sure your direct deposit will be accepted and to get the correct routing number and account number. Fill in the requested information on lines 34c, 34d and 34e.

34c. Routing Number (“RTN”): The routing number must be 9 digits. The RTN must begin with 01 through 12 or 21 through 32. If it does not, the direct deposit will be rejected and a refund check will be sent instead. (NOTE: If you are directing your refund to a NextGen Account, enter the following RTN: 043000261).

34d. Bank Account or NextGen Account Number: Your account number can be up to 17 characters (both numbers and letters). Omit hyphens, spaces and special symbols. Enter the number from left to right and leave any unused boxes blank. NOTE: For NextGen Accounts, the account number is the account owner’s 9-digit social security number. If your account number is listed incorrectly or is invalid, the direct deposit will be rejected and a refund check will be sent instead.

34e. Type of Account: Indicate whether the account is a checking, savings, or NextGen Account. NOTE: Except for NextGen Accounts, the account to receive the direct deposit must be in your name. If you are married, the account can be in either name or in both your names. Some banks, however, will not allow a joint refund to be deposited into an individual account. Refunds directed to a NextGen Account are subject to the terms and conditions of the Program Description, Participation Agreement and any Supplement(s) thereto.

 Concerned About the Rising Cost of College? Maine has a way to assist families in preparing for higher education costs— the NextGen® Matching Grant Program. Qualified families can receive a $200 Initial Matching Grant when opening an account with just $50. Though there are income limits to receive matching grants, anyone, regardless of income, can start a NextGen® Account. Call the Finance Authority of Maine at 800-228-3734 or visit www.famemaine.com for more information.

Line 35b. Underpayment Penalty. If line 27 less the sum of lines 28a, 28d and REW amounts included in line 28b is $1,000 or more, use Form 2210ME to see if you owe an underpayment of estimated tax penalty. To obtain Form 2210ME, download the form at www.maine.gov/revenue/forms or call (207) 624-7894.

Line 35c. Total Amount Due. This is the amount you owe. Do not send cash. If the amount you owe is less than $1.00, do not pay it. Remit your payment using Maine EZ Pay at www.maine.gov/revenue or enclose (do not staple or tape) a check or money order payable to Treasurer, State of Maine with your return. Include your complete name, address and telephone number on your check or money order.

Line 36. FOR MAINE RESIDENTS ONLY: Maine Residents Property Tax and Rent Refund Program - The “Circuit Breaker Program.” Check this box if you would like to receive a Maine Residents Property Tax and Rent Refund Application in August for property taxes assessed or rent paid in 2008. The Maine Residents Property Tax and Rent Refund program is a property tax relief program for qualified homeowners or renters who live in Maine. Although the program that begins August 1, 2009 may change, the current program (that ends June 1, 2009) is generally available to Maine residents with 2007 household income less than $80,000 for multi-member households or less than $60,000 for single- member households. Also, your 2007 property taxes must have been greater than 4% of your income or your 2007 rent must have been greater than 20% of your income. For more information or to file or download an application for the current program (through June 1, 2009) visit, www.maine.gov/revenue/taxrelief/tnr.htm. The application for refunds of property tax assessed or rent paid in 2008 will be mailed to you in August 2009 unless your income on line 16 exceeds the income limits for this program.

THIRD PARTY DESIGNEE. If you would like to allow another person to discuss your 2008 Maine Individual Income Tax Return with Maine Revenue Services (“MRS”), check the “Yes” box. Also enter the person’s name, phone number, and any 5-digit number the person chooses as their personal identification number (“PIN”). This PIN will be used to ensure MRS employees only speak with the individual you have designated. If you want the paid preparer who signed your return to discuss your return with Maine Revenue Services, enter “Preparer” on the line for Designee’s Name and the selected 5-digit PIN.

If you check the “Yes” box, you are authorizing Maine Revenue Services to call, or accept information from, the person you have chosen if there are any questions or if additional information is needed to process your tax return.

This authorization will automatically end no later than the due date (without regard to extensions) for filing your 2009 tax return. For most people, this is April 15, 2010.