You generally have to file a Maine state income tax return if you were a resident of Maine, either for the entire year or part of the year and you are required to file a federal income tax return. You also have to file a tax return in Maine if you were not a resident but you had taxable income in Maine. You should also file a Maine tax return if Maine state income tax was withheld from your pay. You may be due a refund.
You file your Maine state income tax return using either ME1040 Long Form or ME1040 Short Form, depending on which you qualify for. If you are a part-year resident or a nonresident with income from sources in Maine, you also need to file Schedule NR or Schedule NRH if you are a nonresident and are married electing to file separately. You can download all the forms and schedules from the Maine Revenue Services website, or you can file electronically.
On your Maine state income tax return, you start with your federal adjusted gross income and then make certain additions and subtractions on Schedule 1 to determine your Maine adjusted gross income. Then you claim either the standard deduction or itemized deductions and subtract your exemptions to arrive at your Maine taxable income. Based on your taxable income you find your tax in the tax table or use the tax rate schedule. You subtract any credits you qualify for, and the Maine state income tax that was withheld from your pay and any estimated payments you made during the year. Then you can add any voluntary contributions you want to make. The end result is your refund or the amount you owe.
You can find the forms and instructions, with the tax table and tax rate schedule, in the Maine Individual Income Tax Booklet. There is a Long Form booklet and a Short Form booklet.
If you excluded any interest income on state and municipal bonds other than Maine on your federal tax return, you have to include that income on your Maine tax return. But you can subtract interest you earned on U.S. government obligations such as savings bonds or Treasury bills that you included on your federal return. And if your federal return includes interest from Maine Municipal General Obligation and Private Activity Bonds, or bonds issued by a Maine Airport Authority, you can subtract that income on your Maine tax return.
If you included a Maine state income tax refund in your income on your federal tax return because you had claimed an itemized deduction for the taxes the prior year, you can subtract this refund on your Maine state tax return.
If you had to include any social security or railroad retirement benefits as income on your federal return you can subtract them on your Maine return. These benefits are not taxable in Maine. You can also deduct up to $6,000 for other types of retirement income included on your federal return, such as state, federal and military pension benefits, qualified employee benefit plans, and distributions from a 401(k), a 403 employee annuities plan, a 457(b) plan for state and local government or tax exempt organization employees, or an employee deferred compensation plan. Distributions from an IRA or from SIMPLE or SEP plans do not qualify for the pension income deduction.
You can deduct the premiums you paid for a long-term care insurance policy. You cannot claim this deduction if you included the cost of the premiums in your medical expenses if you itemize deductions. Also, you cannot claim the long-term care insurance deduction if you claim the same cost as a self-employed health insurance deduction.
If you contributed to a qualified Maine 529 college savings plan, you can subtract up to $250 per beneficiary.
If you are a Maine resident and obtained an associate’s or bachelor’s degree from a Maine college, junior college or university and after graduation you lived, worked and paid taxes in Maine, you can claim the Credit for Educational Opportunity. The credit is the amount of eligible education loan payments you made during the year, up to the benchmark amount stated in your Student Opportunity Contract. To claim this credit you need to complete the Credit for Educational Opportunity Worksheet for Individuals.
If you claimed the credit for the elderly or disabled on your federal tax return you can claim a credit on your Maine tax return for 20% of the federal credit.
If you claimed the earned income credit on your federal return you can claim a credit on your Maine return for 5% of the federal credit.
If you claimed the child care credit on your federal return, you can claim a credit on your Maine return. You need to complete the Worksheet for Child Care Credit on Maine Schedule A – Adjustments to Tax.
If you paid taxes to another state on income that is included in your Maine tax return you can claim a credit for those taxes on your Maine return. You need to complete Schedule A and the Schedule 3 Worksheet and attach copies of the tax returns you filed in other states.
There are various credits available for businesses in Maine, including credits for making investments and creating jobs, for dependent care assistance programs, for providing health benefits to employees, for research and development, pollution control and alternative energy production, and historic preservation, among others. To claim these credits you need to complete the worksheet corresponding to the credit. You can find these worksheets on the Forms, Publications and Applications page of the Maine Revenue Services website. You also need to complete Schedule A – Adjustments to Tax.
Individual Income Tax Booklet – Maine Revenue Services