The proposal aims to provide tax breaks to families and businesses in Maine during the ongoing COVID-19 pandemic.
AUGUSTA, Maine – Editor’s Note: The above video aired January 8, 2021.
The government of Governor Janet Mills on Monday tabled a package of amendments to the supplementary budget to reflect recent adjustments to federal tax law, included in the more than 6,400 pages of pandemic bills passed by Congress in recent months, including the last at the end of last month.
With this proposal, the administration hopes to maintain a degree of stability and predictability for Maine individual and corporate taxpayers, to comply with federal changes as much as possible, and to provide tax breaks to families and businesses in Maine during the ongoing COVID-19 pandemic. The proposal aims to reduce the burden on Maine families and businesses by:
- Preserve the power of Earned Income Tax Credit that provides tax breaks for families with middle and low income children in Maine with children.
- Providing improved tax treatment and flexibility for healthcare expenses such as skilled medical expenses or telemedicine expenses to families in Maine to help people with their health needs during the pandemic.
- Creation of an allowance for residents of Maine whose work situation changed early in COVID-19 to ensure they are not required to pay dual state income tax.
- Maintain standard treatment so that no Maine company owes state taxes on paycheck protection program income spent to keep employees on payroll or other deductible expenses such as rent or incidental expenses. The administration would have preferred to fully meet the federal government’s added benefit of treating these funds as non-taxable income, but was unable to do so at an estimated cost of $ 100 million and was able to manage the budget without additional Federal aid for the federal government is balanced out by states like those recently rejected by Congress.
- Expanding the state tax credit for small businesses in Maine to recoup the cost of providing paid family vacation so they can keep employees and ensure Maine workers have the opportunity to quarantine family members during the pandemic, to isolate and / or supervise.
- Graduate permission to apply for the Opportunity Maine Tax Credit, which is used to reimburse student loan payments, for completed student loan payments, even if the graduate is unemployed during the pandemic.
- Expansion of the educator’s expense allowance for teachers in Maine, which allows them to deduct non-reimbursed costs for classroom materials, including personal protective equipment, disinfectants, and other COVID-19 related materials.
Extending these tax breaks to families and businesses in Maine would result in a net loss of approximately $ 1.285 million in revenue for the state for fiscal 2021, which the Mills Administration has proposed to fund with savings in other areas.
“Right now, Maine people are focused on what is most important: They are trying to keep themselves healthy, to care for themselves and their families, and to get out of this pandemic,” Mills said. “With this package, my administration is maximizing tax breaks where and whenever possible, and providing as much stability and predictability for Maine businesses as possible. We are doing all we can to help the people of Maine through these troubled times. “
The package of changes is specific to the state’s upcoming tax return season and will be offered as individual applicants, businesses, and CPAs across the country try to keep up with a variety of recent changes to the COVID-19 tax code.
“Across the country, my colleagues and their teams have carefully examined the more than 6,480 pages of federal pandemic aid legislation, most of which were passed weeks ago, to understand the tax implications for our states and the benefits for our states where possible to maximize people, ”said Kirsten Figueroa, Commissioner for Administration and Financial Services. “When we began this endeavor last summer in Maine and during that final round of federal aid, the governor was always clear about what she wanted: prioritizing stability, predictability, and providing as much help as possible to people, families, families in Maine help and business in this challenging time. We do that here. “
In October last year, the Mills Administration gave tax advice to the people of Maine and announced it would enact laws in January 2020 to: 1) further help them avoid adverse tax burdens from the COVID-19 pandemic; and 2) Adaptation to changes in the federal tax code resulting from the CARES Act and other relief measures. This package of changes fulfills that promise and also addresses new tax code adjustments made in the final round of pandemic aid, the Consolidated Appropriations Act, which came in on December 27, 2020, just nine business days before Maine’s most recent deadline for filing the statutory budget in the law were incorporated.
Maine tax forms and instructions for 2020 and estimated Maine tax and withholding tax tables for 2021 are available from Maine Revenue Services or local accountants and tax advisors. For calendar year applicants, the deadline for filing the 2020 Maine individual income tax return is April 15th.
“We are grateful for the more than $ 8 billion pandemic aid that has already flowed through Maine as a result of federal efforts, and although the timing and details of the resulting tax changes required a proper review, I am proud of the dedicated team within this administration developing a solution that will support the people and businesses of Maine through these troubled times and maintain the state’s solid financial foundation, “said Figueroa.
“We know taxes can be complicated enough without the added fear of a public health crisis and all the resulting changes in tax law due to recently adopted relief measures. That’s why Governor Mills has chosen Maine Revenue Services to ensure that we provide high quality service to Maine taxpayers during a tax season that is second to none, “said Jerome Gerard, Executive Director of Maine Revenue Services. a division of the Department of Administrative and Financial Services said. “We stand ready to help people in Maine, and especially those beneficiaries of the Paycheck Protection Program in Maine, who may need to discuss payment plans or apply for a penalty or interest waiver due to personal circumstances due to the pandemic, and we encourage applicants to reach out to the staff turn sooner rather than later to start these conversations. The IRS will open tax filing season on February 12th and our staff will then be available to process government returns, refunds and renewals. “
Full details of the change package can be found on the Bureau of the Budget website.
Contact Maine Revenue Services if you have any questions.