Volume 28, Issue 5		July 2018 - #2

 

Many Maine Taxpayers May Need to File
AMENDED 2017 Maine Income Tax Returns and
Adjust Withholding and Estimated Tax for 2018

As previously announced in the May Tax Alert, Maine has not adopted recent federal tax law changes  enacted after December 31, 2016, including the federal Tax Cuts and Jobs Act (December 22, 2017), the Bipartisan Budget Act of 2018 (February 9, 2018), and the Consolidated Appropriations Act, 2018 (March 23, 2018).

Although most of the federal changes apply to tax years beginning on or after January 1, 2018, some affect tax years beginning in 2017.  Because Maine has not adopted the federal tax changes enacted after December 31, 2016, many taxpayers who have already filed a 2017 Maine income tax return may be required to amend that return.

Maine Revenue Services (MRS) has identified the most significant provisions that may require amended returns to be filed for tax year 2017. MRS expects that more than 15,000 taxpayers will be affected by nonconformity. Affected taxpayers who have already filed a 2017 Maine income tax return are urged to file an amended return in a timely manner to avoid interest and penalty assessments. Generally, 36 M.R.S. § 5227-A requires a Maine amended return to be filed whenever there is a change or correction affecting the taxpayer’s income tax liability within 180 days from the date of the change or correction to avoid the assessment of penalties; however, Maine Revenue Services will abate interest and penalties that would otherwise apply to affected 2017 amended returns filed on or before October 15, 2018.

Tax years beginning in 2017

To determine whether you need to amend a 2017 income tax return, see the new 2017 Additional Worksheet to Report Certain “Other” Modifications to Maine Income Related to Federal Tax Law Changes After December 31, 2016 and the revised 2017 instructions for individual, fiduciary and corporate income taxes will be available within a few days at: www.maine.gov/revenue/forms/homepage.html.

The new worksheets and revised instructions reflect the following changes:

Individual Income Tax

Fiduciary Income Tax for Estates and Trusts

Many of the changes noted above relative to individual income tax taxpayers will also apply to Maine fiduciary income tax returns (Form 1041ME).  See updated instructions for Form 1041ME, Schedule 1, lines 1e and 1f, and the new 2017 Additional Worksheet to Report Certain “Other” Modifications to Maine Income Related to Federal Tax Law Changes After December 31, 2016 for Form 1041ME, Schedule 1, lines 1g and 2f.

Corporation Income Tax

Tax years beginning on or after January 1, 2018

Maine taxpayers are advised to review their Maine income tax withholding and estimated income tax liability for 2018 in light of Maine not adopting the federal tax law changes enacted after December 31, 2016 and make adjustments as needed.

Significant changes that Maine has not adopted for the 2018 tax year include, but are not limited to:

Taxpayers and practitioners with questions regarding Maine income tax should contact Maine Revenue Services at (207) 626-8475 or go to the MRS website at www.maine.gov/revenue.