[PPT] - Income/Estate Tax Update Presented by: Christina C. Ward, Assistant PowerPoint Presentation

SLIDE 1

Maine Revenue Services 2015 2015 Income/Estate Tax Update

Presented by: Christina C. Ward, Assistant Director Sandra J. Lind, Tax Section Manager www.m www.maine aine.gov .gov/rev /reven enue ue

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Overview

Conformity Tax Rate Changes 2015 Tax Law Changes 2016 Tax Law Changes Job Creation through Educational Opportunity

2015 Maine Income and Estate Tax Developments

SLIDE 3

Conformity

 Conformity with the Internal Revenue Code and amendments was extended to the United States Internal Revenue Code of 1986 as amended through December 31, 2014.

SLIDE 4

Conformity

 Conformity with the Code applies unless

therwise stated in Maine law.

 Applies to tax years beginning on or

after January 1, 2014 and to any prior years as specifically provided by the Code.

SLIDE 5

Sales/Use Tax Rate Increase

General Sales/Use tax rate

5.5% for purchases made after July 1, 2015.

Casual Rentals of living quarters tax rate

8% through December 31, 2015; 9% beginning January 1, 2016.

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Individual Income Tax Rates

Indexing suspended for tax years 2014 and 2015. 2015 rates same as those in effect during 2013 and 2014 tax year.

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Individual Income Tax Rates

Changes for 2016:

tax rate brackets of 0%, 6.5% and 7.95% replaced with 5.8%, 6.75% and 7.15% tax rate brackets; single rate schedules adjusted for inflation based on the chained consumer price index Head of household rate schedules = 1.5 times the single brackets Married taxpayers filing joint rate schedules = 2 times the single brackets.

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Gains from Sale of Timberlands

Income subtraction modification

6 2/3% of the gain realized on the sale of eligible timberlands held for at least a 10-year period beginning on or after January 1, 2005.

Increased by 6 2/3 percentage points for each additional year beyond the tenth year, up to 100%

f gain.

Unused portions may be carried forward for up to 10 years.

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New Markets Capital Investment Credit

Income subtraction modification.

Income included on the taxpayer’s federal income tax return from the Maine new markets capital investment credit under § 5219-HH is subtracted for state tax purposes.

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Dental Care Access Credit

 Available only for eligible dentists certified by the Department of Health and Human Services certified through 2015.

Credit repealed December 31, 2020.

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Primary Care Access Credit

 Eligibility expanded to include otherwise qualified persons already practicing in an underserved area.

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Pine Tree Development Zones

Pine Tree Development Zone benefits are extended to call centers in Aroostook and Washington counties.

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Property Tax Fairness Credit

 No Changes.

The credit is equal to 50% of the amount by which property tax paid or rent constituting property taxes paid (benefit base) during the tax year exceeds 6% of total income. The credit is capped at $600 ($900 for individuals 65 years of age or

lder).

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Property Tax Fairness Credit

 Benefit base limitations: Subject to inflation adjustment for tax years beginning after 2015.

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Changes for tax years beginning on

r after January 1, 2016

 Standard Deduction Amount.

 $11,600 for individuals filing single and married persons filing separately;  $17,400 for heads of households; and  $23,200 for married persons filing jointly or surviving spouses.  Additional amount for age/blindness same as federal amounts for age/blindness.

SLIDE 16

Changes for tax years beginning on

r after January 1, 2016

 Standard/Itemized Deduction Phaseout.

 Applicable to taxpayers whose adjusted gross income exceeds:

$70,000 single or married filing separately $105,000 head of household $140,000 married filing jointly or surviving spouse

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Changes for tax years beginning on

r after January 1, 2016

 Military Pension Income Deduction.

 Benefits received under a military retirement plan, including survivor benefits, are fully exempt from Maine income tax.

SLIDE 18

Changes for tax years beginning on

r after January 1, 2016

 Sales Tax Fairness Income Tax Credit.

 Definition of income (same as PTFC): Federal total income (before adjustments) Nontaxable social security and railroad retirement Tax exempt interest Certain business and capital losses

SLIDE 19

Changes for tax years beginning on

r after January 1, 2016

 Sales Tax Fairness Income Tax Credit.

 Base credit = $100 to $180 (based on number of exemptions claimed)  Credit subject to phaseout if income exceeds:

$20,000 - Single taxpayers $30,000 - Head of household taxpayers $40,000 - Married taxpayers filing jointly

SLIDE 20

Changes for tax years beginning on

r after January 1, 2016

 Sales Tax Fairness Income Tax Credit.

 Phaseout income threshold amounts adjusted for inflation for tax years beginning after 2016.  Credit may not be claimed by: Married taxpayers filing separately; Safe-harbor residents; Individuals who are incarcerated and have no family members living in Maine.

SLIDE 21

Changes for tax years beginning on

r after January 1, 2016

 Adult Dependent Care Credit.

 25% of the “applicable percentage” of adult dependent care expenses, up to $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals.  The “applicable percentage” is the same percentage use to calculate the federal child and dependent care credit – based on earned income.

SLIDE 22

Changes for tax years beginning on

r after January 1, 2016

 Adult Dependent Care Credit.

 Refundable, up to $500.  Part-year resident and nonresident credit prorated based on ratio of Maine-source income to federal adjusted gross income.  Credit not refundable for nonresident taxpayers.

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Changes for tax years beginning on

r after January 1, 2016

 Earned Income Tax Credit.

 Credit becomes fully refundable for Maine residents.  Refundable portion pro-rated for part- year residents.  Nonrefundable for nonresidents.

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New Refund Option

 “ReliaCard” Pre-paid Visa Refund Card through US Bank.

 Tax years beginning on or after January 1, 2016.  Form 1040ME

 ReliaCard checkbox  Taxpayer date of birth  Spouse date of birth, if applicable

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“ReliaCard” Pre-paid Visa

Other refund options still available

 DDR  Paper check  Credit forward to subsequent tax year

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Repealed provisions

 Applicable to tax years beginning

n or after January 1, 2016:

Direct Deposit Refunds to NextGen Account; Subtraction for Long-term Care Premiums; Subtraction for Contributions to 529 Plans; Jobs and Investment Tax Credit*;

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Repealed provisions

Family Development Account Credit; Credit for Employer-assisted Day Care; Credit for Employer-provided Long-term Care Benefits; Credit for the Elderly or Disabled; Forest Management Planning Credit;

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Repealed provisions

High-technology Investment Tax Credit; Credit for Dependent Health Benefits; Quality Child Care Investment Credit; Credit for Biofuel Commercial Production;

* Denotes that unused credit amounts may be utilized to the fullest extent allowed by the carryforward provisions for the credit.

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Estate Tax

 Maine Exclusion Amount

For estates of decedent’s dying on or after

January 1, 2016, the Maine exclusion amount is indexed to the federal exclusion amount.

The tax rate schedule is amended to apply to

the taxable estate in excess of the applicable federal exclusion amount.

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Job Creation Through Educational Opportunity Program

Changes applicable to tax years beginning

n or after January 1, 2015:

 The requirement that a qualified individual must work for an employer located in Maine is eliminated;  However, the employee must work in Maine except the employee may work outside Maine for up to 3 months during the tax year.

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Job Creation Through Educational Opportunity Program

Credit becomes available to self- employed individuals who have earned an associate or bachelor’s degree and are making eligible education loan payments.

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Job Creation Through Educational Opportunity Program

 Changes applicable to tax years beginning

n or after January 1, 2016:

 Associate or Bachelor’s degree from non-

Maine community college, college or university earned after 2015 eligible for credit.

 Credit refundable for all Associate degrees.  Graduate degrees earned in Maine after 2015

eligible for non-refundable credit.

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Job Creation Through Educational Opportunity Program

Residency requirement while attending

college is removed.

Restriction on refinanced and consolidated

loans is removed.

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Questions?

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Contact Information

 E-File Help Desk (1040 only)

 efile.helpdesk@maine.gov (207) 624-9730

 Tax Practitioner’s Hotline

 (207) 626-8458

 To order Forms

 www.maine.gov/revenue (207) 624-7894

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Contact Information

 Income Tax Division

 income.tax@maine.gov (207) 626-8475

 Withholding Tax Section

 withholding.tax@maine.gov

 (207) 626-8475 (touch-tone callers, press 1, then

ption 4)

 Sales Tax Division

 sales.tax@maine.gov (207) 624-9693

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Contact Information

 Tax Violations Hot Line

 MRS.TAXTIP@maine.gov (207) 624-9600

 Refund Information

 www.maine.gov/revenue

 Frequently Asked Questions

Maine Revenue Services 2015 2015 Income/Estate Tax Update

Presented by: Christina C. Ward, Assistant Director Sandra J. Lind, Tax Section Manager www.m www.maine aine.gov .gov/rev /reven enue ue

Overview

Conformity Tax Rate Changes 2015 Tax Law Changes 2016 Tax Law Changes Job Creation through Educational Opportunity

2015 Maine Income and Estate Tax Developments

Conformity

 Conformity with the Internal Revenue Code and amendments was extended to the United States Internal Revenue Code of 1986 as amended through December 31, 2014.

Conformity

 Conformity with the Code applies unless

 Applies to tax years beginning on or

after January 1, 2014 and to any prior years as specifically provided by the Code.

Sales/Use Tax Rate Increase

General Sales/Use tax rate

5.5% for purchases made after July 1, 2015.

Casual Rentals of living quarters tax rate

8% through December 31, 2015; 9% beginning January 1, 2016.

Individual Income Tax Rates

Indexing suspended for tax years 2014 and 2015. 2015 rates same as those in effect during 2013 and 2014 tax year.

Individual Income Tax Rates

Changes for 2016:

Gains from Sale of Timberlands

Income subtraction modification

6 2/3% of the gain realized on the sale of eligible timberlands held for at least a 10-year period beginning on or after January 1, 2005.

Increased by 6 2/3 percentage points for each additional year beyond the tenth year, up to 100%

Unused portions may be carried forward for up to 10 years.

New Markets Capital Investment Credit

Income subtraction modification.

Income included on the taxpayer’s federal income tax return from the Maine new markets capital investment credit under § 5219-HH is subtracted for state tax purposes.

Dental Care Access Credit

 Available only for eligible dentists certified by the Department of Health and Human Services certified through 2015.

Credit repealed December 31, 2020.

Primary Care Access Credit

 Eligibility expanded to include otherwise qualified persons already practicing in an underserved area.

Pine Tree Development Zones

Pine Tree Development Zone benefits are extended to call centers in Aroostook and Washington counties.

Property Tax Fairness Credit

 No Changes.

The credit is equal to 50% of the amount by which property tax paid or rent constituting property taxes paid (benefit base) during the tax year exceeds 6% of total income. The credit is capped at $600 ($900 for individuals 65 years of age or

Property Tax Fairness Credit

 Benefit base limitations: Subject to inflation adjustment for tax years beginning after 2015.

Changes for tax years beginning on

 Standard Deduction Amount.

 $11,600 for individuals filing single and married persons filing separately;  $17,400 for heads of households; and  $23,200 for married persons filing jointly or surviving spouses.  Additional amount for age/blindness same as federal amounts for age/blindness.

Changes for tax years beginning on

 Standard/Itemized Deduction Phaseout.

 Applicable to taxpayers whose adjusted gross income exceeds:

$70,000 single or married filing separately $105,000 head of household $140,000 married filing jointly or surviving spouse

Changes for tax years beginning on

 Military Pension Income Deduction.

 Benefits received under a military retirement plan, including survivor benefits, are fully exempt from Maine income tax.

Changes for tax years beginning on

 Sales Tax Fairness Income Tax Credit.

 Definition of income (same as PTFC): Federal total income (before adjustments) Nontaxable social security and railroad retirement Tax exempt interest Certain business and capital losses

Changes for tax years beginning on

 Sales Tax Fairness Income Tax Credit.

 Base credit = $100 to $180 (based on number of exemptions claimed)  Credit subject to phaseout if income exceeds:

$20,000 - Single taxpayers $30,000 - Head of household taxpayers $40,000 - Married taxpayers filing jointly

Changes for tax years beginning on

 Sales Tax Fairness Income Tax Credit.

 Phaseout income threshold amounts adjusted for inflation for tax years beginning after 2016.  Credit may not be claimed by: Married taxpayers filing separately; Safe-harbor residents; Individuals who are incarcerated and have no family members living in Maine.

Changes for tax years beginning on

 Adult Dependent Care Credit.

Changes for tax years beginning on

 Adult Dependent Care Credit.

 Refundable, up to $500.  Part-year resident and nonresident credit prorated based on ratio of Maine-source income to federal adjusted gross income.  Credit not refundable for nonresident taxpayers.

Changes for tax years beginning on

 Earned Income Tax Credit.

 Credit becomes fully refundable for Maine residents.  Refundable portion pro-rated for part- year residents.  Nonrefundable for nonresidents.

New Refund Option

 “ReliaCard” Pre-paid Visa Refund Card through US Bank.

 Tax years beginning on or after January 1, 2016.  Form 1040ME

 ReliaCard checkbox  Taxpayer date of birth  Spouse date of birth, if applicable

“ReliaCard” Pre-paid Visa

Other refund options still available

 DDR  Paper check  Credit forward to subsequent tax year

Repealed provisions

 Applicable to tax years beginning

Direct Deposit Refunds to NextGen Account; Subtraction for Long-term Care Premiums; Subtraction for Contributions to 529 Plans; Jobs and Investment Tax Credit*;

Repealed provisions

Family Development Account Credit; Credit for Employer-assisted Day Care*; Credit for Employer-provided Long-term Care Benefits*; Credit for the Elderly or Disabled; Forest Management Planning Credit;

Family Development Account Credit; Credit for Employer-assisted Day Care; Credit for Employer-provided Long-term Care Benefits; Credit for the Elderly or Disabled; Forest Management Planning Credit;

High-technology Investment Tax Credit; Credit for Dependent Health Benefits; Quality Child Care Investment Credit; Credit for Biofuel Commercial Production;