Current through 2024-13, March 27, 2024
A.
Wage
methods. Any of the following methods may be used by persons responsible
for withholding to determine the amount of Maine income tax to be withheld from
payments subject to the federal wage method of withholding. Generally, the
amount of withholding is determined based on the information provided on the
Maine Employee's Withholding Allowance Certificate (Form W-4ME). The payroll
period used to determine Maine income tax withholding is the same period used
to determine federal income tax withholding or, if federal withholding is not
required, the period that would be required to be used if federal income tax
withholding were required.
1.
Percentage method. The amount of tax to be deducted and withheld
under the percentage method of withholding is determined using the applicable
percentage method tax rate schedule and related instructions contained in the
current year's "Withholding Tables for Individual Income Tax" booklet prepared
by the Assessor.
2.
Wage
bracket tables method. The amount of tax to be deducted and withheld
under the wage bracket tables method is determined using the applicable wage
bracket withholding table contained in the current year's "Withholding Tables
for Individual Income Tax" booklet with respect to the period in which such
wages are paid. Each table consists of wage brackets that establish the tax to
be withheld by number of withholding allowances.
3.
Other methods. If neither the
percentage method nor the wage bracket tables method of withholding properly
reflects an amount substantially equivalent to the tax reasonably estimated to
be due from an employee's wages, either the person responsible for withholding
or the payee may request permission from the Assessor to use an alternate
method acceptable to both the payee and payer. As provided in Section .08
below, claiming a larger number of withholding allowances for Maine purposes
than that calculated under this rule is not allowed unless a Personal
Withholding Allowance Variance Certificate has been filed with, and approved
by, the Assessor.
B.
Wages paid to Maine residents working outside of Maine. If, for
any payroll period, a payer is required to deduct and withhold income taxes of
another state or other states from the wages paid to a resident of Maine, the
payer shall deduct and withhold Maine income taxes in accordance with 36
M.R.S., chapter 827. For that payroll period, the Maine income tax withholding
amount must be calculated on the basis of all of that person's wages in all
states and the result reduced by the amount required to be deducted and
withheld from the wages under the laws, rules, or regulations of the other
state or states. For the purposes of this subsection, "state" means a state of
the United States, a political subdivision of any such state, the District of
Columbia, or any political subdivision of a foreign country that is analogous
to a state of the United States.
C.
Exemptions from wage withholding are available as follows:
1.
Withholding from payments to
nonresidents. Generally, employers who are required to withhold federal
income tax from wages to a nonresident employee must also withhold Maine income
tax from those wages if the wages constitute Maine-source income that is not
excluded from taxation under Maine law. A nonresident employee is not subject
to Maine withholding unless that employee exceeds the minimum taxability
thresholds in
36 M.R.S.
§5142(8-B) by
performing personal services in Maine for more than 12 days and earning more
than $3,000 in Maine during the taxable year. Performing certain personal
services for up to 24 days during the taxable year, however, may not be counted
toward the 12-day threshold.
36 M.R.S.
§5142(8-B)(C) and MRS
Rule 806.02(G) and
(H) (18-125 C.M.R., ch. 806.02(G) and (H)).
A nonresident employee who initially is exempt from Maine
income tax withholding due to the nonresident taxability thresholds becomes
subject to Maine income tax withholding immediately upon exceeding both the
12-day and $3,000 thresholds at any time during the taxable year. Because
income earned by the employee in Maine prior to exceeding the thresholds
becomes taxable once the thresholds are exceeded, employers should consult with
employees in this situation to ensure that Maine withholding is adequate to
cover Maine income tax liability for the tax year. This consultation may
involve completion and submission of an amended Form W-4ME pursuant to Section
.08 below.
2.
Federal
exemption from withholding. An employee who is exempt from federal
income tax withholding is also exempt from Maine income tax
withholding.
3.
Election to
be exempt from withholding. A resident employee who is subject to
federal income tax withholding may elect to be exempt from Maine income tax
withholding if the employee had no Maine tax liability for the prior calendar
year and reasonably expects to have no Maine tax liability for the current
year. The election must be made on Form W-4ME and expires at the end of the
year in which it is made. If an employee who elected to be exempt from
withholding fails to submit a Form W-4ME for the next calendar year, the
employer must begin withholding for the next year as required above.
4.
Tribal member. An employer is
not required to withhold Maine income tax from wages paid to a tribal member
who resides on tribal land if such wages are derived from or connected with
sources on tribal land, as determined by
36 M.R.S.
§5132 and MRS Rule
825. This income does not constitute
Maine taxable income under
36 M.R.S.
§5122(2)(ZZ). An
employee must utilize Maine Form W-4ME to declare that they are a tribal member
residing on, and earning wages derived from or connected with sources on,
tribal land as determined by
36 M.R.S.
§5132 and MRS Rule
825. In the absence of such a
declaration made by a tribal member on Maine Form W-4ME, the employer must
withhold Maine income tax on the wages earned by the tribal member, whether
derived from or connected with sources on or off tribal land, in accordance
with 36
M.R.S. §5250 and this
rule.
