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Anne Powelson Anne Powelson
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Remember the Maine (tax changes)

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The Federal Tax Code and the impact of the fiscal cliff received most of the publicity recently. But Maine also has changes affecting your take home pay and 2012 tax preparation. Some of these changes affect everyone having taxes withheld. Others affect fewer filers, but can have a big impact on their Maine taxes.

Maine withholding tables have changed

2013 brings two competing changes to withholding. The Payroll Tax Holiday has ended, so the personal share of the social security taxes has increased from 4.2 percent to 6.2 percent. And Maine has changed its withholding tables as well. Changes to the withholding tables reflect decreasing tax rates and increasing exemptions scheduled to be used on 2013 Maine taxes. In 2013, the top rate for Maine is dropping from 8.5 percent to 7.95 percent, and personal exemption amounts will increase.

Unfortunately, Maine decreases to withholding are smaller than the increase to payroll taxes. Paychecks will be smaller, though you can comfort yourself that they are not as small as they would have been had Maine not decreased its taxes. Pensions which have Maine withholding should be slightly larger.

The Taxpayer Service Center in Augusta has moved to 51 Commerce Drive

Walk-in and phone assistance for all taxes and programs are available at the new location Monday-Friday, 8 a.m. to 4:30 p.m., state-recognized holidays excepted. The phone number there is 626-8475.

The Maine short form (1040S-ME) has been eliminated

Use of the short form has steadily decreased as electronic filing has become more popular. In 2011, less than 7 percent of Maine individual tax returns were filed on the short form. Eliminating the form should decrease costs for the state. In addition, using and, most importantly, reading the long form helps make filers aware of all available credits and deductions, including the Maine Opportunity Credit.

Net Operating Loss (NOL) changes

A NOL can be created when business expenses exceed income. Generally, individuals have NOLs from self-employment, but NOLs can also be generated from unreimbursed business expenses, casualty and theft losses, moving expenses or rental property. On federal tax returns, NOLs can generally be carried back two years and forward 20 years. On Maine returns, NOLs can only be carried forward. For 2009, 2010 and 2011 carried forward NOLs were also not allowed on Maine returns. But in 2012, the Maine NOL, presumably higher than the Federal NOL, can once again be used against Maine Income.

Figuring and documenting a NOL is a challenging area in taxes. If you feel you have or had a NOL, you should check with Maine Revenue Guidance Documents, 'Modifications Related to Net Operating Losses' and IRS Publication 536, 'Net Operating Losses (NOLs) for Individuals, Estates and Trusts.'

Reminder about filing delays

As things stand now, the first day the IRS will begin accepting returns is Jan. 22, 2013. This means the first refunds will not be sent out until early February. However, if you have all your information, your return can be prepared and ready to send in at the earliest date possible.

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