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R.I.P. property tax and rent rebate

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R.I.P. property tax and rent rebate R.I.P. property tax and rent rebate

Looking for Maine Property Tax and Rent Rebate (Circuit Breaker) forms? Whether you always file or were hoping to file for the first time this year, you're not going to find them. Maine's legislature did away with the program in June of this year.    

In its place is a new tax credit, the Property Tax Fairness Credit. This new credit is part of your 2013 Maine Income Tax Return. It's refundable, so even if you don't owe Maine taxes, you might get money back. 

The four criteria for this new credit are:

1) You were a Maine resident for any part of the year

2) You owned or rented a home and lived in that home during any part of the year

3) Your Maine Adjusted Gross Income (MAGI) is $40,000 or less  

4) You paid property tax on a home in Maine that was more than 10 percent of MAGI or paid rent to live in Maine during the year that was more than 40 percent of MAGI.

The maximum Property Tax Fairness credit will be $300; $400 if over age 70. The credit is calculated at 40 percent of the amount your property tax exceeds 10 percent of MAGI. For renters, 25 percent of rent paid is deemed to be property tax.

How do the two programs compare? 

Under the Property Tax Fairness Credit:

a) Maximum refunds are smaller, $400 vs. $1600

b) Maximum Income levels are lower.  $40,000 vs. $64,950 ($86,600 Married/Qualified Dependent) 

c) Some criteria are stricter

Property Tax must exceed 10 percent of MAGI, (previously 4 percent.)  Rent must exceed 40 percent of MAGI (previously 20 percent).

d) Some criteria are easier

1) The rebate had a series of add-backs, including non-taxed income such as disability pensions and child support.  Property Tax Fairness will just use MAGI.  As a reminder, MAGI does not include any Social Security income.

2) With the old rebate, if your rent exceeded $9000, you were required to send rent receipts in with your application. Current guidance from Maine Revenue Services is Rent Receipts will not be required, but may be requested if rent seems inconsistent with income.  

3) Longer time to file. The old system had various availability dates, most recently Aug. 1 through May 31. The 2013 Property Fairness Credit, since it is a part of state tax returns, should be claimable up through April 15, 2016.     

e) Some things are the same: Rent payments for utilities, furniture rental or meals may not be included.  Rent subsidized by government programs, (other than for people receiving Social Security Disability or Supplemental Security Income Disability) may not be included.

Maine Revenue Services consistently estimated just half of eligible parties claimed the old rebate.  Since this new credit will be part of the Maine Individual Income Tax form, hopefully more people will benefit from it. If you think you may be eligible, even if you don't need to file a federal return, you should think about filing a Maine tax return in 2014.   

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