New Program to Help with Rent and Property Taxes
April 18, 2014 update: The 2014 legislature has changed this program again. The new rules will be in effect for the 2015 tax filing season. This should result in higher refunds for most people. The refunds will still be much lower than under the old "Circuit Breaker" program but higher than this year's refunds. And the maximum will increase automatically each year thereafter. We will post more details before January 2015.
The following information applies to 2014 filings.
The old "Property Tax and Rent Refund Program" is repealed
The old Property Tax and Rent Refund (or "Circuit Breaker") program is gone. Under that program, you could apply for help between August 1 and May 30 each year. There will be no Circuit Breaker program after August 1, 2013.
The new "Property Tax Fairness Credit" is enacted
The Maine legislature has replaced the Circuit Breaker program with a new tax credit. It is called the "Property Tax Fairness Credit" program. It starts January 2014. Here are some of the main features of the new credit:
- Most people will claim and get the credit when filing their state income tax return between January 1 and April 15, 2014. There is no longer a separate application. The 2013 Maine Income Tax Form 1040ME will include a Property Tax Fairness Worksheet to help you figure out if you can get help.
- If you do not normally file an income tax return, you can apply for the credit through either Maine Revenue Services or the Maine Department of Health and Human Services. More information on this later (after DHHS has set up its rules and procedures).
- The refund (now "credit") will still help both homeowners who pay property tax and renters.
- The maximum amount of the credit is much lower than under the Circuit Breaker program. For tax year 2013, the maximum credit is $300 ($400 for people 70 years of age or older).
- Due to stricter eligibility limits , many fewer people will get help with their property taxes or rent.
- The credit is "refundable." This means that you can get the help, even if you owe nothing in taxes (or owe less than the amount of the credit).
- You must own your own home or pay rent.
- You were a Maine resident during any part of the tax year
- Your adjusted gross income for tax purposes is not more than $40,000.
- You paid property tax on your home in Maine that was more than 10% of your adjusted gross income, OR you paid rent that was more than 40% of your adjusted gross income.
How is the credit calculated?
- For homeowners, the benefit is based on any property tax amount that is more than 10% of your adjusted gross income. Your credit is 40% of that amount. The most you can get is $300 ($400 if 70 years of age or older). For example, if your adjusted gross income is $30,000, your property taxes would need to be higher than $3000 to get any help. If your property taxes were $3500, with income of $30,000, you would get a $200 credit.
- The formula is the same for renters, except that your "property tax amount" is deemed to be 25% of the rent you paid during the tax year.
More details for renters
- If you get SSI or Social Security Disability, you may still qualify even if your rent is subsidized. Others receiving rent subsidies (such as a Section 8 voucher) will not qualify.
- The rental amount used does not include amounts paid for utilities, furniture rental, or other add-on charges. Only the amount charged for the basic "right of occupancy" is counted.
- The tax assessor can reduce the rental amount used for calculating the credit if the rental amount is deemed to be "excessive" (or not an "arm's length" deal made in the usual course of business).
For more information you can get a 1040ME booklet. The booklet can be downloaded from the Maine Revenue Service website, or you can request a hard copy be mailed to you, by either calling the forms line at 207-624-7894 (leave you name and mailing address) or by writing to: Maine Revenue Services, PO Box 9107, Augusta ME 04332-9107.
You will also need the Schedule PTFC form. If your only income is social security, social security disability, SSI, or railroad retirement income, you can follow a simplified procedure.
For help filing for the new tax credit you can contact Maine Revenue Services at 207-626-8475 weekdays 8:00 am – 5:00 pm or visit Maine Revenue Services at 51 Commerce Drive, Augusta, ME 04330. More information here.
During the tax season, you can get free tax filing help at centers throughout the state.