A Guide for Maine Workers and Their Families:
Can I get any tax relief?

Guide Contents

Contents of this page
10.1 Earned Income Tax Credit (EITC)
10.2 Child Tax Credit (CTC) and Additional CTC
10.3 Child and Dependent Care Tax Credit
10.4 Help filing your income taxes
10.5 The Property Tax and Rent Refund Program
10.6 Property Tax Abatement
10.7 The Maine Homestead Exemption
10.8 Other property tax exemptions

10.1 Earned Income Tax Credit (EITC)

Many families don’t realize that they are eligible for the federal Earned Income Tax Credit (EITC). The EITC is a special tax benefit for working families with low or moderate income. If you are eligible for the EITC, you could owe less in taxes or get money back.

You may be eligible for a federal refund, even if you don’t pay taxes.

The maximum federal refund for tax year 2009 is:

• $5,656 for a family with three or more qualifying children
• $5,028 for a family with two qualifying children
• $3,043 for a family with one qualifying child
• $457 for a family with no qualifying children

These maximum amounts change every year.

Who can get the Earned Income Tax Credit (EITC)?

You may qualify for the Earned Income Tax Credit (EITC) if you have a child (or children) in your home and even if you don’t. Different rules apply to each group:

• If you have a child in your home, you may qualify if the child is:

Age 18 or younger; or

Age 23 or younger and a full time student; or

Completely disabled, no matter what age; and

The child is your son, daughter, adopted child, grandchild, step-child, sibling or step-sibling and/or their children (e.g., your niece or nephew), or a foster child placed in your home by an authorized placement agency; and

The child lives in your home (in the United States) for more than half the year.

The child must be younger than the person claiming the child, and the child must not have filed a joint return other than to claim a refund.

• Even if you aren’t eligible for a tax credit because of a child, you may still qualify for the EITC, if you are:

Age 25 to 65; and

Not the dependent of another person; and

Living in the United States for more than half the year; and

A U.S. citizen or resident alien with a Social Security number that allows you to work. (Some workers without “green cards” can qualify. Contact the Immigrant Legal Advocacy Project (ILAP) at (207) 780-1593.)

Every person listed on the tax return must have a valid Social Security number.

What are the Earned Income Tax Credit (EITC) income eligibility guidelines for tax year 2009?

To qualify for the Earned Income Tax Credit (EITC) in tax year 2009, both your earned income and your adjusted gross income must be less than:

• $43,250 if you have more than 2 qualifying children (or $48,250 if you are married filing jointly)
• $40,295, if you have 2 children (or $45,295 if you are married filing jointly
• $35,463 if you have only 1 qualifying child (or $40,463 if you are married filing jointly)
• $13,440 if you do not have a qualifying child (or $18,440 if you are married filing jointly)

“Earned” income is money you receive as salary, wages, tips, professional fees, or from other work, including self-employment. “Adjusted gross income” is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040 of your income tax form.

You will not be eligible if you receive more than $3,100 from investment income such as stock dividends.

Will the Earned Income Tax Credit (EITC) affect the amount of my TANF, food stamps, or other public benefits?

If you get the Earned Income Tax Credit (EITC), it does not count as income for programs like TANF, food stamps, or Supplemental Security Income (SSI). However, it may count as an asset that puts you over the guidelines for certain programs, but only if it is not spent within a certain amount of time. The general rule is that your EITC will not be counted as an asset during the month you received it and during the next month. This gives you 2 months to spend your EITC before it could affect your eligibility. This 2-month rule applies to TANF and MaineCare families with children. Some programs have a longer limit. For example, the SSI rules give you 9 months to “spend down” the money before it counts as an asset. The Food Stamp Program gives you 1 year in most cases to spend it.

Note: You may want to consider putting your EITC return into a Family Development Account (FDA). Many programs, such as MaineCare and TANF, don’t count some money in FDAs as an asset, so you can save more money without losing important benefits. For more information about Family Development Accounts, ask your DHHS MaineCare or TANF worker, or call Maine Equal Justice at (207) 626-7058 or toll-free at 1 (866) 626-7059.

Did you know that you can start to get part of your federal Earned Income Tax Credit (EITC) right away in your weekly paycheck?

If you expect to qualify for the federal Earned Income Tax Credit (EITC) this year, you may be able to start getting it right now. This is called the EITC “Advance Payment.” The amount you can get in advance depends on your wages. If you are married, it also depends on whether your spouse also files for an advance payment. The maximum amount you can get in advance in your paycheck for all of 2009 is $1,826.

To be eligible for an EITC advance payment you must expect:

• To have at least one child that makes you eligible for this credit; and
• That your 2009 earned income and adjusted gross income will each be less than $35,463 (or $40,463 if you expect to file a joint return for 2009).

If you get advance federal EITC payments, you will need to show the amount of the advance that you received on your federal income tax form. You’ll get the rest of any credit you are owed after you file your tax return.

Should I choose the Earned Income Tax Credit (EITC) Advance Payment?

Many workers decide not to file for an Advance Earned Income Tax Credit (EITC) payment because they fear that they will get too much and owe money to the IRS. However, there is some built-in protection against this kind of overpayment. For example, you can only get about half of the amount you are eligible for as an advance payment. If you believe you will be eligible for the credit this year and you do not expect the circumstances that affect your eligibility to change, the advance EITC may be a good choice for you.

However, if you expect a significant change in your financial or family circumstances during the year, you probably should not file for the advance EITC payment. Advance EITC payments that are based on incorrect information may cause you to be paid more than you are eligible for. If this happens you may have to send a check to the IRS at tax time to make up the difference.

Some reasons not to choose the EITC Advance Payment include:

• You expect to receive a large increase in your earned income during the year;
• You hold two or more jobs at the same time;
• You have a working spouse, unless both you and your spouse sign up for the advance payment during the year;
• You plan to get married during the year and both you and your spouse will work; or
• Your child will not live with you for more than half the year.

How do I apply for the federal Earned Income Tax Credit (EITC) or the EITC Advance Payment?

Families with a qualifying child. To get the Earned Income Tax Credit (EITC), you must file either IRS Form 1040 or 1040A and attach a Schedule EIC to your tax return. Workers with children cannot get the EITC if they file Form 1040EZ.

If you want to get some of your credit in your paycheck now, complete IRS Form W-5 (the Earned Income Credit Advance Payment Certificate) and give it to your employer. After your employer sends your W-5 to the IRS, you will then start to get advance EITC payments in your paycheck.

If you selected the EITC Advance Payment but your situation has changed so that you no longer want to receive an advance, you will need to give a new Form W-5 to your employer.

Individuals and couples without a qualifying child. If you do not have a qualifying child in your home, you can file any federal tax form, including the 1040EZ. Your tax form will include an EIC worksheet that you can use to figure out the amount of your credit, or you can write “EIC” on the Earned Income Credit line and let the IRS figure out your credit amount for you. You do not have to file Schedule EIC.

You cannot qualify for the EIC Advance Payment if you do not have a qualifying child.

Important note: If you don’t usually file a tax return because you don’t make enough money to file, you will need to file a tax return in order to get the EITC. You can claim up to 3 years of back EITC payments. If you are afraid to do this because you think you might owe back taxes as well, contact the Low-Income Taxpayer Clinic for advice at 207-942-8241.

Is there a state Earned Income Tax Credit (EITC), too?

Yes. Like the federal government, the state also gives families an earned income tax credit on their state income tax. The amount of the credit is limited to 5% of your federal Earned Income Tax Credit (EITC), and it is not refundable like the federal EITC. This means you will only be able to get the state credit if you owe, or have already paid, state income tax for the year. You can apply for your state EITC when you file your state income tax.

How can I learn more about the Earned Income Tax Credit (EITC)?

• For information about the Earned Income Tax Credit (EITC), other income tax credits, and where to go for help filling your tax forms, visit the Pine Tree Legal Assistance website.
• You can also learn more about the EITC and the EITC Advance Payment on the IRS website. You may also call the IRS at 1 (800) TAX-FORM.
• You will also find information on the EITC and other tax credit programs at the Center on Budget and Public Policy website. During tax season it is easy to find information about the EITC on their home page.

10.2 Child Tax Credit (CTC) and the Additional CTC

Who is eligible for the Child Tax Credit (CTC)?

You may be eligible for the federal Child Tax Credit (CTC) if you have dependent children who are age 16 or younger. This includes your son or daughter, adopted child, grandchild, stepchild, foster child, your sibling or step-sibling and their children or grandchildren. The children must be U.S. citizens or resident aliens living in the U.S. The child cannot have provided over half of his or her own support during the year.

Generally, the parent with whom the child lives for more than half the year can claim this credit. But, if a divorce or separation agreement allows the non-custodial parent to claim the child as a dependent, this gives that parent the right to claim the CTC. In this case, the custodial parent must sign a release (IRS Form 8332) giving the non-custodial parent the right to the credit. (This does not affect the custodial parent’s right to claim the Earned Income Tax Credit.)

How much can I get from the Child Tax Credit (CTC)?

The maximum annual amount of the Child Tax Credit (CTC) is $1,000 for each child.

What if the amount of my Child Tax Credit (CTC) is more than the amount of federal income tax that I owe? Or what if I don’t owe any taxes this year?

You may be able to get a refund through the Additional Child Tax Credit (the Additional CTC). And, you may get a refund even if you don’t owe taxes for the year. To qualify for the Additional CTC in tax year 2009, you must have taxable earned income of $3,000 or more.

Your CTC will first be used to pay off any federal income taxes that you owe. If some of your CTC is still left over, you may get a refund. This refund is called the Additional CTC.

For example, your CTC amount is $1,000. You owe $400 in federal income taxes. You may be eligible for a refund of up to $600 ($1,000 CTC minus $400 owed for federal taxes = $600). This is in addition to any EITC you qualify for. Whether you get the full refund amount or only part of it will depend on how much income you have. To find out how much you can get through the Additional CTC, check out the IRS website or go to the Pine Tree Legal website for information about how you can get free help with your tax returns.

Will the Additional CTC affect my eligibility or benefits in other programs, like MaineCare and Food Stamps?

Like the Earned Income Tax Credit (EITC), the additional Child Tax Credit (CTC) refund is generally not counted as income in public assistance programs. If you save the money, it may be counted toward your asset limit in the third month after you received it in some programs. (More details in the EITC section above).

How do I claim the Child Tax Credit (CTC) and the Additional CTC?

To claim the Child Tax Credit (CTC) and the Additional CTC you must file a federal income tax return using Form 1040 or 1040A. The instructions will help you figure out if you have any CTC left over after it has been first applied to your income tax liability. If you do, the next step is to fill out Form 8812 to claim the Additional CTC refund.

For more information:

Internal Revenue Service (IRS)
You may also call to request these forms at 1 (800)- TAX-FORM.

10.3 Child and Dependent Care Tax Credit

Who is eligible?

You may also be eligible for a federal and state Child and Dependent Care Tax Credit if, in order to work or look for work, you paid for:

• Child care for a child age 12 or younger; or
• The care of a spouse or a dependent of any age who is incapable of caring for himself or herself.

In addition, to be eligible for this credit:

• The child or dependent needing care must have lived with you for at least half the year; and
• The amount you paid for the care was less than your income for the tax year. If you are married filing jointly, you must have paid less for the care than the income of the spouse with the lowest earnings.

What kind of care qualifies for the credit?

Any kind of child or dependent care that you paid for qualifies for this credit, including care provided by a neighbor or relative (except by your spouse or child age 18 or younger).

If you get some help with your child or dependent care, like from a state program that pays part of the cost, you can only count the amount that you actually pay yourself toward this credit.

How much can I get from the Child and Dependent Care Tax Credit?

The amount of your credit will depend on:

• How many dependents you have;
• Your income; and
• The amount you pay for child/dependent care.

The maximum amount for the federal credit is $1,050 for families with one dependent; $2,100 for families with more than one dependent. But, you can’t get the federal Child and Dependent Care Tax Credit if you earn too little to have to pay taxes. (In other words, this federal credit is not “refundable” like the federal EITC or the Additional CTC).

How do I file a claim for the Child and Dependent Care Tax Credit?

To claim the federal Child and Dependent Credit you must file either Form 1040 and attach Form 2441; or file 1040A and fill out Schedule 2. You can get free copies of these forms at the IRS website or by calling 1 (800) TAX-FORM.

You will need to report the name, address and taxpayer identification number (either the Social Security number or the employer identification number) of the care provider on your tax return. (If the provider is tax exempt, you will just need the name and number.) You can use Form W-10 to request this information from your care provider.

Is there a state Child and Dependent Care Tax Credit?

Yes, and it may be worth a lot to you. This credit is “refundable,” meaning that you may still get a refund of up to $500 even if you don’t have to pay any income tax. The amount of the state income tax credit is 25% (in 2009) of the federal Child and Dependent Credit you are eligible to receive.

For example, if you have determined that your federal Child and Dependent Care Tax Credit is $1,000, then you will receive 25% of that amount for your state Child and Dependent Care Tax Credit. $1,000 X .25 (25%) = $250. So you would receive a $250 state Child and Dependent Care Tax Credit refund.

If your child is enrolled in a childcare center or home with a “Quality Certificate,” you will be eligible for a double credit (50% of the federal credit) up to $500. Ask your childcare provider if they have a Quality Certificate. If they do, ask them for the 3-digit number on their Quality Certificate and be sure to write this number on your Maine Income Tax Return.

For more information:

Information about the federal credit:
Internal Revenue Service (IRS) website

Information about the state credit:
Office of Child Care and Head Start, of the Department of Health and Human Services (DHHS)
The Maine Revenue Services

10.4 Help Filing Your Income Taxes

To make sure you get all the credits and refunds you are eligible for under state and federal law, you may want to get someone to help you fill out your tax forms. Free help is available all over Maine! Go to Pine Tree Legal Assistance’s website for information about qualified volunteers who offer free tax filing help for low-income Mainers as well as reliable free online programs.

Even if you decide to use a commercial tax preparer, it pays to resist their rapid refund offers. These offers are really loans with extremely high interest rates. With electronic filing—which many free help sites now offer—you can get your refund almost as quickly.

For more information:

Read Pine Tree Legal's guide, and say 'no' to rapid refunds.

10.5 The Property Tax and Rent “Circuit Breaker” Refund Program for Home Owners and Tenants

Whether you own your home or rent, you may be eligible for a partial refund of your property tax and/or the rent you paid. Now, over 200,000 Maine households are eligible for this help—you may be one of them. But, you must apply to get the refund. The maximum refund available is now $2,000.

Who is eligible?

Your eligibility for this program is based on your income and property tax or rent costs in a prior year. For example, if you are applying between August 1, 2008 and May 31, 2009 your eligibility will be based on your circumstances in 2007.

You may qualify for a refund if you:

• Were a resident of Maine for the year for which you are applying; and
• Maintained a home (or rented one) in Maine for the whole year and lived there for at least 6 months; and
• Your total income does not exceed a maximum amount, which changes from year to year (for 2007, $60,000, if you lived alone; $80,000, if you lived with a spouse or dependent(s); and
• Your property tax for that year was more than 4% of your annual income or your rent was more than 20% of your household income.

Important note: Some people don’t need to meet this last requirement (property tax of more than 4% of your income or rent of more than 20%). If your income was $13,600 or less ($16,800, if you are married), and you were age 62 or older in the year for which you are applying or if you (and your spouse, if you are married) were 55 or older and disabled you do not need to meet this requirement. You will be considered “disabled” if you are receiving a federal disability payment such as SSDI).

Am I eligible if I live in subsidized housing?

As a general rule, renters who live in subsidized housing (where the rent is paid, in part, by the government) are not eligible for a refund. However you may qualify if you are:

• 55 or older with a disability; or
• 62 and meet all of the other requirements listed above

Where can I get an application?

You can get an application at your town or city office, library, Area Agency on Aging, Community Action Program, and Pine Tree Legal Assistance. You can also request an application from Maine Revenue Services by calling (207) 624-7894; or call Maine Equal Justice 1 (866) 626-7059. You can also print out a copy of the application from the Maine Revenue Service website.

How do I apply?

Mail your application to the Maine Revenue Service (the address is on the application) or you can “I-file” your application online.

What is the deadline?

Applications for a refund on your 2007 property tax or rent must be mailed between August 1, 2008 and May 31, 2009. The Maine Revenue Service may allow up to a 2-month extension until July 31, 2009, but only if you have a good reason for not filing on time. This filing schedule is the same each year unless the law changes.

For assistance and more information:

Maine Revenue Service:
Voice: (207) 626-8475 (from 8 am to 5 pm weekdays);
TTY: 1 (888) 577-6690 (from 8 am to 4:30 pm weekdays).

Pine Tree Legal Assistance

Maine Equal Justice:
Voice: 1 (866) 626-7059 ext. 205

10.6 Property Tax Abatement

If you can’t afford to pay your property taxes because you only have enough income to pay basic living expenses like mortgage, lights, heat and food, you may be eligible for what is called a “poverty tax abatement.” This means that your town or city could decide that you don’t have to pay some or all of your property taxes.

(Note: this is different than the regular property tax abatement. The usual type is when you believe that your town has overvalued your house. If you think this has happened, you can also ask for a regular abatement. You can ask for both the regular one and the one based on not having enough income.)

You will need to show the town what your income was for each year that you are applying for a property tax abatement. You will also need to prove that you used all of that income just to meet your basic needs and didn’t have enough money left over to pay your taxes. In some cases, if you own valuable property that you could sell, you may not qualify.

How many years of taxes can I get help for?

Your city or town must let you apply for up to 3 years of back tax bills. They may allow you to apply for more. If you owe more than 3 years, ask the town if they will forgive all of the taxes that you owe.

How do I apply?

To apply, go to your town office or city hall. If you don’t have a town office, talk to your town clerk or a selectman. Tell them you need an “abatement” because of your low income and ask for an application form. Maine law gives you the right to make a written application for a poverty abatement. If your town doesn’t have a form, you can print a poverty abatement or call the Pine Tree Legal office closest to you and they will mail one to you.

What happens after I apply?

The town has 30 days to make a decision on your application. During that time they may hold an informal hearing, which you should be invited to attend. Your application and your hearing must be kept private. After 30 days, they must give you their decision in writing and tell you the reasons for their decision.

What if my town won’t make a decision or give me an abatement?

If the town doesn’t give you a written decision in 30 days, call Pine Tree Legal Assistance. They may be able to help.

If the town denies your application, you will have 60 days to appeal this decision. To appeal you must send a letter to a “higher authority” asking for a new hearing. The written decision from the town should tell you who to contact for your appeal.

A second hearing will be held. Be prepared to go over your income and expenses for basic necessities to show why you didn’t have enough money to pay your taxes. You should get a decision from this appeal within 60 days. If you are denied again, you can appeal this decision to the Maine Superior Court. You must do this within 30 days of getting the second decision.

If the town doesn’t give you the information you need, or if you are denied, call the office of Pine Tree Legal Assistance nearest you.

For more information:

Visit the Pine Tree Legal Assistance website

10.7 The Maine Homestead Exemption

If you have owned a home that is your permanent residence in Maine for at least 12 months, you may qualify for an exemption of up to $13,000. This means that when you get your tax bill the value of your home will be reduced for tax purposes by up to $13,000. It doesn’t matter if you sold one home and moved to another so long as you continuously owned a home in Maine during the 12-month period. There are no income eligibility caps for the Maine Homestead Exemption.

How do I apply?

It’s easy to apply. You can get an application from your town or city, or you can download the form. Submit the application to your local tax assessor’s office. The application deadline is April 1st of the year for which you want to request the exemption. Once you apply, you should not have to apply again unless you move.

10.8 Other Property Tax Exemptions

You may also be able to get more tax relief if you are:

• Blind;
• A wartime veteran and at least 62 years old;
• A paraplegic veteran; or
• The widow or minor child of a wartime veteran.

If you believe that you are eligible for one of these exemptions, you can apply at your town office. You can get more information and an application for these exemptions from the State’s website.

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