Maine Military Filing Information
A military member’s legal residence does not change solely because of a change in duty assignment. The legal residence designated at the time of entry into the service remains the same until the member establishes a new legal residence. A completed DD Form 2058, “State of Legal Residence Certificate” is evidence of a change in domicile (but does not prove it conclusively). Individuals domiciled in Maine who are members of the armed forces of the United States, the National Guard or Reservists who received federal orders for active duty continue to be domiciled in Maine for income tax purposes for the period of time they are stationed outside of Maine.
If you are a nonresident who is stationed in Maine, your military income will not be taxed by Maine, nor will income from intangible sources, such as interest and dividends. However, if you work at an additional job in Maine or operate a business in Maine, that income will be taxed by Maine.
Generally, a military spouse cannot lose or acquire residence or domicile in a state for tax purposes when the military spouse is absent from, or located in, a state solely to be with the servicemember who is complying with military orders. Consequently, for Maine income tax purposes, a military spouse will not be treated as a resident of Maine if the following conditions are met:
- The military spouse is located in Maine solely to be with the servicemember;
- The servicemember is located in Maine in compliance with military orders;
- The servicemember and the spouse were residents or domiciled in the same state other than Maine immediately prior to being located in Maine; and
- The servicemember and the spouse have the same state of residency or domicile.
In these circumstances, income of a military spouse for the performance of services in Maine will not be treated as Maine-source income subject to Maine income taxation.
The exclusion from state taxation applies only with respect to the military spouse. Non-military income earned in Maine by a servicemember is Maine-source income and remains subject to Maine income tax.
THE FOLLOWING INFORMATION IS EFFECTIVE AS OF JANUARY 2005
Combat Zone Tax Relief
Maine Revenue Services conforms with many of the special federal tax benefits applicable to active members of the U. S. Armed Forces serving in designated combat zones or qualified hazardous duty areas.
A combat zone is any area the President of the United States designates by Executive Order as an area in which the U.S. Armed Forces are engaging or have engaged in combat.
Military service outside a combat zone is considered to be performed in a combat zone if:
- The service is in direct support of military operations in the combat zone, and
- The service qualifies you for special military pay for duty subject to hostile fire or imminent danger.
Combat Zone Exclusion
Any pay that is excluded from Federal Adjusted Gross Income because it was earned while serving in a combat zone or hazardous duty area is also excluded from Maine income. This includes: active duty pay earned in any month served in the combat zone; imminent danger/hostile fire pay; reenlistment bonus if the voluntary extension or reenlistment occurs in a month served in a combat zone; pay for accrued leave earned in an month served in a combat zone; pay received for duties as a member of the Armed Forces in clubs, messes, post and station theaters and other nonappropriated fund activities earned in a month served in a combat zone; awards for suggestions, inventions, or scientific achievements due to a submission made in a month served in a combat zone; and, student loan repayments attributable to the period of service in the combat zone. See IRS Publication 3, “Armed Forces’ Tax Guide” for more details. The guide can be downloaded from the IRS Web site at www.irs.gov.
For tax years beginning after 2002, taxpayers whose federal income tax liability is forgiven under IRC § 692 due to a combat casualty are similarly granted a waiver from Maine income tax for the same period or periods.
Extension of Deadline
The deadline for filing Maine income tax returns and paying taxes is automatically extended if you meet requirements set by the Internal Revenue Service on its extensions, whether or not you claim an extension of a deadline for federal tax purposes.
One of the following statements must be true in order to qualify for the automatic extension:
- You serve in the Armed Forces in a combat zone, OR
- You have qualifying service outside of a combat zone.
You serve in the Armed Forces in a qualified hazardous duty area or are deployed overseas away from your permanent duty station in support of operations in a qualified hazardous duty area, but your deployment station is outside the qualified hazardous duty area. You serve in the Armed Forces on deployment outside the United States away from your permanent duty stations while participating in a contingency operation. A contingency operation is a military operation that is designated by the Secretary of Defense or results in calling members of the uniformed services to active duty (or retains them on active duty) during a war or a national emergency declared by the President or Congress. The deadline extension provision also applies to the spouses of individuals serving in a combat zone or contingency operation and support personnel serving in a combat zone or a contingency operation under the direction of the Armed Forces.
Deadline extension period
The deadline for filing Maine income tax returns and paying the taxes due is extended for 180 days after the later of: The last day you are in a combat zone, have qualifying service outside of a combat zone, or serve in a contingency operation (or the last day the area qualifies as a combat zone or the operation qualifies as a contingency operation), or The last day of any continuous qualified hospitalization for injury from service in the combat zone or contingency operation or while performing qualifying service outside of the combat zone. In addition to the 180 days, your deadline is extended by the number of days that were left for you to file or pay when you entered a combat zone (or began performing qualifying service outside the combat zone) or began serving in a contingency operation. If you entered the combat zone or began serving in the contingency operation before the expiration of the period of time ordinarily allowed for filing or paying, your deadline is extended by the entire period of time remaining for filing or paying at the time you entered the combat zone or began serving in the contingency operation. For example, you had 3½ months (January 1 – April 15, 2014 to file your 2013 tax return. Any days of this 3½ month period remaining when you entered the combat zone (up to or the entire 3½ months if you entered the combat zone by January 1, 2013) are added to the 180 days when determining the last day allowed for filing your 2013 tax return.
The actions to which the deadline extension provision applies include:
- Filing any return of income tax (except employment and withholding taxes)
- Paying any income tax (except employment and withholding taxes)
The deadline extension will be applied upon receipt of a copy of your deployment orders. Otherwise untimely requests for a credit or refund due to service in a combat zone or other qualified service must be in writing and will be considered on a case by case basis. Taxpayers in the combat zone, or their representatives or spouses, who receive correspondence from Maine Revenue Services should contact the Agency immediately.