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New tax program offers credit for as much as $1,600 to Mainers

By Bethany Lozada

Posted on Monday, October 19th, 2009, 1:58 am

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Mainers filing their taxes in 2009 who paid property tax or rent in 2008 may be eligible for a newly created credit that would go toward reducing the amount they owe.

Mainers who paid taxes or rent in 2008 may qualify for a refund from the state for as much as $1,600. The Maine Property Tax and Rent Refund Program — better known as the Circuit Breaker Program — provides property tax relief for home owners and renters that are paying more than a certain percentage of their income, according to James McConnon, professor of economics at the University of Maine.

Mainers who pay more than 4 percent of their household income on property tax can apply for the credit. Renters who paid more than 20 percent of their household income on rent can apply as well. In addition, applicants must have earned no more than $61,400 in household income in 2008 if they are single and have no dependents, or $81,150 if they are married or claim dependents to qualify.

The state reduced the maximum amount of the refund since last year. The maximum refund was originally $2,000, according to Christopher St. John, executive director of the Maine Economics Center for Economic Policy.

“Applications are being taken on a rolling basis,” said Michael Allen, director of Economic Research at the Maine Revenue Services. “Anyone can apply.”

The state began accepting applications for the tax credit Aug. 1. Because of a tax reform passed by the state legislature last year, applications were going to be accepted between January and November 2010, but a people’s veto initiative put the reform on hold. As it is now, the state is accepting tax credit applications between August and May 31. St. John said the people’s veto was organized in opposition to unrelated aspects of the tax reform legislation, and said the Secretary of State’s office is currently counting the initiative’s signatures. He expects it to be on the June ballot.

“People of low income particularly have a higher tax burden than people of higher income,” McConnon said.

This program has gone unnoticed by numerous Mainers, according to Sandy Lynn, a tax specialist for the Maine Revenue Service. More than 100,000 people filed for the tax program last year — about half of those who are likely eligible, according to St. John. The program has been advertised through commercial advertisements and by the state legislature.

“There are various reasons that the other half doesn’t apply,” Allen said. “One of the most frequent reasons we would hear is that the elderly feel like it’s a privacy issue. They don’t want people to know their income.”

“It’s hard to get people to focus on this program,” St. John said. “There are a lot more people that are unaware and do not apply for the program.”