10 Maine income tax withholding obligations

Maine law requires income tax to be withheld by the following entities for nonresidents: A. Employers and certain non-wage payers. Any person who maintains an office or transacts business in Maine and who is required to withhold federal income tax from a particular payment must also withhold Maine income tax if the payment constitutes income that is not excluded from taxation under Maine law. See 36 18-125 Chapter 806 page 13 M.R.S. §§ 5250 and 5255-B. Employers who are required to withhold Maine individual income tax from employees must withhold from the earnings of nonresident individuals who are present in Maine performing personal services, provided the minimum taxability thresholds contained in 36 M.R.S. § 5142 (8-B) are exceeded. B. Pass-through entities. A pass-through entity with income apportioned to Maine must withhold Maine income tax from any nonresident’s quarterly share of Maine-source income earned by that pass-through entity as provided in 36 M.R.S. § 5250-B. C. Buyers of real estate from nonresidents. Buyers of Maine real property purchased from nonresidents must withhold an amount equal to 2.5% of the sale price to be used as an estimated tax payment towards any Maine tax liability on the gain realized from the sale. The buyer of the property must remit the real estate withholding to Maine Revenue Services using form REW-1. Exemptions or reductions in the withholding amount may apply in certain situations. See 36 M.R.S. § 5250-A(3). For more information on income subject to Maine income tax withholding and determining the amounts to be withheld, see Rule 803.