Section 125-803-04 - Withholding from wage paymentsA.Wage methods. Any of the following methods may be used by persons responsible for withholding to determine the amount of Maine income tax to be withheld from payments subject to the federal wage method of withholding. Generally, the amount of withholding is determined based on the information provided on the Maine Employee's Withholding Allowance Certificate (Form W- 4ME). The payroll period used to determine Maine income tax withholding is the same period used to determine federal income tax withholding or, if federal withholding is not required, the period that would be required to be used if federal income tax withholding were required.1.Percentage method. The amount of tax to be deducted and withheld under the percentage method of withholding is determined using the applicable percentage method tax rate schedule and related instructions contained in the current year's "Withholding Tables for Individual Income Tax" booklet prepared by the Assessor.2.Wage bracket tables method. The amount of tax to be deducted and withheld under the wage bracket tables method is determined using the applicable wage bracket withholding table contained in the current year's "Withholding Tables for Individual Income Tax" booklet with respect to the period in which such wages are paid. Each table consists of wage brackets that establish the tax to be withheld by number of withholding allowances.3.Other methods. If neither the percentage method nor the wage bracket tables method of withholding properly reflects an amount substantially equivalent to the tax reasonably estimated to be due from an employee's wages, either the person responsible for withholding or the payee may request permission from the Assessor to use an alternate method acceptable to both the payee and payer. As provided in Section .08 below, claiming a larger number of withholding allowances for Maine purposes than that calculated under this rule is not allowed unless a Personal Withholding Allowance Variance Certificate has been filed with, and approved by, the Assessor.B.Wages paid to Maine residents working outside of Maine. If, for any payroll period, a payer is required to deduct and withhold income taxes of another state or other states from the wages paid to a resident of Maine, the payer shall deduct and withhold Maine income taxes in accordance with 36 M.R.S., chapter 827. For that payroll period, the Maine income tax withholding amount must be calculated on the basis of all of that person's wages in all states and the result reduced by the amount required to be deducted and withheld from the wages under the laws, rules, or regulations of the other state or states. For the purposes of this subsection, "state" means a state of the United States, a political subdivision of any such state, the District of Columbia, or any political subdivision of a foreign country that is analogous to a state of the United States.C.Exemptions from wage withholding are available as follows:1.Withholding from payments to nonresidents. Generally, employers who are required to withhold federal income tax from wages to a nonresident employee must also withhold Maine income tax from those wages if the wages constitute Maine-source income that is not excluded from taxation under Maine law. A nonresident employee is not subject to Maine withholding unless that employee exceeds the minimum taxability thresholds in 36 M.R.S. §5142(8-B) by performing personal services in Maine for more than 12 days and earning more than $3,000 in Maine during the taxable year. Performing certain personal services for up to 24 days during the taxable year, however, may not be counted toward the 12- day threshold. 36 M.R.S. §5142(8-B)(C) and MRS Rule 806.02(G) and (H) (18-125 C.M.R., ch. 806.02(G) and (H)). A nonresident employee who initially is exempt from Maine income tax withholding due to the nonresident taxability thresholds becomes subject to Maine income tax withholding immediately upon exceeding both the 12-day and $3,000 thresholds at any time during the taxable year. Because income earned by the employee in Maine prior to exceeding the thresholds becomes taxable once the thresholds are exceeded, employers should consult with employees in this situation to ensure that Maine withholding is adequate to cover Maine income tax liability for the tax year. This consultation may involve completion and submission of an amended Form W-4ME pursuant to Section .08 below.
2.Federal exemption from withholding. An employee who is exempt from federal income tax withholding is also exempt from Maine income tax withholding.3.Election to be exempt from withholding. A resident employee who is subject to federal income tax withholding may elect to be exempt from Maine income tax withholding if the employee had no Maine tax liability for the prior calendar year and reasonably expects to have no Maine tax liability for the current year. The election must be made on Form W-4ME and expires at the end of the year in which it is made. If an employee who elected to be exempt from withholding fails to submit a Form W-4ME for the next calendar year, the employer must begin withholding for the next year as required above.4.Tribal member. An employer is not required to withhold Maine income tax from wages paid to a tribal member who resides on tribal land if such wages are derived from or connected with sources on tribal land, as determined by 36 M.R.S. §5132 and MRS Rule 825. This income does not constitute Maine taxable income under 36 M.R.S. §5122(2)(ZZ). An employee must utilize Maine Form W-4ME to declare that they are a tribal member residing on, and earning wages derived from or connected with sources on, tribal land as determined by 36 M.R.S. §5132 and MRS Rule 825. In the absence of such a declaration made by a tribal member on Maine Form W-4ME, the employer must withhold Maine income tax on the wages earned by the tribal member, whether derived from or connected with sources on or off tribal land, in accordance with 36 M.R.S. §5250 and this rule.18-125 C.M.R. ch. 803, § 04