Discussion:Truck Driver / Maine State taxes (source of income)

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Discussion Forum Index --> Tax Questions --> Truck Driver / Maine State taxes (source of income)

Mitch82 (talk|edits) said:

7 March 2013
I have a new client who is a truck driver who drives for a company based in Maine. He lives in New Hampshire. The company reports state wages to Maine but his W2 shows tax blocked and the company does not withhold Maine taxes. On the Maine tax return tax is applied to income from all sources and a credit is then given for the tax that applies to non-Main source income. So if none of his income is Maine sourced then he would receive a credit equal to the tax liability offsetting it to zero. His prior tax preparer filed as if none of the income was Maine sourced resulting in zero tax liability.

I want to ensure this is correct. Does anyone have experience in this situation? How would you determine if the income is Maine sourced income? The company is based in Maine but the driver does not work exclusively in Maine but instead drives to many different states. I would suspect that the company should not report income to Maine if it is not Maine sourced. Thanks for your help in this matter.

KatieJ (talk|edits) said:

7 March 2013
It depends on whether the client's services are performed in interstate commerce. If the employer is an interstate carrier, and the employee drives in more than one state, federal law provides that the only state that can tax the employee's compensation is his or her state of residence -- which in this case would be New Hampshire. There would be no Maine source income arising from this activity, and the prior year Maine tax return would have been completed correctly. Unless the employer has withheld Maine income tax, or the client has other Maine source income, he would have no filing requirement in Maine. The statute is at 49 USCS Sec. 14503(a) and (c). http://codes.lp.findlaw.com/uscode/49/IV/B/145/14503

If the employer is a local carrier, and the employee drives only in Maine, he would not be covered by the federal law, and the employer should be withholding Maine tax from his wages.

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