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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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If I lived in Maine and owned a property there but worked in

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If I lived in Maine and owned a property there but worked in New Hampshire where there is no income tax, would I have to pay anything or would Maine law apply? Maine has lower property tax but New Hampshire reigns supreme in income tax at zero.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

If you live in Maine, you will owe income tax there on the income you earn in New Hampshire

MyVirtualCPA :

To avoid Maine tax, you would have to move from there

JACUSTOMER-k1zg6ucw- :

To avail of NH income tax rates I must live there then correct?

MyVirtualCPA :

Correct

JACUSTOMER-k1zg6ucw- :

Why would you have to pay Maine income tax rates for income earned outside the state?

MyVirtualCPA :

Because Maine taxes your worldwide incme

MyVirtualCPA :

income

MyVirtualCPA :

If New Hampshire had tax, you would owe tax to both NH and ME

MyVirtualCPA :

But Maine would give you credit for NH tax, but you'd still have both taxes to do

JACUSTOMER-k1zg6ucw- :

Oh sorry to clarify then I would file in Maine but NH rates would be applied at 0%?

MyVirtualCPA :

No.

MyVirtualCPA :

You owe tax on all the income you earn in Maine at the Maine income tax rates

JACUSTOMER-k1zg6ucw- :

I thought you said that but what do you mean they would 'give me credit' for NH tax exactly?

MyVirtualCPA :

I'm sorry that I confused you. I was making the point that IF NH DID have income tax, (which they don't but say they did) then you would pay income tax to both NH and ME

JACUSTOMER-k1zg6ucw- :

Righto got it. I see NH is in the 10 lowest overall tax bracket and Maine is in the 10 highest overall. Would you say that is correct based on your experience? I would rather live in maine (cheaper housing for sure!) but am worried about that statistic. I see NH also has some odd laws regarding car insurance and some sort of tax on cars unique to them? So wondering if it balances at all? I am trying to make Maine a valid choice compared to NH next door with no sales or income tax.

MyVirtualCPA :

I couldn't assess which is the best state. All I can confirm is that Maine has higher taxes and lower housing costs. I also don't know anything about the laws surrounding car insurance

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