Maine Composite Income Tax For Nonresident Owners and Partnership Audit Return 2023 Form 1040C-ME - General Instructions

Sep 19, 2026

General instructions for Maine composite income tax for nonresident owners and the Partnership Audit Return using Form 1040C-ME. Explains when nonresident partners or S corporation owners are subject to Maine income tax based on Maine-source income, nexus, and apportionment of distributive share. Describes who may file or be included in a composite (block-filing), required member affidavits, estimated tax payment obligations, withholding rules, filing dates, and key related forms.

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Are Nonresident Owners Subject to Maine Income Tax?

Composite Return Eligibility and Inclusion

Who May File a Composite Return?

Who May Be Included

Withholding and Estimated Tax Requirements

When Withholding Is Not Required

Filing Date for Calendar Year 2023

Maine Composite Income Tax For Nonresident Owners and Partnership Audit Return 2023 Form 1040C-ME General Instructions Are nonresident individuals who are owners of a partnership/S corporation subject to Maine income tax? Yes, if the partnership/S corporation operates in Maine. Anonresident individual is subject to Maine income tax based on Maine-source income. All income derived from or effectively connected with the carrying on of a trade or business within Maine is Maine-source income and that income is subject to Maine tax if the business is either domiciled in Maine or has nexus with Maine. An entity has nexus with Maine if, for example, it, directly or through agents, maintains an office or other place of business, executesa contract, exercises or enforces contract rights, buys or sells property or employs labor in Maine. See Maine Revenue Services (“MRS”) Rule 808 (Corporate Income Tax Nexus) . Nonresident individual owners of a partnership or S corporation do not have tobe physically present in Maine to be subject to Maine tax. Owners of a partnership/S corporation who are not Maine residents are subject to Maine income tax on that portion of their distributive share of partnership/S corporation income apportionable to Maine, based on sales of the partnership/S corporation. The minimum taxability threshold under 36 M. R.S. § 5142(8-B) does not apply to the Maine income earned by the partnership/S corporation orto the distributive share of that income to nonresident partners/ shareholders. Partners/shareholders who are Maine residents are liable for Maine income tax on their entire distributive share of partnership/S corporation income. Who may file a composite return? A partnership/S corporation may elect to report and pay Maine income taxes on behalf of participating eligible persons on a composite (block-filing) basis. This method relieves participating eligible persons of the obligation to each file Maine income tax returns based solely on the entity income of the partnership/S corporation, but does not relieve the participating eligible persons of the responsibility for accurate and timely reporting and payment of taxes. Who may be included in a composite return? A partnership/S corporation may file a composite return on behalf of its partners or shareholders who are eligible persons that have obtained a Nonresident Member Affidavit and Agreement to Participate in a Composite Filing of Maine Income Tax (Form 941CF-ME.) An “eligible person” is: 1) a nonresident individual for the entire taxable year who has no Maine-source income other than entity income that is included in a composite filing by each entity; • Married nonresident individuals filing jointly for federal tax purposes may not participate in a composite filing to the extent either spouse has Maine-source income unrelated to the entity. 2) a nonresident electing small business trust (“ESBT”) or Qualified subchapter S trust (limited to the portion of the trust that consists of stock in one or more S corporations; or 3) a nonresident estate or trust that has no Maine-source income other than entity income that is included in a composite filing filed by each entity, that would have included such income as Maine taxable income if it were to file an income tax return for that year, and that has not distributed any of its Maine-source income for the taxable year to its beneficiaries as distributable net income. Note: Resident partners/shareholders and entities taxable as C corporations may not participate in a composite filing. See MRS Rule [805 at](805 at www.maine.gov/revenue/publications/rules)[ ](805 at www.maine.gov/revenue/publications/rules)[www.maine.gov/revenue/publications/rules](805 at www.maine.gov/revenue/publications/rules). Does a pass-through entity filing a composite return have to withhold or pay estimated tax? Pass-through entities doing business in Maine are generally required to withhold income taxes from n

FAQs

When are nonresident individuals who own a partnership or S corporation subject to Maine income tax?

They are subject if the partnership/S corporation operates in Maine. Maine-source income includes income derived from, or effectively connected with, a trade or business carried on within Maine when the business is domiciled in Maine or has nexus there.

Who can be included in a Maine composite return?

Eligible persons include nonresident individuals for the full taxable year with no Maine-source income other than entity income included in the composite, certain nonresident trusts (ESBT/qualified subchapter S trust limited to S corporation stock portion), and qualifying nonresident estates or trusts meeting specific undistributed Maine-source conditions.

Do pass-through entities filing a composite return have to withhold or pay estimated tax?

Withholding is generally required for nonresident owners’ apportionable distributive income, but it is not required when the entity collects the required Nonresident Member Affidavit and Agreement, makes appropriate estimated payments on behalf of the composite group, files the required forms, and files the composite return. If withholding was inadvertently made, a withholding credit may be claimed with member copies of Form 1099ME attached.

Sep 19, 2026

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