As you near your graduation day, many of you may feel overwhelmed by the fact that in a short time you will have to start looking for your entry-level jobs. Even more overwhelming is the statistic that before actually entering the labor market, the Institute for College Access and Success estimates that your average student loan balance will be $31,364. After studying long hours and cramming for college exams, paying off student loan debt is not at the forefront of many college student’s minds. However, regardless of what you want, it is a reality for many. Thankfully, if you live and work in Maine and make your required student loan payments regularly, there is a tax credit that makes everything a little more bearable.
The Education Opportunity Tax Credit is a credit for Maine residents who are paying down student loans and have graduated from college between 2008 and now. Essentially, it reimburses graduates for part or all of their student loan payments. Over the last 10 years the state of Maine has expanded their qualifications for who is considered eligible, and the most recent rules are aimed at increasing the number of candidates who qualify.
The first determining factor is your college graduation year. You can only qualify for this tax credit if you are a 2008 or later graduate. The law also states that you must be a Maine resident and must work in Maine for the tax year. From this point the law begins to change based on the year you graduated. Please see the flow chart below to determine if you meet a few of the necessary requirements. You can also find more information at the Live in Maine Work in Maine website.
It is also important to remember that the amount of money you are eligible for will change depending on your degree you obtained. If your degree is considered STEM or not will determine whether your tax credit is refundable or offset.
Now I am sure you are wondering if you qualify, and how much the credit is worth in your specific case. As I am sure many would agree, any additional money at the end of the year is helpful. Maybe you could pay down additional debt with these funds or take a much-needed vacation. Whatever the case may be, you first need to determine if you qualify.
The Education Opportunity Tax Credit can provide a lot financial assistance to recent graduates and should be considered by all Maine graduates that reside here. If you need guidance to determine if you qualify, do not hesitate to contact the One River CPAs Team. Our goal is to provide the best tax support to our clients so they can continue living their best life.
