Maryland taxpayers have a unique opportunity to receive a Tax Credit to pay toward their outstanding student loan debt. The Maryland Student Loan Debt Relief Tax Credit went into effect in July 2017 to help qualified taxpayers pay down their student loans. Maryland has allocated up to $5 Million per year toward this credit. In 2017, there were over 5,000 applications and the average credit approved was $1,200 for in-state students and $1,000 for others.
The Maryland Higher Education Commission (MHEC) recently posted the application for the 2018 tax year on their website Here. Eligible applicants must meet the following criteria:
- File Maryland State Income Taxes for the tax year
- Have incurred at least $20,000 in undergraduate and/or graduate student loan debt
- Have at least $5,000 in outstanding student loan debt remaining when applying for the credit
- Have completed and submitted an application to the Maryland Higher Education Commission by September 15, 2018
- Have submitted all required graduate and/or undergraduate student loan information, including Maryland Income Tax Information and college transcripts
- Must agree to pay the complete tax credit received into their outstanding loan balance within two years and provide
recordof the payment to MHEC
This is a RefundableTax Credit, which means this payment will directly reduce any Maryland Tax owed and you will receive a tax refund for the difference. For example, if you owe $1,000 in state taxes without the credit and then claim a $5,000 credit, you will receive a $4,000 refund. The maximum credit you can claim is $5,000.
The MHEC will prioritize recipients and amounts based on the following qualifications:
- Higher debt-burden-to-income ratios
- First time receiving the credit
- Graduated from a college in Maryland
- Eligible for in-state tuition at their college
Higher priority applicants, if approved, will likely receive larger tax credits than lower priority applicants.
It is not too late to apply! For more details, visit the website at https://mhec.maryland.gov/preparing/Pages/StudentLoanDebtReliefTaxCredit.aspx
Voya Financial Advisors does not provide tax or legal advice.