Are you a Maryland resident? Do you have student loan debt? Well, good news – you may be eligible for a new tax credit on your 2017 tax return!
The Student Loan Debt Relief Tax Credit went into effect on July 1, 2017, and provides that qualifying Maryland residents may be eligible for up to $5,000 of a state income tax credit to help them pay down their student debt. There’s a catch, however – you must apply for the tax credit before September 15, 2017.
Maryland has set aside $5,000,000 to fund the tax credit each year, and will spread the credit among all qualified applicants. The tax credit is available even if you attended college outside of Maryland, although the state will give priority to students who attended a Maryland college or university.
To qualify, you must:
- Complete and submit the application, available here: http://mhec.maryland.gov/preparing/Pages/StudentLoanDebtReliefTaxCredit.aspx;
- Be a resident of Maryland for the tax year;
- Have incurred at least $20,000 in total undergraduate student loan debt; and
- Have at least $5,000 in outstanding student loan debt during the tax year for which you are applying.
The application requires supporting documentation, including an official transcript, documentation regarding your loan(s), and a copy of your most recent income tax return, so don’t wait until the last minute to start the process. Also, within two years of receiving the tax credit, you must apply the funds to pay down your student loans and provide proof to the state, otherwise you will need to return the money.
Free money toward student loan debt? Yes, please!
(h/t to Amanda Wooddell Wilhelm, CPA, SC&H Financial Advisors)
Cheryl A. Jones is an attorney in the Wealth Preservation Department of PK Law in Towson, MD, who represents a wide variety of clients on matters relating to trusts and estates, probate, elder law, and asset protection. She can be reached at firstname.lastname@example.org, or 410-769-6141.