Expertise Beyond the Numbers

Maryland Student Loan Debt Relief Tax Credit Available for 2019

The Maryland Higher Education Commission (MHEC) is now accepting applications for the Maryland Student Loan Debt Relief Tax Credit for the 2019 tax year.

In July 2017, The Maryland Student Loan Debt Relief Tax Credit went into effect by the MHEC. Over the past three years, the State has allocated funds towards helping students pay down their student loan burden. Qualified taxpayers may receive a tax credit up to $5,000, depending on the amount of approved applicants.

MHEC follows statutory law and regulations when prioritizing who will receive tax credits in any year.  They prioritize recipients and amounts on the following qualifications:

  1. Higher debt-burden-to-income ratios
  2. Graduated from a college in Maryland
  3. Did not receive the credit in a prior year
  4. Eligible for in-state tuition at their college

Applicants do not need to fit into the above-mentioned groups. If approved, a tax credit will be provided, even though it may not be for the full amount.

On July 1, 2019. MHEC opened the process for accepting new applications for the 2019 tax year. The requirements remain the same as prior years:

  • Filing Maryland State Income Taxes for the 2019 year
  • Incurred at least $20,000 in total student loan debt
  • Have at least $5,000 in outstanding student loan debt remaining during 2019 tax year
  • Submitted an application to the MHEC by September 15, 2019

Approval of the credit will take 90 – 135 days and there is no application fee. New for 2019 is the ability to submit the application electronically through the MHEC website. The online application process is strongly preferred.

Upon receiving the tax credit, each recipient must use the credit to pay down their student loans within two years from the close of the taxable year for which the credit was claimed. Payments can either be a one-time payment of the full amount or routine monthly payments. The total amount of the credit must be used within the two years or the credit will be recaptured. Proof of payment must be provided to the MHEC.

An additional item to note is that the credit is for students with debt in their name. Parents with student loan debt on the behalf of their children are not eligible for the credit. For full details visit: http://mhec.maryland.gov/preparing/Pages/StudentLoanDebtReliefTaxCredit.aspx

If you have any questions regarding the tax advantages associated with the Student Loan Debt Relief Tax Credit please Contact Us.

2019 Tax Planning