- Who is a qualified individual that can claim the SLRTC?
- What are the earned income requirements for claiming the SLRTC?
- What are eligible education loan payments?
- How much is the SLRTC?
- I am a qualified individual. Can I claim the SLRTC for loan amounts paid by others on my behalf?
- I have made loan payments on behalf of another person who is also a qualifying individual. Can I claim the SLRTC?
- I made education loan payments that have been refunded by the lender. Can I claim the SLRTC for the refunded payments?
- Can I claim the SLRTC for loan amounts that I paid even though my employer reimbursed me for the payments?
- I have obtained more than one associate, bachelor’s, and/or graduate degree. Can I claim the SLRTC for each degree?
- During the tax year, my education loans were in deferment or forbearance status. However, I have continued to pay my student loans during this time. Can I still claim the SLRTC for these payments?
- My educational loans are consolidated/refinanced with other debt. Do I qualify for the SLRTC?
- I am claiming the SLRTC for the first time. What information do I need to provide with my tax return?
The SLRTC is available to qualified individuals. A qualified individual is a Maine resident who:
- obtained an associate, bachelor’s, or graduate degree after 2007 from an accredited Maine or non-Maine community college, college, or university;
- has a certain amount of earned income;
- lives in Maine; and
- files a Maine individual income tax return.
To qualify for the credit, the resident individual must make eligible education loan payments directly to the lender during the tax year.
Married taxpayers: If both spouses are qualified individuals, both may claim the credit based on their eligible education loan payments made directly to the lender. Each spouse must complete a separate worksheet to claim the credit.
Earned income includes wages, salaries, tips, and other employee compensation, but only if the amounts are includible in gross income for the taxable year.
If you are a self-employed individual, include the net earnings from self-employment for the taxable year determined with regard to the deduction for one-half of self-employment taxes.
To qualify for the credit, you must have earned income during the tax year that is at least the state minimum wage as determined on January 1st of the taxable year, multiplied by 936 hours. For tax years beginning in 2022, this amount is $11,934.
Eligible education loan payments include loan payments paid by a qualified individual directly to the lender with respect to loans that are part of the qualified individual’s financial aid package during the part of the tax year that the qualified individual is a Maine resident.
The financial aid package includes financial aid obtained by the qualified individual for attendance at an accredited community college, college, or university to obtain an associate, bachelor’s, or graduate degree after 2007. Loans must be in the name of the qualifying individual.
The financial aid package may include private loans. However, the following loans do not qualify for the credit:
- loans obtained from a person related to the qualified individual;
- loans obtained from any qualified employer plan; or
- any loan made under a contract purchased under a qualified employer plan.
The refundable credit is equal to:
- the eligible education loan payments paid by the qualified individual directly to the lender with respect to loans that are part of the qualified individual’s financial aid package during the tax year; plus
- the amount of unused Educational Opportunity Tax Credit (EOTC) amounts carried forward from prior tax years that does not exceed the 10-year carryforward limit.
The credit is limited to $2,500 annually, up to $25,000 lifetime, per taxpayer.
Except, a one-time election may be made to claim up to $3,500 instead of up to $2,500 for either tax year beginning in 2022 or 2023, by a qualified individual who received the EOTC during any tax year beginning in 2019, 2020, or 2021 that was based on loans acquired to obtain a bachelor’s or an associate degree in science, technology, engineering, or mathematics. The one-time increase in the annual maximum credit, up to $1,000, does not apply against the $25,000 lifetime cap.
Unused EOTC amounts that are allowed to be carried forward from prior tax years, for purposes of the SLRTC, may be claimed only for tax years beginning before January 1, 2027.
No. You may only include eligible education loan payments you made directly to the lender. You cannot claim payments that were made to your lender by another individual, even if you advance or reimburse that individual for the payments. Loans must be in the name of the qualifying individual to be considered eligible loans.
No. You may not claim the SLRTC for loan payments you paid on behalf of another individual.
No. Payments that are refunded by the lender are not considered to have been paid for purposes of the SLRTC. If you have filed a Maine individual income tax return and claimed the SLRTC based on education loan payments that have been refunded, you must file an amended Maine individual income tax return to reduce the amount of the credit claimed.
Yes. However, you cannot claim the SLRTC based on any loan amount that your employer paid directly to the lender on your behalf. You may only claim the SLRTC based on loan payments you paid directly to the lender.
Note that your employer will most likely include the amounts reimbursed to you in your taxable income in box 1 of your Form W-2.
You may include in the SLRTC all loan payments you made directly to the lender during the taxable year on all eligible education loans for any eligible degree you obtained, subject to the annual and lifetime limitations.
10. During the tax year, my education loans were in deferment or forbearance status. However, I have continued to pay my student loans during this time. Can I still claim the SLRTC for these payments?
Yes. You can claim the credit for eligible education loan payments you paid directly to the lender during the tax year. The SLRTC is not limited to loan payment amounts due.
Maybe. Payments made on a refinanced eligible education loan qualify for the credit if the refinanced loan remains separate from any other debt incurred, except for other educational loans.
If this is the first year you are claiming the SLRTC and the documentation has not been previously provided to claim either the SLRTC or EOTC you must include with your completed Maine individual income tax return (Form 1040ME) and Student Loan Repayment Tax Credit Worksheet:
- a complete copy of your college transcript;
- documentation that the educational loans qualify for the SLRTC; and
- documentation showing the actual student loan payments you paid directly to the lender during the tax year.
Maine Revenue Services may request additional documentation supporting your claim.