For some, that means deciding if the loan will be taxable, but one state is going another direction — by offering residents with student loans to claim an extra $1,000 off on top of the federal forgiveness plan. But the deadline is a few days away, so here’s what you need to know.
What is the Maryland Student Loan Debt Relief Tax Credit?
According to Washington Examiner, Maryland is offering its residents the opportunity to apply for an additional debt relief tax credit above what the Biden administration has announced. The credit has been around since 2017, and the deadline to apply for this year’s credit is September 15… so, you should hurry up if you’re a Maryland resident who qualifies. The credit was designed to help Maryland residents who are making undergraduate or graduate education loan payments from accredited universities or colleges to qualify, per details outlined on Central Scholarship.org.
Who qualifies for the Maryland Student Loan Debt Relief Tax Credit?
To qualify to receive the debt relief tax credit, applicants need to have been eligible for in-state tuition and graduated from a university or college in Maryland. In addition, the applicant needs to have a “higher burden to income ratio,” Central Scholarship.org explains and did not receive a tax credit last year to qualify for the 2022 credit. Other requirements to be eligible include:
You must have an outstanding student loan balance of at least $5,000You must have borrowed at least $20,000 in student loansYou must file 2022 Maryland state income taxesYou must claim Maryland residency for the 2022 tax year
How much money is the Maryland Student Loan Debt Relief Tax Credit?
There isn’t a set amount that’s released for the tax credit per person, Central Scholarship.org explains. The site outlined that in 2021, close to 9,000 residents of Maryland applied and received the tax credit. The one-time credit payment varied between $875 and $1,000.” The Higher Education Commission explained most people typically receive around $1,000, per the Washington Examiner,
How to apply for the Maryland Student Loan Debt Relief Tax Credit?
To apply for the credit, the first important thing to note is the deadline is coming fast—September 15 but the application can be done online, so there’s still time. To apply for the credit, applicants should visit the Maryland Higher Education Commission (MHEC)’s website to access the application online. Once you submit the application, the MHEC reviews the application, decides, and notifies applicants via email. “If you take advantage of this credit, you need to provide proof to the Higher Education Commission that it went to paying off debt,” Central Scholarship.org notes, “otherwise you might have to re-pay whatever money you received.” More information and details can be found on Maryland’s OneStop website.
