In this post I’m going to explain exactly how to claim the Maryland Student Loan Tax Credit with minimal effort. Each year I spend about 30 minutes and earn a tax credit worth a little over $800.00. After you read this, you will be able to claim this free money every year, too!
What You Must Know To Claim The Maryland Student Loan Tax Credit Â
First, the Maryland Student Loan Debt Relief Tax Credit Program is operated by the Maryland Higher Education Commission (MHEC) and is open to Maryland residents and part-ear residents who are filing Maryland state Income Taxes in the year that they are applying for the tax credit. So basically, you have to live in and pay taxes in Maryland in order to get this money.
Second, you must have INCURRED at least $20,000.00 in student loans (including interest) at some point. Additionally, you must also have $5,000.00 in current student loan balance at the time of your application. So if you have only ever taken out $10,000.00 and now have $4,750.00, sorry, you cannot claim this tax credit.
Third, you must demonstrate that you spent this tax credit on your student loans within two years of receiving it. So don’t think that once you get this money you can spend it on the air fryer your mom keeps telling you will change your life.
Fourth, this money is a tax credit. So you will receive this money after you file your taxes. If you owe Maryland State, they will deduct what you owe them OUT of this credit and give you the difference.
For example, let’s say you owe $667.00 in Maryland State taxes for tax year 2020. Let’s also say you were awarded $1,000.00 for the Tax Credit this year. Therefore, you will receive $333.00 after you file your taxes.
You must still spend $1,000.00 on your student loans even if you didn’t receive the entire credit due to owing taxes.
The Maryland Student Loan Debt Relief Tax Credit Program Application Process
The Maryland Student Loan Debt Relief Tax Credit opens on July 1 each year here!
That means the 2020 Program will re-open July 1, 2020. Mark it on your calendars.
To be considered for the tax credit, you must do the following:
1. Complete the application and have it notarized.
I suggest calling your local bank that you use and asking them when their Notary Public is available. Then bring the completed yet unsigned application to that bank during those times. Remember to bring your photo ID, proof of your relationship with bank if they ask, and the application. When you sit down with the Notary Public, sign the document. They will then notarize the application.
Usually banks only provide this service to current customers and only when its related to their services. Since this is a financial document (as opposed to a Will or other legal document), they will most likely notarize it for you with no problems. I told my bank that I needed the documents signed for my student loans and I had no issues.
2. Submit Maryland residence and student loan information
These documents include transcripts, lender documents​, and Maryland Income Tax forms. Specifically, you must attach the following to your application:
-Your complete, official transcript from each undergraduate and/or graduate institution that you attended.
-Documentation from your lender(s) that shows the educational loans that qualify for the credit
-This documentation must include the name, address, and phone number of the lender(s); account number(s); original balance(s); and outstanding balance(s); and the person(s) responsible for repayment of the loan(s).
-A copy of your Maryland income tax return for the most recent prior tax year.
3. Submit the Tax Credit application to MHEC
You can mail the paper application and supporting documents to MHEC at:
Maryland Higher Education Commission
Attn: Student Loan Debt Relief Tax Credit
6 North Liberty Street, 10th Floor
Baltimore, Maryland 21201
You can also complete the online application using Maryland One Stop account at https://onestop.md.gov/.
I suggest that if you do mail it, like I did my first year, you sign it certified mail with return receipt requested. This ensured that you have proof of your submission!
Please submit everything before September 15th deadline!
The Maryland Student Loan Debt Relief Tax Credit Program Award Process
The tax credit application process closes each year on September 15th. You will receive notification of the tax credit awards in mid-December.
I received notification via mail so remember to provide the current and most recent mailing address on your application.
I attached Notification Letter to my Maryland Income Tax filing and mailed it in as normal. Within a few weeks, an extra $833.00 hit my checking account for a total of 30 minutes of effort.
You must use the tax credit within two years toward your student loans and submit proof of loan payments to MHEC.
You can submit proof via mail, email at studentdebttaxcredit.mhec@maryland.gov, or through you OneStop account. Make sure to read all instructions sent to you because MHEC will clarify what method they want you to use.
I continued to make my minimum payments for one year, which equaled to more than the $833.00 I received. Then I submitted proof within one year of receiving the award. If you want to make one lump sum, you can. Just remember to pay at least the amount you receive in the tax credit within two years of receiving it and saving the proof of payments.
