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Got student loans? Don't miss this credit in 2014

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Got student loans? Got student loans?

Student loans are a common way to fund a college education; the average student loan debt for Maine's class of 2012 was $29,252. Wouldn't it be great if there was a program rewarding recent Maine graduates who are paying off student loans? Well there is - the Maine Opportunity Credit. This year it's better than ever.

What is the Maine Opportunity Credit? Maine Opportunity Credit is a credit on your Maine return, reimbursing you for student loan payments made. That's right, reimbursement of the entire student loan payment, not just the interest.

To be eligible for the credit you must:

-Have been a Maine resident while attending college in Maine.

-Obtained an associate or bachelor degree from a Maine college or university after December 2007.  

-be a Maine resident working for a Maine employer.

-make payments on your student loans.

How big is the credit? Thecredit can be quite significant; exactly how bigdepends on several factors:

-Year of graduation.

-Associate or bachelor degree.

-Monthly student loan payments.

-Percent of degree credit hours completed in Maine and after January 2008.

-Eligible months meeting work, residency and payment requirements.

  For 2012 graduates, maximum monthly credits are $342 for a bachelor degree and $65 for an associate degree. So those with a 2012 associate degree and 12 eligible months of payment would have a credit of $780. A 2012 bachelor's degree recipient could be looking at a maximum credit of $4,104!  

New and improved! What if the credit is more than your tax liability? One of two things happens if you don't have sufficient tax liability to take advantage of the entire credit. If you graduated with a degree in science, technology, engineering or mathematics, the additional credit is refundable. Otherwise, it carries forward for up to ten years.

How do you claim this credit? This credit is claimed on the Maine tax form. The worksheet for the credit is available at Maine Revenue's website: maine.gov/revenue/forms/credits. If you forgot to claim the credit on prior year returns, you may be able to amend your return to add the credit.

Be prepared to document your numbers: Maine Revenue Services is cautious and gives the credit only to those who prove their eligibility. You should submit documentation to verify the date of your degree, degree received, academic credit hours after Dec. 31, 2007 and educational loan payments required and made.  

But don't let the need for documentation deter you from claiming this credit: Come on, how hard is it for you to make a copy of your diploma and transcript? As to your required loan payments, your creditors should be able to provide that ask them.  

Bottom line: Opportunity Maine is a great program with the refundable option it's better than ever. If you are paying on student loans or know someone who is, be sure to check out the Maine Opportunity Credit.

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