EDUCATIONAL OPPORTUNITY TAX CREDIT

Educational opportunity tax credit

EOTC Forms

Just looking for the instructions, forms or Benchmark amounts?

Here you go.

CNN news article published October 25, 2018
Maine will help you pay off your student loans if you move there

 

What is EOTC?

Maine’s Educational Opportunity Tax Credit (EOTC) is a component of the Job Creation through Educational Opportunity program and is a powerful statement from state legislators to taxpayers (TP) who work and live in Maine, are making payments on their student debt, and graduated after 2007.

The EOTC is a tax credit that will refund to the taxpayer a significant portion of their entire student loan payments, NOT just the interest component of those payments.

There are a few criteria that control eligibility. The instructions are explicit and lead to the determination of the monthly ‘Benchmark’ amount used to arrive at the Eligible Payments recognized. [example. Calculation of EOTC section below].

An average monthly Benchmark for an Associates degree is about $75, for a Bachelors degree $375, and for a Graduate degree is $320. See example below.

See If You Qualify:

Live + Work in Maine (click)

 
Here is the worksheet for the EOTC Sample Return click on this image to see this tax return.

Here is the worksheet for the EOTC Sample Return click on this image to see this tax return.

 

Once you arrive at the Eligible Payments figure, it is evaluated against the basic education degree information to determine whether the credit should be:

  • REFUNDABLE credit when degree is a STEM degree (Science, Technology, Engineering or Mathematics)

  • NONREFUNDABLE credit when degree is a non-STEM degree


The example below is for STEM graduate.

EOTC Worksheet that is filed with the tax return.

EOTC Worksheet that is filed with the tax return.


Interview

Eligibility:

  • Maine resident

  • Maine Part-year res

  • Worked in Maine

  • Graduated after 2007

  • STEM degree

  • Non-STEM

  • Have student debt

  • Paying on student debt

Intake & Interview

If the Taxpayer’s (TP) Intake & Interview sheet indicates they paid student loan interest
(Fed - Sched 1), ask a couple of follow-up questions to see if they are eligible to use this tax credit.

Having student loan interest indicates the TP has student debt and has paid a larger payment consisting of both principal & interest. This entire payment of both principal and interest is considered for the EOTC calculation. [FYI - this is huge!]

Your questions are aimed at determining that the graduation date was after 2007 and the interest paid was for their educational degree; parents paying for a child’s student debt won’t be eligible for the EOTC credit.


Something like this:
Tax-Aide: I see you have student debt, in what year did you graduate?
Taxpayer: I graduated in 2016. I got my Nursing degree at University of Vermont and have lived in Maine & worked at Maine Medical Center since then.
Tax-Aide: Great. That answers many of the questions that establish eligibility for a Maine tax credit called Maine Educational Opportunity Tax Credit. You live in Maine, you work in Maine and you even received a STEM (Science, Technology, Engineering or Mathematics) degree which would make you eligible for the refundable component of the EOTC credit.
Tax-Aide: Ok. Let’s go ahead and complete your Federal return and when we get to your Maine return we will go through this. Let me print the worksheet now, you can take a look and then we can go though it later. (Full disclosure. I do this so I won’t forget:-)
Taxpayer: Ok. It can’t hurt to try!

Click to see list of EOTC STEM degrees. Maine colleges and universities that have identified STEM degrees are listed here. This list is not comprehensive; other out-of-state colleges and universities also have eligible STEM degrees.


Documents

 

Software Entry

In order to prepare the EOTC Tax credit worksheets, the taxpayer must know the exact amount of each loan payment. Most people can pull this information up on their phone. The rest of the information regarding graduation dates, etc., they usually know.

If they are eligible for the credit AND this is their first year to claim the tax credit they must include three extra documents with the tax return:

  1. A complete copy of their college transcript

  2. Proof of the Educational loans that qualify them for the tax credit

  3. Proof of the loan payments made directly to the lender

This is important information to share since there are a couple of extra steps for the taxpayer to take after leaving the tax site: gathering these documents together, also enclosing forms like W-2s, and signing the return. (extra steps that are no longer required with eFiling).


IMPORTANT! TaxSlayer software can now handle this tax credit. It is not completely operational as it only allows one person on the return to claim the credit. It is probable that this error will be addressed by the time filing season begins in February 2019.

This area is under construction.
(Jan 25, 2019)


Calculation of EOTC

The Educational Opportunity Tax Credit is for Maine residents who are working and paying their education loans.

For example, a taxpayer graduated May 2016 from University of Vermont with a BS degree in Nursing. She paid $379 / month from Jan through Dec 2018. The benchmark amount for a 2016 grad is $373 per month. $373 x 12 = $4,476 is the eligible amount that is entered as Eligible Payments on the worksheet. (Take a look at the sample return).

Eligible months are determined by whether taxpayer met all of the following criteria

  1. was a resident of Maine

  2. worked in Maine

  3. paid eligible education loans directly to lender


These returns must be filed by paper.
Mail to:

Maine Revenue Service
P.O. Box 1066
Augusta, ME 04332-1066

Checklist

  • Enclose W-2’s

  • Sign the return

  • IF first year for claiming EOTC enclose

    • Transcript

    • Proof of Loan

    • Proof of Loan Payments

Finishing the return