18-125 C.M.R. ch. 811 — Rule 811. Student Loan Repayment Tax Credit

18
DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES
125
BUREAU OF REVENUE SERVICES
INCOME/ESTATE TAX DIVISION
Chapter 811: STUDENT LOAN REPAYMENT TAX CREDIT
SUMMARY: This rule addresses the Maine student loan repayment tax credit ("SLRTC")
pursuant to 36 M.R.S. § 5217-E.
Outline of Contents:
.01
Definitions
.02
General qualifications
.03
Reduction in earned income requirement; disaster period
.04
Eligibility of education loan payments
.05
Credit limitations
.06
Application
.01
Definitions
A. Bachelor or associate degree in science, technology, engineering, or mathematics
("STEM") awarded prior to January 1, 2020.
1. For purposes of Section .05(A), below, a "bachelor or associate STEM degree
awarded prior to January 1, 2020" means an associate or bachelor degree with a
major (or if no major is awarded, an equivalent concentration) as recognized by
the participant's accredited community college, college, or university limited to
the following courses of study:
a. Animal, food, or plant science; archeology; biology; chemistry; computer and
information sciences; environmental science; physics/physical, earth, or
marine sciences; or registered nursing/nursing sciences;
b. Aeronautical engineering; architectural engineering technology;
biotechnology; clinical or medical technologies; communications technology;
computer technology; construction engineering technology; drafting and
design technology; automotive technology; electrical and electrical
engineering technology; electromechanical engineering technology; science
technology; or telecommunications technology;
c. Chemical, civil, construction, electrical, forest, industrial, mechanical, naval,
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or surveying engineering;
d. Economics, mathematics, or statistics; or
e. Any degree listed on the United States Department of Homeland Security,
Immigration and Customs Enforcement STEM Designated Degree Program
List.
2. Any degree awarded prior to January 1, 2020, that is considered a STEM degree
pursuant to this section will continue to qualify for STEM-degree treatment after
December 31, 2019, regardless of whether the taxpayer had previously treated the
degree as a STEM degree.
B. Bachelor or associate degree in science, technology, engineering, or mathematics
awarded on or after January 1, 2020, but before January 1, 2022.
1. For purposes of Section .05(A), below, a "bachelor or associate STEM degree
awarded on or after January 1, 2020 but before January 1, 2022," means an
associate or bachelor degree in a program of study classified under one of the
following Classification of Instructional Programs ("CIP") codes according to the
Integrated Postsecondary Education Data System ("IPEDS") of the National
Center for Education Statistics ("NCES"):
a. CIP codes listed on the United States Department of Homeland Security,
Immigration and Customs Enforcement STEM Designated Degree Program
List as of the year in which the degree was awarded;
b. Dental Hygiene/Hygienist (CIP code 51.0602);
c. Kinesiology and Exercise Science (CIP code 31.0505);
d. Marine Science/Merchant Marine Officer (CIP code 49.0309);
e. Occupational Therapy/Therapist (CIP code 51.2306);
f. Registered Nursing, Nursing Administration, Nursing Research, and Clinical
Nursing (CIP codes 51.3801 through 51.3899); and
g. Secondary Education and Teaching: STEM Concentrations (CIP code 13.1205
with a concentration in a field that would qualify as a STEM degree under
subparagraphs a through f if the degree was earned in that field directly).
C. Code. "Code" means the United States Internal Revenue Code of 1986 and
amendments to that Code as of the date stated in 36 M.R.S. § 111(1-A).
D. Earned income. "Earned income," as defined in 36 M.R.S. § 5217-E(1)(B), has the
same meaning as in Code § 32(c)(2). "Earned income" includes, without limitation,
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wages, salaries, tips, and other employee compensation, but only if such amounts are
includible in gross income for federal income tax purposes for the taxable year.
"Earned income" also includes net earnings from self-employment for the taxable
year (within the meaning of Code § 1402(a)), but such net earnings shall be
determined with regard to the deduction for one-half of self-employment taxes under
Code § 164(f).
E. Earned income requirement. "Earned income requirement" means the requirement
that earned income of the taxpayer during the taxable year shall be equal to at least
the state minimum wage, as set out in 26 M.R.S. § 664(1), as adjusted for cost-of-
living increases, as determined on January 1st of the taxable year, multiplied by 936
hours. For tax years not beginning on January 1st of the calendar year, "January 1st
of the taxable year" means January 1st of the calendar year during which the taxable
year begins.
F. Financial aid package. "Financial aid package," as defined in 36 M.R.S. § 5217-
E(1)(D), means financial aid obtained by a student for attendance at an accredited
community college, college, or university for an associate, bachelor's, or graduate
degree obtained by the student from an accredited community college, college, or
university after December 31, 2007. "Financial aid package" may include private
loans or less than the full amount of loans under federal programs, depending on the
practices of the accredited community college, college, or university.
G. Person related to the qualified individual. "Person related to the qualified
individual" is a person that meets the criteria listed in Code §§ 267(b) or 707(b)(1).
H. Qualified employer plan. "Qualified employer plan" has the same meaning as in
Code § 72(p)(4).
I. Qualified individual. "Qualified individual" means an individual, including the
spouse filing a joint return under 36 M.R.S. § 5221 with the individual, who is
eligible for the credit provided in this section. An individual is eligible for the credit
if the individual:
(1) Obtained an associate, bachelor's or graduate degree from an accredited
community college, college or university after December 31, 2007;
(2) During the taxable year was a resident individual as defined in 36 M.R.S. §
5102(5); and
(3) During the taxable year had earned income of at least the state minimum wage, as
set out in 26 M.R.S. § 664(1), as adjusted for cost-of-living increases, as
determined on January 1st of the taxable year, multiplied by 936 hours.
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.02
General qualifications
Subject to the limitations set forth in this rule, a Maine resident taxpayer who is a
qualified individual under 36 M.R.S. § 5217-E may claim on their Maine income tax
return the Maine SLRTC for certain eligible education loan payments made during the
taxable year and certain unused credit amounts under the Maine educational opportunity
tax credit (see 36 M.R.S. § 5217-D), that are related to the award of an associate,
bachelor's, or graduate degree after December 31, 2007. The SLRTC is refundable.
Married taxpayers who are qualified individuals and filing jointly may each separately
claim the credit based upon their separately earned incomes.
.03
Reduction in earned income requirement; disaster period
A qualified individual must meet the earned income requirement as defined in section
.01(D) to qualify for the SLRTC. The Assessor may reduce the minimum earned income
requirement if a portion of the taxable year falls within a disaster period. If such a
reduction is authorized by the Assessor, the amount of the reduction will be determined
by multiplying the applicable minimum earned income requirement for the taxable year
by the ratio of the number of days during the taxable year that fall within the disaster
period to the total number of days during the taxable year.
.04
Eligibility of education loan payments
A. Generally. Eligible education loan payments are payments paid directly by the
qualified individual to the lender with respect to loans that are in the name of the
qualified individual and that are part of the qualified individual's financial aid
package. Only those loan payments made during that part of the taxable year that the
qualified individual is a Maine resident qualify for the credit.
B. Refinanced and consolidated loans. Payments made with respect to refinanced
loans or consolidated loans that are part of the qualified individual's financial aid
package are eligible for the credit if the refinanced loans or consolidated loans remain
separate from other debt, but only in proportion to the portion of the loan payments
that are otherwise eligible.
C. Payments reimbursed by employer. Eligible loan payments for which the qualified
individual is reimbursed by an employer are eligible for the credit.
D. Education loan payments not eligible. The following education loan payments are
not eligible for the credit:
1. An otherwise qualified individual may not claim payments made on their
behalf by another individual or by an employer;
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2. Except in the case of a spouse filing jointly with a qualified individual, an
individual may not claim payments that they have made on behalf of an
otherwise qualified individual;
3. Payments made on loans obtained from a person related to the qualified
individual;
4. Payments made on loans obtained from a qualified employer plan;
5. Payments made on loans under a contract purchased under a qualified
employer plan;
6. Payments made by the qualified individual prior to the award of their degree.
E. Refunded loan payments. Loan payments that are refunded by the lender, including
refunds occurring after the last day of the taxable year, are not considered to have
been paid and may not be claimed for purposes of the SLRTC. If a return claiming
the credit was filed prior to the refund of payments, an amended return for the taxable
year must be filed by the taxpayer to recalculate the SLRTC.
.05
Credit limitations
The refundable credit is limited to $2,500 per taxpayer annually and is subject to a
$25,000 lifetime cap per taxpayer, except for the one-time election described in
subsection A below. Each spouse on a married filing joint return is considered a separate
taxpayer for purposes of the credit (i.e., except as provided in subsection A below, each
spouse who is a qualified individual may receive a credit of up to $2,500 for each taxable
year and a lifetime credit of up to $25,000).
A.
A one-time election may be made to claim up to $3,500 (instead of up to $2,500)
for either taxable year beginning in 2022 or 2023 by a qualified individual who
received the educational opportunity tax credit under 36 M.R.S. § 5217-D during
any taxable year beginning in 2019, 2020, or 2021 that was based on loans
acquired to obtain a bachelor or associate STEM degree awarded prior to January
1, 2020 as defined by section .01(A) above or to obtain a bachelor or associate
STEM degree awarded on or after January 1, 2020 but before January 1, 2022, as
defined by section .01(B) above. The one-time increase in the annual maximum
credit, up to $1,000, does not apply against the $25,000 lifetime cap.
B.
Unused educational opportunity tax credit amounts that were allowed to be
carried forward from prior taxable years under 36 M.R.S. § 5217-D(2)(A) that do
not exceed the 10-year carryforward limit may be claimed for purposes of the
SLRTC for any taxable year beginning on or after January 1, 2022, and before
January 1, 2027. For purposes of 36 M.R.S. § 5217-E(2)(C) and this subsection,
unused educational opportunity tax credit amounts do not include unused amounts
that result from the educational opportunity tax credit calculation for employers
under 36 M.R.S. § 5217-D(5).
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.06
Application
Except where otherwise stated, this Rule applies to taxable years beginning on or after
January 1, 2022.
STATUTORY AUTHORITY:
36 M.R.S. §§ 112 & 5217-E
EFFECTIVE DATE:
May 22, 2024 - filing 2024-121