Education Tax Benefits
The Educational Opportunity Tax Credit (commonly referred to as Opportunity Maine) provides either a refundable or non-refundable Maine income tax credit for student loan payments made by degree earners who live, work and pay taxes in Maine following graduation. The tax credit is also available to Maine businesses that make their employees' educational loan payments. Certain STEM degrees are eligible for a refundable tax credit.
To claim the Educational Opportunity Tax Credit, qualifying individuals must file a Maine Income Tax Return. Using the Credit for Educational Opportunity Worksheet found on the Maine Revenue website here when completing the income tax return will provide the necessary information to determine eligibility and claim the credit, if eligible.
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The American Opportunity Tax Credit (currently authorized through tax year 2012) provides a federal income tax credit of up to $2,500 of the cost of qualified tuition and related expenses paid during the taxable year. Under this provision 40% of the credit is refundable, which is up to $1,000. The tax credit is limited to the first four years of post-secondary education.
Lifetime Learning Tax Credit provides a federal income tax credit of up to $2,000 per taxpayer based on the first $10,000 in tuition and fees paid by the taxpayer during the tax year. The Lifetime Learning Tax Credit may be received for an unlimited number of years.
The Student Loan Interest Deduction allows borrowers of federal and private education loans to deduct up to $2,500 in interest as an adjustment to income. This deduction may be taken even if the taxpayer does not itemize.
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