Educational Opportunity Tax Credit Worksheet For Employers

2014 Educational Opportunity Tax Credit Worksheet for Employers - Instructions

This worksheet and the related instructions are for employers who made eligible education loan payments directly to the lender on

behalf of qualiﬁ ed employees. Employers that are pass-through entities must also provide speciﬁ c owner information to assist each

owner in claiming their portion of the credit. Note: A self-employed person is eligible for the credit for educational opportunity for

employers only if the self-employed person has qualiﬁ ed employees. Payments made on behalf of the self-employed person are not

eligible for the credit.

The educational opportunity tax credit is a component of the Job Creation through Educational Opportunity program, which began in

2008. The credit is based on eligible education loan payments (deﬁ ned below) paid directly to the lender during the tax year for months

during which the employee was a resident of Maine and worked for an employer located in Maine. A Maine resident deployed for

military service in the United States Armed Forces also qualiﬁ es if the individual meets all other eligibility criteria.

The monthly payment amount eligible for the credit is limited to an upper cap called the benchmark loan payment. For example, if the

qualiﬁ ed employee graduated in 2013, earned all credit hours for the degree after 2007 and monthly payments were made in 2014 of

$365 for qualiﬁ ed loans, the amount that can be used to calculate the credit is $356, the applicable monthly benchmark loan payment

for individuals graduating in 2013 (see instructions for line 1 below). Using this example, if regularly scheduled monthly payments of

$365 were made through the entire year and the qualiﬁ ed employee worked for an employer located in Maine all year, the credit would

be $356 x 12 = $4,272.

An employee eligible for the program is a graduate who:

● Obtained an associate's or bachelor’s degree after 2007 from an accredited Maine or non-Maine community college, college or

university;

● After graduation, is a Maine resident (as deﬁ ned by Maine tax law in 36 M.R.S. § 5217-D(1)(H)) working for an employer located

in Maine. Note: A self-employed person is eligible for the credit for educational opportunity for employers only if the self-

employed person has qualiﬁ ed employees. Payments made on behalf of the self-employed person are not eligible for the credit.

If loan payments are made by both you and the employee, your credit is limited to the amount you paid directly to the lender. For

example, if the required 2014 monthly loan payment was $310 and you paid half ($155) and your employee paid half, your credit would

be $155 x 12 months = $1,860. Your employee would also be eligible to claim a credit of $1,860 based on the loan payments they

made.

Also, the combined credit for you and the employee may not exceed the benchmark loan payment amount multiplied by the number

of months eligible loan payments were made. If the combined credit is based on the benchmark loan payment amount (that is, the

benchmark loan payment amount is less than the combined monthly loan payment made by you and your employer), the benchmark

loan payment must be prorated between you and your employer. For example, if the qualiﬁ ed employee graduated in 2013 and the

required monthly loan payment in 2014 was $380, of which you paid half ($190) and your employee paid half, the credit for both

you and your employee would be based on the monthly benchmark loan payment amount for individuals graduating in 2013 ($356).

Because in this example you paid half of the required loan payments in 2014, you may use only half of the monthly benchmark loan

payment amount ($178) to calculate your credit. Your 2014 credit, therefore, would be $178 x 12 months = $2,136. Your employee

would also be eligible for a credit of $2,136, based on the remaining half of the benchmark loan payment amount.

Eligible education loan payments are payments made by an employer directly to the lender for loans that are part of a ﬁ nancial aid

package certiﬁ ed by an accredited Maine college or university and for loans associated with a degree earned at an accredited non-

Maine college or university. Only eligible education loan payments made during the part of the tax year during which the individual was

a resident of Maine working for an employer located in Maine qualify for the credit. Payments in excess of the required loan payment

are not eligible for the credit. Payments on a reﬁ nanced eligible education loan qualify for the credit as long as the reﬁ nanced loan

remains separate from any other debt incurred.

Educational Opportunity Tax Credit Worksheet For Employers - 2014 Page 2